LexMEMBER BOARD OF REVENUE, WEST BENGAL versus M/S. SWAIKA OIL MILLS
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B c D E F G H 270· 7, MEMBER BOARD OF REVENUE, WEST BENGAL v. M/S. SWAIKA OIL MILLS August 4, -1977 (Y. V. CHANDRACHUD AND P. S. KAILASAM, JJ.J Constitution of India, Art. 286(l)((b)-Central Sales Tax Act, 1956, Section 5(1)-'ln the course of export", applicability-F.0.B. contract-Goods delivered on foreign bound shiP- Use' of export-licence lent ro-exporter-1-Vhether Sa1e exigible to sales tax. ' ___ -The Netherlands Selling Orgiinisation Ltd. bought linseed oil .. F.O.B. Calcutta - price", from·. the respondent oil mills. The terms of the sale-contract provided that the oil mills would deliver the goods on a ship bound for Indonesia~ and lend the use of its export-licence to facilitate the export of the goods by the Netherlands Organisation to a foreign buyer. The respondent claimed -exemp- tion tram the payment of sales-tax on the ground that the sale was effected in the course of the export of goods out of the Indian territory. The claim was ·rejected by the Revenue Authorities but was allowed by the High Court; in a reference by the Board of Revenue. - - ---:_-- - -- . Allowing the appeal and holding that the sale was exigible to sales-tax, the Court. HELD:- (lj Thef-e is no privity of contract bet\veen the respondents and the foreign buyer. The export was occasioned by the contract of sale between the Netherlands 'Organisation and their own buyer, and not by the contract of sale between the respondents and the Netherlands Organisation. The two safes are not part of one integral transaction. [272C, D] - - - (2) The circumstance that the contract between-the-~- re:~P-~nderits and the Netherlands Organisation was in the F.0.D. form and that the payment of price was to be made only after the goods ,vere put on board the ship by the respon- dentsr do not affect the fundamental position that there were two independent and unconnected sales. In loading the goods on the ship, the respondents were acting as mere carriers. The fact that the place of delivery is a foreign-bound ship cttn- not, by itself~ make a sale one in the course of export. [272H, 273A-BJ _ Mohd. Serajuddin etc. v. State of Orissa [1975] Supp. SCR 169, applied. (3) The bill of lading was made out in the name of the Netherlands Organisa- tion which obtained a complete and indefeasible title to the goods purchased by them from the respondents in India. The fact that the respondents were to lend them the use of their export licence or that the respondents paid the custom5 duty and the Port Commissioner's charges, does not mean that the goods ·were exported by, or at the instance of the respondents. (272 E-F, 273C] CIVIL APPELLATE JURISDICTION.: Civil Appeal No. 1477 of 1972. Appeal by Special Loave from the Judgment and Order dated 25-11-1970 of the Calcutta High Court in Sales Tax Reference No. 499 of 1967. D. N. Mukherjee and G. S. Chatterjee for the Appellant. Slzankar Ghosh and D. P. Mukherjee for the Respondent. The Judgment of the Court was delivered by CIIANDRACllUD, J.-Article 286(1) (b) of the Constitution pro- , vides that no law of. State shall impose, or authorise the impositi<tn of a tax on the sale or purchase of goods, where such sale or purchase --~ • . ..- ' • • J. ' MEMBER REVENUE BOARD v. 'swAIKA OIL MILLS (Chandrachud, J.) 271 takes place in the course of the-import of the g;;-Ods into, or export of A the goods out of, the territory of India. By the s.xth Amendment to the Constitution which came into force on September 11, 1956, an amendment was made to clause (2) of Article 286, by which Parlia- ment wa• given the power by law to formulate principles for determin- ing when a sale or purchase of goods takes place in any of the ways men)ioned in clause ( 1)., Acting in pursuance of ibis power, the Parliament enacted Section 5(1) of the Central Sales Tax Act, 1956, B providing- that a sale or purchase of goods shall be deemed to take place in the course of the export of the goods out of the territory of India only if the sale or purchase either occasions such export o.· is effected by a transfer of documents of title to the goods af~r the goods have crossed the customs frontiers of Inch. The question which arises for our consideration in this appeal c is whether a sale effected by the respondents-Mis Swaika Oil MH!s- - is a sale in the course of the export of goods out of the territory o1 India. This question was answered against the respondents by
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