RAMALINGAM & CO. versus THE STATE OF MADRAS

Citation: [1962] SUPP. 2 S.C.R. 954 · Decided: 01-02-1962 · Supreme Court of India · Bench: S.K. DAS · Disposal: Appeal(s) allowed

Judgment (excerpt)

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v. 
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Hi""'""'1JeA J. 
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95t SUPREHE COURT REPORTS [1962] SUPP. 
l l 
h11.rdly necessa.ry in this case to show how far a 
Mal!?istrate ca.n go to find that there is no ground 
for committing the accused to stand bis trial in a 
Court of Seesion. We seo no reason to interfere 
with the order of the High Court, 11.nd diemiAs 
the 11.ppeal. 
It is a matter of regret that much delay ha.s 
taken place in this ca.se, and it may harm the case 
on the one side or the other. We hope that now 
thll case will be he11.rd from day to day, 11.nd 
disposed of, 
11.6 
expeditiously 11.S possible. We 
further make it clear to the Court or Courts de11.l-
ing with this case that any expression of opinion 
on the merits of th" case whether b:v us or by the 
High Court or the Magistrate, who first heard it, 
or elRe where, in this ordPr or the ordrrs prece· 
ding this, is to be completely ignored. and the 
case shall be decided without being influPncecl in 
any way by Ruch expression of opinion. 
Appeal dismissed. 
RAMALINGAM & CO. 
v. 
THE Sl'ATE OF MADRAS 
(S. K. DAS, M. HrnAYATULLAH and J. C. SHAH. 
JJ.) 
Salu Taz-Contratt for sale of goud1 by corresponden«-
C. I. F. or G. F. controcf.1-Bill of /fJding hand.d otier 
to 
ban~us tD port with only on paym.nt-Whtfh-r properly in 
good8 pa&Jed ;,. Mttdraa-Pooition of banker1 Vi•-a-Via wler and 
foreign buy.,,_J,.i.,,,.,diary bank<r if agent o/ ulkr-Madra1 
Gtneral Salt1 Ta:r: Act (Marl. 9 of 1931!). 
The .._....,. were doing busine" principally as expor· 
ters of vcg<table fibres 10 fon:ign countri<s. The contracts 
of sale wen: C.I.F. or C.F. and wen: made by correspondence 
on approval of samples sen! by the a.scssr<S to the fo~ign 
buy<rs. The price was payable by draft upon bank credit to 
be opened by the buyer ; who opened with bis own bankers 
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2 S.C.R. 
SUPREME COURT REPORTS 
955 
an irrevocable letter of credit in favour of the assessees for 
95% of the net invoice value. Intimation of the opening of 
the letter of credit was then given to the assessees by the 
local bankers in India who were the agents of the foreign 
bankers. The local bankers, however, did not by intimating 
the opening of the letter of credit undertake any liability, and 
the assessees were expressly informed that they would not be 
released from their liability U:1der the Bill of Exchange drawn 
by them. On receipt of the information about opening of 
the letter of credit the assessees shipped the goods, obtained 
bills of lading in their own names and lodged the shipping 
documents endorsed in blank with their own bankers together 
with the invoice and Bill of Ex~hange for 95% of the invoice 
value. 
Bills of lading were handed over to the assessees 
bankers with the definite instructions to pass on the shipping 
documents to the buyers only on payment. The assessees 
then discounted the Bills through their own bankers. The 
shipping documents were forwarded to the foreign bankers 
who on presentation paid 95% of the invoice amount. The 
Bill of lading was then delivered by the foreign banker to the 
buyer and goods were unloaded. 
For the year 1945-46 the Commercial Tax Officer taxed 
the assessees under the Madra. General Sales Tax Act, 1930. 
The Commercial Tax Officer 
rejected the claim of the 
assessees lhat the amounts in respect of overseas transactions 
was exempt from liability to tax, because in his view the export 
transactions were sales within the province of Madras. The 
Board of Revenue confirmed the order and held that the 
property In th_e goods passed to the buyers in a large majority 
of the export transaction when the goods were shipped. 
The assessees contended that the export sales were at 
the material time totally outside the provisions of the Madras 
General .Sales Tax Act and the order of the assessment was 
ultra vires and beyond the powers of the Authority. The 
plea of the State of Madras was that the foreign bank opening 
the letter of . cred_it is an agent of the buyer, and that the 
bank authorises lls own branch to pay the price to the 
shippers and by the arrangements made by opening the letter 
of credit, price is paid to the vendor in his own country 
against the Bill of lading endorsed in blank. 
Held, that the price in respect of the goods was not 
received in the Province of Madras and the property in the 
g"oods also did not pass to the buyer within the province. 
Therefore tax in respect of the sale tra

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