9911796707
TMI Blog1981 (12) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... on notice under section 12(3) of the Karnataka Sales Tax Act, as the machinery for assessment under the Act is the one provided for by the State enactment, by which he proposed to disallow the exemption claimed under section 5(1) of the Act. The petitioner filed its objections to the proposal. It was contended by the petitioner: (1) That there was only one sale which occasioned the movement of the goods sold from this country to the U.S.S.R.; (2) That the invoice in the case had been raised on the Projects and Equipment Corporation of India Ltd. (for short "P.E.C.") by and in respect thereof only service charges at one per cent on the f.o.b. value of the goods was paid; (3) That there was no transfer of property in the goods (spark plugs) to the P.E.C. prior to the export of the goods from the Indian ports; (4) That the goods in question were not delivered to the possession of the P.E.C. at any point of time or place before they were put on board; (5) That all the shipping documents including bills of lading were directly taken out in the name of the foreign buyer by the assessee-petitioner as the shipper, and the goods were put on board by the petitioner which alone was liabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. Further it is asserted that the ratio of the decision of the Supreme Court in the case of Mod. Serajuddin v. State of Orissa [1975] 36 STC 136 (SC); AIR 1975 SC 1564 clearly applies to the facts of the case and therefore the respondent was justified in holding that the facts of the present case were similar to that of the facts found in Mod. Serajuddin's case [1975] 36 STC 136 (SC); AIR 1975 SC 1564 and therefore the exemption claimed was not available to the assessee-petitioner. 5.. Much of the facts are not in dispute. What little dispute there is, it lies in the area of understanding the intent and purpose of the P.E.C. on the one hand and the assessee-company on the other hand in their respective agreements with each other and the agreement of the P.E.C. with the foreign buyer Avtoexport-U.S.S.R. 6.. However, the respondent has raised a preliminary objection regarding the maintainability of the writ petition under article 226 of the Constitution inasmuch as the assessee-petitioner has by-passed the procedural remedies available to it under the Karnataka Sales Tax Act by way of appeal, second appeal and a revision petition to this High Court. It is therefore contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o him in terms of section 5(1) of the Act. It is now therefore convenient to state the facts which are in dispute. It is contended for the respondent that even on the material produced by the assesseepetitioner itself, it is possible unerringly to infer as to what caused the movement of goods from the Indian frontiers to the U.S.S.R. It is asserted that it is the contract of sale between the P.E.C. and the Avtoexport-U.S.S.R. A true copy of the said agreement is produced along with the petition. In that agreement the P.E.C. is described as the sellers and the Avtoexport as the buyers. Subject of the contract is stated and the price of the spark plugs as well as delivery schedule is also agreed upon including the terms of payment. It also provides for letter of credit being opened against the following documents: (a) Sellers' specified invoice; (b) Full set of "clean on board" bill of lading made out in the name of Avtoexport, U.S.S.R; (c) Packing list; (d) The sellers' letter of guarantee for the quality of the goods. It also provides that the sellers undertake to carry out without delay on their account, to eliminate the defects or to replace the defective parts. It further p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied as evidenced by the bill of lading which is at exhibit G to the petition. From the copy of the bill of lading it is seen the shipper is the assessee-petitioner. It is not disputed that the letter of credit was directly opened by the Avtoexport in favour of the assessee-petitioner. In other words, the crucial terms on which the export agreement of the Avtoexport and the P.E.C. on which the learned Government Pleader strongly depended upon were never acted upon by the parties to that agreement. On the other hand, if the export agreement is read as part and parcel of the composite documents as contended for by the assessee-petitioner, then a slightly different picture emerges. It is unnecessary to set out the terms and conditions of the agreement between the P.E.C. and the assessee-petitioner. In substance the P.E.C. and the assessee-petitioner a-reed to give effect to the export agreement with the Avtoexport which P.E.C. had, and strangely the assessee-petitioner in the second of the agreements is described as the seller. Article III of the contract provides for the foreign buyer to open an irrevocable and divisible, premitting part shipment, letter of credit for 100 per cent val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C.J., as he then was, after discussing a number of earlier decisions of the High Courts and the Supreme Court while reiterating that the facts in each case must be given full meaning and effect while taking a decision, nevertheless, necessarily laid down some tests which ought to be applied in all cases to determine whether a sale was in the course of export or for export. It was clearly laid as one of the tests that an intervening sale before the goods are moved out of the country would deny the exemption available to the exporter. In other words, the exporter should not effect sale in this country before such goods are moved out of this country. It is in this context that in Serajuddin's case [1975] 36 STC 136 (SC); AIR 1975 SC 1561 also the appellant therein could not get the exemption available to him under section 5(1) of the Act on account of two sales. 12.. In the case on hand, apart from there being no evidence of a second sale in this country, no material is placed before this Court even to presume such a sale. The argument of the learned Government Pleader assumes such a sale in favour of the P.E.C. by the assessee-petitioner by virtue of the documents, viz., invoice, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o another contract has no meaning or purpose in relation to the earlier contract with which alone we are concerned in this case. 16.. However, Shri Devanathan, the learned counsel for the petitioner, has drawn my attention that this document was produced before the respondent only for the purpose of pointing out that export incentives available on account of the export in question was only to the assessee-petitioner and not to the P.E.C. clearly establishing that the petitioner was the exporter and not the P.E.C. 17.. I, therefore, see no difficulty in allowing the petition for the reasons I have given above and quash the order which is impugned in this writ petition, namely, the order of the respondent at annexure M in so far as it relates to disallowance of the claim for exemption from payment of tax under the Act, in the light of the provisions contained in section 5(1) of the Act. It is ordered accordingly. 18.. Before parting with this case I must notice one other contention urged by Shri. Devanathan. That contention relates to the reference to sale effected by transfer of documents of title to the goods after the goods have crossed the customs frontiers of India in section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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