LexSTATE OF ORISSA versus MINERALS AND METALS TRADING CORPORATION OF INDIA LTD.
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A
B
STATE OF ORISSA
v ..
MINERALS AND METALS TRADING CORPORATION
OF INDIA LTD.
JULY 18, 1994
[KULDIP SINGH AND DR. AS. ANAND, JJ.]
Sales Tax-Orissa Sales Tax Act, 1947-Secs. 5(2){a)(ii) and 2(gj--
Orissa Sales Tax Rules, 1947-fl.ule 27(2}-Delivery of goods at a port within
C the State of Orissa-Whether amounts to 'sale' within the State of Orissa.
D
E
F
Constitution of India-Article 286(1) (b )-fl.estriction on imposition of
tax on the sale of goods in the course of export out of India-Whether
attracted.
Words and phrases-J'Export Sale''-Meaning of
The respondent-assessee, Minerals and Metals Trading Corporation
of India Ltd., a Government company registered as a dealer under the
Orissa Sales Tax Act, 1947 purchased mineral ore from mine-owners who
too were registered dealer under the Act. While purchasing the goods the
assessee submitted a declaration under Orissa Sales Tax Rules, 1947 to
the effect that the said mineral ore was to be re-sold within the State of
Orissa and thus avoided the payment of sales tax. The assessee sold the
mineral ore to a Japanese buyer under a pre-existing contract by delivering
the goods at the port of Paradeep in Orissa for transportation out of India.
The Sales Tax Officer found the sale in contravention of the decla·
ration, added the amount of the relevant sales to the taxable turnover and
issued a demand for payment of the tax. The respondent argued that as
the goods were being resold in Orissa and the transaction with the
G Japanese buyers was sale in the course of export no tax was due. The
Tribunal agreed with the first contention but rejected the second and
found the respondent liable to pay tax.
The High Court, in its opinion, concluded that the sale to the
Japanese buyers was effected within the State of Orissa and since the sale
H was In the course of export it was not exigible to Orissa sales tax by virtue
762
STATE OF ORISSA v. MINERAL & METALS TRADING
763
of Art. 286(l)(b) of the Constitution read with Section 5 of Central Sales A
Tax Act.
Allowing the appeal, this Conrt
HELD : 1.1. The sale effected by the assessee in favour of the
Japanese buyers was sale in the course of export of goods out of the B
territory of India and not exigible to sales tax. [765-B]
1.2. A sale "in the course of the export of the goods" and "a sale within
the State of Orissa were two distinct events. A sale "in the course of the
export of the goods' could not be a sale within the State of Orissa. The
assessee entered into contracts with the Japanese buyers for "export sale" C
of the mineral ore. An "export sale" had an entirely different legal concept.
In the ''export sale" the "sale" and the "export" were so interwined and
intermixed that both began and ended together. The various clauses of the
contract entered into by the assessee and the Japanese buyers were wholly
irrelevant and of no consequence. Even if on the construction of the D
contract of "export sale" the sale part of it was completed within the state
it would still not be considered as legally complete because till the time the
'sale" and the 'export' both were completed none could not be taken to be
complete. It was inherent in the concept of "export sale" that both the "sale"
and the "export" be completed when the goods were appropriated by the E
foreign buyer. [770-F, G, HJ
1.3. The delivery of the goods at the Paradeep Port was in discharge
of the obligation under the contract on the part of the exporter-assessee
and formed but a single transaction. It was not a second 'sale" to the
foreign buyer in the State of Orissa. The effort to confuse the delivery of p
goods at Paradeep Port for transportation to the destination of the foreign
buyer with a 'sale" at Paradeep Port was a futile attempt to wriggle out of
the mis-declaration. [772-F]
1.4. The sale by the respondent-assess'ee was in contravention of the
declaration given under Rule 27(2) of the Orissa Sales Tax Rule and G
attracted the proviso to Section 5(2)A(a) (ii) of the Orissa Sales Tax Act.
[773-A]
Md. Serajuddin v. State of Orissa, [1975] 2 SCC 47; State of Travan-
core-Cochin v. Bombay Co. Ltd., [1952] SCR 1112 and Coffee Board.
Bangalore v.Joint Commercial Tax Officer, Madras, [1970] 3SCR147, relied H
764
SUPREME COURT REPORTS [1994] SUPP. 1 S.C.R.
A on.
I
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 1811-
1815 (NT) of 1977 etc. etc.
From the Judgment and Order dated 11.5.76 of the OrisExcerpt shown. Read the full judgment & AI analysis in Lexace.