9911796707
TMI Blog1998 (9) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, to form a Consortium of the intending exporters which would undertake the supply-contract. The Association agreed to such proposal and accordingly with the assistance of the Association a Consortium called "Tea Exporters Consortium" was formed. The Association was to act as the agent of the Consortium with the specific understanding that in the event the supply order would be procured each member of the Consortium would assume full responsibility to supply tea according to their respective quota and that the Letter of Credit (in short L.O.C.) should be divisible and transferable to the members. The Corporation, on being contacted by the Association, by a fax message addressed to the Tea Exporters Association Consortium, India invited quotation. In pursuance of the said message the Association in the combined letter head of the Association and the Consortium on November 14, 1984 offered to supply 750 metric tons (tonnes) of Indian Black Orange Pekoe Tea with proposal to make payment by transferable and divisible L.O.C. in favour of the Consortium. Later the quantity was raised from 750 tonnes to 1,000 tonnes. On the same date the Corporation communicated their acceptance to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondents and has averred therein that the agreement whereon the applicants rest their claim is itself invalid and that there being no privity of contract between the applicants and the foreign buyer, the exemption claimed under section 5(2)(a)(v) was not entertained by the respondents or the Board. In defending the orders of the appellate authority and the Board, the respondents further contend that order of exporting tea was placed by the foreign buyer on the Tea Exporters Consortium, a separate legal entity, distinct from the applicant-company, though the company was a member of the Consortium. Hence, according to the respondents the applicants are not entitled to any exemption under section 5(2)(a)(v) of the 1941 Act. 4.. In the affidavit-in-reply the applicants dispute all material averments of the respondents and reiterates the stand as highlighted in their original application. 5.. The dispute here hinges on the question whether in the set of facts given above, the transfer of consignment of tea from the company and the others forming the Consortium, to the Corporation amounts to sale in course of export or such transaction can be said to be consisting of two independen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turnover for the assessment under the Central Sales Tax Act. There was no formal contract. The High Court of Madras scanned the correspondences between the parties and ascertained the agreement. The Supreme Court held that the High Court was right in ascertaining the nature of agreement from the correspondences. 7.. In the case before us the applicant has filed several documents of which the following will help us to ascertain the real nature of contract involving sale of 1,000 metric tonnes of tea to the Corporation: (i) The letter dated November 13, 1984 (vide page 8 of the application) in the letter head of the Tea Exporters Consortium, c/o. Tea Exporters Association, communicating the Consortium's offer to sell 750 metric tonnes of Indian Black Tea Orange Pekoe to the Corporation at $3.5 per kilogram setting forth other terms and conditions relating to packing, shipment, payment, etc. (ii) The letter dated November 14, 1984 from the Consortium modifying the offer to the extent that shipment of 1,000 metric tonnes of such tea would be made by March 31, 1985 and also making a further offer of shipment of a further quantity of 1,000 metric tonnes of such tea provided the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he application) the Consortium made it clear to the Corporation that L.O.C. was to be established in favour of each member whose percentage of the total accepted quantity was mentioned in the letter. It lays bare an unmistakable position that these members are the real suppliers. After this letter the Consortium was no more in the picture. The individual members, including the applicant, (1) caused the shipments of their respective quota of tea, (2) drew invoice therefor and (3) got their respective share of sales proceed according to the specified shares by way of transfer of the amount into their respective bank accounts, of course after deduction of 1.5 per cent as stamp duty. These aspects are not in dispute. There is absolutely nothing to show that the Consortium ever got any share of the sales proceed or had any role in the shipment of tea or in drawing any invoice in favour of the Corporation. 9.. The applicant's claim of exemption in respect of the sale of tea on the ground that it was an export sale has been rejected by the assessing officer (respondent No. 4). The officer has proceeded on the reasoning that the privity of contract was between the Corporation and the Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. But here in the case before us, as we have observed the Consortium never acquired title. The Consortium was just the shadow identity for the individual members who constituted its corporeal self to meet the Corporation s condition of placing the supply order on a single concern. The individual members in reality shouldered the legal obligation as well as enjoyed the benefit directly under the supply contract. This is evident from clause (3) of the agreement, recorded in the letter head of the Tea Exporters Association (annexure B to the application) and the clause runs thus: "3. That each member of the Consortium will have to give the undertaking to the Tea Exporters Association to the effect that they will be solely responsible for the performance of the quantity allocated to them by the Consortium and shall indemnify the Association against any loss arising out of the deal if any." (underscoring* done by us). 11.. That the individual members are the real persons behind the bargain is further evident from the fact that the Association in its letter dated November 14, 1984 (vide annexure G) typed on the combined letter head of the Association and the Consortium laid bare tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore be liable to account for the sale proceeds. The true relationship of the parties in each case has to be gathered from the nature of the contract, its terms and conditions, and the terminology used by the parties is not decisive of the legal relationship." 13.. Mr. K.K. Saha, learned Advocate for the respondents, asserts that the transaction culminating in supply of tea to the Corporation consisted of two distinct sale transactions, one between the Consortium and its members and the other between the Consortium and the Corporation. To derive support to his contention he relies on the decision in the cases: (1) Hindustan Steel Limited, Bhilai Steel Plant v. State of Madhya Pradesh [1982] 50 STC 287 (MP) and (2) Mod. Serajuddin v. State of Orissa [1975] 36 STC 136 (SC). But in these two reported cases there are certain distinct features which distinguish these cases from the one before us. In the first reported case [Hindustan Steel Limited, Bhilai Steel Plant v. State of Madhya Pradesh [1982] 50 STC 287 (MP)] the issue was whether transfer of goods by the assessee leading to ultimate purchase of the same by a foreign buyer could be considered the assessee's sale in course o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation which really sold the goods to the foreign buyer. In this case, the assessee (the appellant before the Supreme Court) entered into two contracts with the State Trading Corporation for the sale of mineral ore and the Corporation in its turn entered into similar contracts with foreign buyers for sale of the identical goods purchased from the assessee. There was specified condition in regard to the sale of the goods by the assessee to the Corporation against shipping documents. The assessee contended that the sale between him and the Corporation and the export by the Corporation to the foreign buyer constituted one integrated transaction so as to make the assessee's sale as the one in course of export. In this case also there were undisputed two sales and the issue was whether they could be considered as integrated transaction. In view of the existence of two distinct sales and only the second sale (sale between the Corporation and the foreign buyer) being the export sale, the Supreme Court by its majority judgment rejected the assessee's contentions. But in our case we have seen that there was no sale of goods by the applicant to the Consortium and there was no resultant transf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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