MALABAR TEA PLANTATIONS LTD Vs. STATE OF KERALA

JUDGEMENT

(1.) THIS petition is to bring up the records relating to sales -tax assessments of the petitioner,for the years 1953 -54,1954 -55 and 1955 -56,and to quash the assess­ment orders passed by the second respondent,the Deputy Commercial Tax Officer,Chowghat,and confirmed on appeal by the third respondent,the Commercial Tax Officer,Palghat.The petitioner,a company,is a registered dealer which carried on the business of growing and sell­ing tea its principal place of business being Thiruvalla,in the Kerala State.During the relevant years,the petitioner sold tea in public auction at Fort Cochin which was within Madras State at the time.The tea so auctioned was purchased,among others,by Messrs.Harrisons and Crosfield Ltd .,Messrs.James Finaly and Co .,Ltd .,Messrs.Campbell and Co .,Private Ltd.for export to foreign countries. The contention of the petitioner,which was advanced before the taxing authorities but which was repelled by hem,and was repeated before me,was,that the sale in auction,to the three companies was "in the course of ¦¦¦¦¦ export of goods(tea)out of the territory of india  and therefore was exempt from the levy,under Article 286(1 )(b)of the Constitution.It is now well -settled by a series of decisions of the Supreme Court,that a sale to an exporter or a sale for export,as distinguished from a sale by export,is not within the aforesaid prohibition.The earliest case is State of Travancore -Cochin v .The Bombay Co.Ltd. A.I.R.1952 S.C.366 in which a sale by export was described as a series of integrated activities commencing from the agreement of sale with a foreign buyer and ending with the delivery of the goods to a common carrier for transport out of the country by land or sea.Such a sale cannot be dissociated from the export without which it cannot be effectuated,and the sale and the resultant export form parts of a single transaction ;. In the next case of State of Travancore -Cochin v .Shanmugha Vilas Cashewnut Factory A.I.R.1953 S.C.333,a sale or purchase for the purpose of export was stated to be only: an act preparatory to export and cannot.........be regarded as an act done in the course of the export of the goods out of the territory of India  any more,than production or manufacture for export,can be so regarded.A sale which cannot be dissociated from the export without which it cannot be effectuated,and which,with the resultant export,forms part of a single transaction as aforesaid,is a sale,which may be said to occasion the export itself ;.In the above case,the last purchase of goods made by the exporter for the purpose of exporting them,in order to implement orders already re­ceived from foreign buyers or expected to be received in due course,was held to be outside the prohibition in Arti­cle 286(1 )(b ).This was followed by the Supreme Court in the third case of State of Madras v .Gurviah Naidu A.I.R.1956 S.C.158. In State of Mysore v .Mysore Spinning and Manufacturing Co .,Ltd. A.I.R.1958 S.C.1002 the Supreme Court ruled that State of Madras, v .Gurviah Naiau A.I.R.1956 S.C.158 has decided,that sales made for the purpose of export are not protected,by Article 286(1 )(b ),unless the sales themselves ˜˜occasion the export ;.In the next case before the Supreme Court, Gordhandas Lalji v .B.Banerjet A.I.R.1958 S.C.1006 in the usual course of business,and on the advice of parties who were well -known tea exporters and tea merchants in Bombay,the appellant had made purchases at tea auctions in Calcutta,as their agents and on their behalf,and for the purpose of direct export to foreign countries,and yet,was held liable to pay sales -tax on the sale by him to the Bombay parties,on the ground,that as soon as the goods were sold to them,the appellant's interest ceased,and whatever happened subsequently to the goods,was of no concern to him,and that there was no privity between the appellant and the foreign merchants to whom the goods were ultimately ex­ported,In the still later case of Burmah Shell Co .,Ltd. v. Commercial Tax Officer 11 S.T.C.764 the rule was stated thus: It may thus be taken as settled,that sales or purchases for the purpose of export are not protected,unless he sales or purchases them­selves occasion the export and are an integral part of it. The rule has been followed and applied by different High Courts in several cases,to which it is unnecessary to refer.The petitioner relied on Exts.P -1,P -2 and P -3 series,certi­ficates issued by the three companies,that tea purchased by them was for the purpose of export during the concerned years and were so exported out of the territory of India I fail to see how the certificates can do more than establish,that the purchases were made by the companies for export. But the learned counsel for the petitioner urged,that the companies who made the purchases,were agents of foreign buyers and that this circumstance must distinguish the present case.Admittedly,the petitioner sold tea in auction,and anyone, not necessarily an agent of a foreign buyer,could have made the purchase.The export which took place later,and under the responsibility of the three companies,was not integrally connected in point of intention or purpose,with the sale by the petitioner.That sale was directly and in fact to local buyers,whoever be the ultimate purchasers and was completed by delivery to them. It must be mentioned,that even the certificates relied on, do not establish,that the three companies afore­ said acted in this respect as agents of foreign principals or purchased the goods on their behalf.In fact,apart from relying on Article 286(1) (b) and contending,that the sale was in the course of export out of the territory of India, the petitioner did not set up a case specifically before respondents 2 and 3,that the three companies were agents of foreign buyers.Assuming that they were so and had acted in this transaction in such capacity,it does not seem to me to make any difference in the principle to be applied to the sale by the petitioner.It was not a sale by export,nor did it occasion the export.Had the foreign buyer himself come to Fort Cochin and purchased it,it was open to him to sell a part or the whole of it locally,as it was to take it out of the country. If he adopted the latter course of exporting tea purchased by him,the position so far as the sale by the petitioner was concerned,would not be different.In the present case,there was also no privity between the petitioner and the undisclosed foreign buyers. In these circumstances, the expor t by the three companies when it took place,and the sale by the peti­tioner did not form part of a single transaction,or of a series of integrated activities within the rule laid down by the Supreme Court. I therefore come to the conclu­sion,that the sales by the petitioner were not exempted from sales -tax,by anything in Article 286(1) ( b)of the Constitution. It was next contended,that the second respondent was not authorised under section 2 (a - 2)of the Madras General Sales Tax Act,1939,which is the statute applicable,to assess the petitioner.Government Revenue Department Memoranda No.1 6420 -M/54 -22,dated 12th April,1954,and dated 20th May,1954,were referred to,in order to suggest,that the Deputy Commercial Tax Officer attached to the Special Circle,Non -resident,Madras City,was the competent authority.Certainly he could not have any jurisdiction over Fort Cochin,after the reorganisation of the States.After that date,and at the time of the assessment,the petitioner could not be con­sidered to be a non - resident,being a resident of the Kerala State.The defect of jurisdiction,if any,is not so patent.However that may be,the petitioner owed a duty to ex­plain,why this objection to jurisdiction was not taken be­fore the second respondent himself,or before the third respondent.In the absence of any explanation whatever,whether well or ill -founded,this Court ought to decline to entertain this objection in a proceeding under Article 226.On this question,I follow the Bench decision of this Court in Kumaraswamy Reduiar v .Noordeen I.L.R.1960 Kerala 717 and repel the objection. No other point was urged.This petition is dismissed with costs.