MANGANESE ORE (INDIA) LTD. versus THE REGIONAL ASSISTANT COMMISSIONER OF SALES TAX, JABALPUR

Citation: [1976] 3 S.C.R. 99 · Decided: 19-12-1975 · Supreme Court of India · Bench: HANS RAJ KHANNA · Disposal: Dismissed
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Judgment (excerpt)

99 
MANGANESE ORE (INDIA) LTD. 
A 
v. 
THE REGIONAL ASSISTANT COMMISSIONER OF SALES TAX, 
~ 
JABALPUR 
• 
December 19, 1975 
(H. R. KHANNA AND S. MURTAZA FAZAL ALI, JJ.] 
Central Sales Tax Act, 1956-S. 5(1) read with 
Art. 286(1)(b) of the 
Cdnstitution of India-Contract of sales occasioning export a'e eligible to tax 
under s. 5(1) of the Central Sales Tax, 1956-Sales through an intermediary 
buyer does not "occasion export". 
"Stare Decisis" doctrine of, is a valuable principle of precedent requiring 
B 
special or extraordinary reasons to depart from. 
C 
Genial Sales Tax Act, 1956-Sec. 3(a), 4(2)(b) and 9-Sale in the course 
of _inter-State trade or commerce-Conditions to be satisfied before a sale can 
be said to take place. 
Central Sales Tax Act, 1~56-Sec. 3(a)-"Moven1ent of goods"-Wltether 
it 1nakes a distinction between unascertained goods and future goods-Scope of 
s. 3(a). 
Penalties for belated return under the Central Sales Tax Act when not pro-
.vided for, the State cannot take recourse to under the State Sales Tax Act-
Sec. 10 (a) of the Central Sales Tax Act, 1956. 
"Oriental ndxture"-Term used in the contract of sale, whether "manganese 
ore" and liable to tax. 
The appellant-Manganese Ore (India) Ltd. (a commercial venture where 
the ·Government of India, Government of Maharashtra and 
Government of 
Madhya Pradesh hold shares in the ratio of 17 per cent each) entered into four 
types of "contracts of sale" with buyers in India and outside India for selling 
the manganese ores extracted from the mineral mines leased out to it and situated 
in the States of ~Iadhya Pradesh and Maharashtra. Tuey were (a) category I 
are the contracts ¥/here the appellant directly sent the ores to two foreign com-
panies on f.o.b. terms; (b) category II represents contracts which were entered 
into by the appellant with the Mineral and Metals Trading Corporation of India 
Ltd., under which the appellant despatched manganese ore of varying percentage 
to the M.M.T.C., f.o.b. Bombay and the M.M.T.C, in turn exported the goods 
to foreign buyers; (c) category III relates to the sales to M/s. Ram Bahadur 
Thakur & Co., Bombay and other buyers who in their turn sold the goods to 
M.M.T.C. for export; and (d) category IV relates to the sales in favour of the 
buyers within the territories of India, but outside the State. 
According to s. 3(a) and 9 of the Central Sales Tax Act, the State of Madhya 
Pradesh was competent to levy tax on the sales in the course- of inter·State trade 
or conunerce. 
Under s. 5(1) of the Central Sales Tax Act, sales occasioning 
export or in the course of export are exempt from the purview of the Act. 
In respect of categories II to IV, the Sales Tax Authorities levied tax under 
the Central Act, holding that they were in the course of inter-State trade or 
commerce and imposed a pen~lty of Rs. 1,000/- under the Madhya Pradesh 
General Sales Tax Act for belated filing of returns. The writ petition filed by 
the assessee in the Madhya Pradesh High Court failed. 
D 
E 
F 
G 
Dismissing the appeal by special leave and quashing the penalty imposed, 
H 
the Court. 
HELD : As no export was involved so far as the buyers in India are con-
cerned; s. 5 (I) of the Central Sales Tax Act has no application at all. This 
100 
SUPREME COURT REPORTS 
[1976) 3 S.C.R. 
-A 
point is no longer "res integra" in view of the Constitution Bench Division of 
this Court in Md. Serajuddin and others v. State of Orissa, [1975] 2 SCR 47 
Where the sale was not directly and substantively connected with export, and 
where between the seller and ultimate buyers intermediaries are involved, such 
a sale would not occasion any export and would not fall within the purview of 
s. 5(1) of the Central Sales Tax Act. [102 G, 103 C-D] 
Md. Serajuddin & others v. State of Orissa, [1975] 2 SCR, 47, app!ied. 
B 
(2) The doctrine of "Stare Decisis" is a very valuable principle of precedent 
c 
which cannot be departed from unless there are extraordinary or special reasons 
to do so, and more so to reconsider a recent constitutional decision. [103 GJ 
(3) Before a sale can be said to take place in the course of inter-state trade 
or commerce, the follov.:ing conditions must be satisfied : (i) that there is an 
agreement to sen which contains a stipulation express or implied regarding the 
movement of the goods from one State to, another; (ii) that in pursuance of the 
said contract the goods in fact moved from one State to another; and (i
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