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TMI Blog2014 (8) TMI 917X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs:- "We have carefully considered the arguments advanced. We note that unlike the Max India Ltd case referred to by the Ld. Counsel for the appellant company, the goods receipts brought on record in this case do not show the appellant company as a consignee. It is, therefore, necessary for the appellant company to bring on record further evidence to show that the transfer of title to the buyer was preceded by and not followed by the clearance of the goods in question for export out of India. In this case, therefore, though the appellant company has brought on record material to show that there was a sale of goods to the named buyer and that there was an import of such goods into Nepal, it has not been shown that the transfer of property in the goods from the appellant company to the buyer named above took place after and not before the goods were cleared for export out of India." 3. Reading of the first paragraph of the aforesaid findings would indicate that the petitioner assessee had relied upon decision of the Tribunal in Max India Ltd., but the same was distinguished on the ground that in the case in question the petitioner assessee was not shown as a consignee in the good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such sale or purchase takes place- (i) In the course of inter-state trade or commerce, or (ii) Outside Delhi, or (iii) In the course of the import of the goods into, or export of the goods out of, the territory of India Explanation- Section 3,4 and 5 of the Central Sales Tax Act, 1956 (74 of 1956) shall apply for determining whether or not a particular sale or purchase takes place in the manner indicated in clause (i), clause (ii) or clause (iii) of this section." 7. It is clear from the reading of the aforesaid Article and Section 8 of the Act that sales tax cannot be imposed and levied on sale or purchase of goods in the course of the import of the goods into or export of goods outside, the territory of India. The expression "in the course of" was elucidated and explained by the Supreme Court way back in the year 1964 in Ben Gorm Nilgiri Plantations Co-Conoor (Nilgiris) Vs. Sales Tax Officer, Special Circle, Ernakulum, [1964] 51 ITR 345, where question arose regarding taxability on auction of tea chests to the bidder who was an agent of a foreign buyer, under Travancore-Cochin General Sales Tax Act, 1125 and it was held:- "23. As preliminary to the discussion of the questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the goods purchased were not to be sold locally but have to be exported, he is right only in the sense that it is not any express term of the contract. But could it be said that that was not the implicit common understanding on which the entire transaction was concluded. The buyer was not interested in the purchase except on terms of the export quota rights being transferred to him and that was why the transfer of the export right was affected or contracted to be effected as part and parcel of the sale of the goods. Again, the buyer was an agent, who as we have stated earlier was not free to deal with the tea purchased by effecting a local sale, but was under an obligation to his foreign principal to export the goods purchased to a foreign destination. It was with such a buyer that the assessee entered into the transaction of sale. On these facts we are satisfied that it was part of the understanding between the seller and the buyer, inferrable from all the circumstances attendant on the transaction that the buyer was bound to export. Pausing here, we would add that, we understand that importance is attached in this context to the need of a term in the sale contract laying an obl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either occasions such export or is effected by a transfer of documents of title to the goods after they have crossed the custom frontiers. Insofar as the present case is concerned, the facts on record show that the sale of the goods by the assessed (sic) through STC had taken place after the goods had crossed the custom frontiers both by ship as well as by aircraft." Thus in either case i.e. when the sale or purchase either occasions such export or secondly when transfer of documents of title of the goods is after they have crossed the customs frontiers, it is treated as export of goods. 10. Section 5(3) of the Central Sales Tax Act, 1956 is relevant and reads as under:- "(3) Notwithstanding anything contained in sub-section (1), the last sale or purchase of any goods preceding the sale or purchase occasioning the export of those goods out of the territory of India shall also be deemed to be in the course of such export, if such last sale or purchase took place after, and was for the purpose of complying with, the agreement or order for or in relation to such export." Decision of Supreme Court in Monga Rice Mill and Others Vs. State of Haryana and Another, (2004) 6 SCC 101, is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntier the sales must be held to have taken place "in the course of export" and the exemption under Art. 286(1)(b) will come into operation. The sellers' case is that these were sales on FOB contracts. Though the Learned Solicitor General appearing on behalf of the Sales Tax Officer tried to convince us that these were not really FOB contract sales, it appears that the averment in Paras. 11 and 13 of the writ petition that these sales were made on FOB basis were not denied in the counter affidavit sworn by the Sales Tax officer. It is also worth noticing that in the assessment order itself the Sales Tax officer referred to these sales as sales on FOB basis. The specimen contract produced also used the words "FOB delivered". There can be no doubt therefore that these were sales under FOB contracts. The normal rule in FOB contracts is that the property is intended to pass and does pass on the shipment of the goods. In certain circumstances, e.g., if the seller takes the bill of lading to his own order and parts with it to a third person the property in the goods, it has been held, does not pass to the buyer even on shipment. We are not concerned here with the question whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds passes to the buyer after they have crossed the customs frontier for the purpose of export to a foreign country, the sale is "in the course of export" out of the territory of India. This clarification and elucidation was required as the assessee, the exporter, in B. K. Wadeyar's case (supra) was both the consignor and consignee in the FOB contract. But that does not mean that there cannot be and would not be any other case covered by the expression "in the course of export". The quoted passage relates to and deals with second part of Section 5(1) of the Central Sales Tax Act, 1956. A case may well be covered by the first part. Facts of each case have to be examined to ascertain whether the transactions in question were "in the course of export" or not. Further, actual export has to be established and shown. Latter aspect has been dealt with in the case of Sita Juneja (supra). 13. In these circumstances, the question of law mentioned above has to be answered in favour of the petitioner assessee and against the respondent revenue. However, we pass an order or remit as in the second paragraph noted above the tribunal had made some observations in favour of the petitioner assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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