THE STATE OF KERALA AND OTHERS versus THE COCHIN COAL COMPANY LTD.

Citation: [1961] 2 S.C.R. 219 · Decided: 31-10-1960 · Supreme Court of India · Bench: S.K. DAS · Disposal: Dismissed

Cited by 3 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

2 S.C.R. SUPREME COURT REPORTS 
219 
THE ST ATE OF KERALA AND OTHERS 
·v. 
THE COCHIN COAL COMPANY LTD. 
(S. K. DAs, M. HIDAYA'l'ULLAH, K. C. DA.s GuPTA 
J.C. SHAH and N. RA.JA.GOPALA AYYANGA.R, JJ.) 
Sales Tax-Explanation Sales-Sale and delivery of coal to 
Steamship-Whether in the course of export-Constitution of India, 
Art. 286-United States of Travancore and Cochin General Sales 
Tax Act, n25, s. 6-Notiftcation dated February 5, I954· 
The respondent stocked 'bunker coal ' at Candle Island in 
the State of Madras. They sold the coal to steamers calling at 
the port of Cochin in the State of Travancore-Cochin and 
delivered it there. The respondent was assessed to sales tax on 
such sales for the year 1951-52 and 1952-53. The respondent 
contended that no sales tax could be levied on these sales since 
they were either sales' in the course of export' or in 'the course 
of inter-State trade' exempt from sales tax under sub-cl. (1) (b) 
or cl. (2) of Art. 286 of the Constitution and in the alternative 
that they were exempt from tax under a notification dated 
February 5, 1954, issued by the appellant State under which 
sales falling within the Explanation to Art. 286(1)(a) made 
during the period 4-1-1951 to 31-3-1953 were exempted from 
liability to pay tax. 
Held that the sales were exempt from . tax under the 
Government Notification. The coal was delivered to the actual 
consumer, i.e., the steamships in Travancore-Cochin and they 
were at liberty to consume it :wherever they desired, either 
within the State or outside the choice depending on its con-
venience and necessity. The delivery wa·s for consumption 
within the State and the sales fell within the txplanation to 
Art. 286(1)(a). 
Though the sales were in the course of inter-State trade 
which were covered by the ban on taxation imposed by Art. 
286(2) the levy was validated by the Sales Tax Validation Act, 
1956. 
M. P. V. Sundararamier & Co. v. The State of Andhra Pra-
desh, [1958] S.C.R. 1422, relied on. 
The sales were not made ' in the course of export ' and 
were not covered by the ban imposed by Art. 286(1)(b). 
For 
Art. 286(1)(b) to apply it was not sufficient that the goods merely 
moved out of the territory of India, but it was further necessary 
that the goods should be intended to be transported to a destina-
tion beyond India. The concept of 'export' in Art. 286 postulat-
ed the existence of two termini between which the goods were 
in tended to be transported. 
1960 
Octobn 3r 
r960 
The State of 
J( er ala G Others 
v. 
The Cochin Coal 
Co1npany Ltd. 
220 
SUPREME COURT REPORTS 
[1961] 
Burmah Shell Oil Storage & Distributing Co. of India Ltd. v. 
The Commercial Tax Officer, C.A. 75I of I957 & C.A. IO of 1958 
(Unreported} followed. 
CIVIL APPELLATE JURISDICTION: 
Civil Appeal 
No. 287 of 1958. 
Appeal from the Judgment and Order dated tho 
10th September, 1956, of the formerTravancore-Cochin 
in Original Petition No. 191 of 1955. 
Sardar Bahadur, for the Appellants. 
K. P. Abraham, P. George and M.R. Krishna Pillai, 
for the Respondent. 
1960. October 31. The Judgment of the Court 
was delivered by 
Ayyaugar J. 
AYYANflAR J.-This is an appeal from the judgment 
of the High Court of Travancore.Cochin on a certifi-
cate of fitness granted by it under Art. 133(1) of the 
Constitution and raises for consideration the liability 
of the respondent-The Cochin Coal Company Ltd.-
to sales-tax under the United State of Travancore and 
Cochin General Sales Tax Act, 1125 (1950). 
The following are briefly the facts which it is neces-
sary to state in order to appreciate the points in con-
troversy in the appeal. The Cochin Coal Company 
Ltd. which will be referred to as the respondent-
Company are, as their name indicates, dealers in coal. 
The commodity, the sales of which have given rise 
to the dispute in this appeal is what is known as 
'Bunker coal'. The company have their offices at a 
place called Fort Cochin which was formerly within 
the State of Madras. They import and keep stocks 
of " bunker coal " stacked at a place called Candle 
Island which at the date relevant to these proceedings 
was also within the State of Madras. Part of the 
activities of the respondent-company consist in the 
supply of" bunker coal " from their depots in Candle 
Island to steamers arriving in or calling at, the port 
of Cochin (in the State of Travancore-Cochin) for the 
outward voyage of the steamers from the said port. 
The usual procedure by which "bunke

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