GOPINATHAN NAIR AND CO Vs. STATE OF KERALA

JUDGEMENT

(1.) IDENTICAL questions arise for consideration in these batch of 37 revisions. These revisions are preferred against the orders of the Sales Tax Appellate Tribunal. There, T. A. Nos. 713 and 1020 of 1975 were treated as the main cases and a common order was passed dated 11th March, 1985, disposing of the appeals. The revisions filed from the said apples, T. A. Nos. 713 and 1020 of 1975, are T. R. C. Nos. 91 and 92 of 1986. The common order passed in T. A. Nos. 713 and 1020 of 1975 was followed in all other cases. So, in this Court also, at the request of counsel appearing for both parites, T. R. C. Nos. 91 and 92 of 1986 were treated as the main cases and it was agreed by counsel on both sides that the decision in the said revisions will govern all other revisions in these batch of cases. T. R. C. Nos. 91 and 92 of 1986 relate to the assessment years 1970-71 and 1971-72. The same revision-petitioner in both the cases, is an assessee under the kerala General Sales Tax Act. He is a cashew dealer. The Revenue is the respondent in both the revisions. Common questions arose for consideration for these two years. They were disposed of by a common order by the Sales Tax Appellate Tribunal, Additional Bench, Ernakulam, in T. A. Nos. 713 and 1020 of 1975 by order dated 11th March, 1985. Briefly stated, the point in dispute is regarding the tenability of the claim of exemption put forward by the assessee/revision-petitioner on the turnover of "african nuts" for these two years. The assessing authority held that the turnover of African nuts, which were purchased by the assessee from M/s. Cashew Corporation of India Ltd. , were only local purchases and not purchases "in the course of import" within the meaning of section 5 (2) of the Central Sales Tax Act. The appeals filed by the assessee, before the Deputy Commissioner of Agricultural Income-tax and Sales Tax (Appeals), Quilon, were dismissed. The Appellate Tribunal confirmed the aforesaid decisions. The assessee has come up in revisions.

(2.) AT the outset, it should be stated that the order passed by the Appellate Tribunal in T. A. Nos. 713 and 1020 of 1975 dated 11th March, 1985, has dealt with the only question, as to whether the purchases made by the assessee from M/s. Cashew Corporation of India Ltd. , are in the course of import and so exempt under section 5 (2) of the Central Sales Tax Act, 1956. In para 13 of the appellate order, the Tribunal has observed, that the other contentions raised in the appeal memorandum were not pressed by the appellant (assessee ). On this basis, the other contentions were rejected as not pressed. Counsel for the revision petitioner made a feeble attempt to raise questions not dealt with by the Appellate Tribunal. In view of the decisions of the Supreme Court of India in Bank of Bihar v. Mahabir Lal AIR 1964 SC 377 and in State of Maharashtra v. Ramdas Shrinivas Nayak AIR 1982 SC 1249, we indicated to counsel, that if the statement contained in para 13 of the Tribunal's order is wrong or based on a misconception, the proper remedy was to file an appropriate application for review or rectification before the Appellate Tribunal itself and it is not proper, to entertain the plea for the first time, in this Court. So, in these revisions, we are concerned with the only question, as to whether the purchases of African nuts made by the assessee from the Cashew Corporation of India Ltd. , are in the course of import and so the turnover is exempt under section 5 (2) of the Central Sales Tax Act.

(3.) IN order to understand as to whether the exemption claimed by the assessee is tenable, we shall first advert to section 5 (1) and 5 (2) of the Central Sales Tax Act, 1956. " Section 5. When is a sale or purchase of goods said to take place in the course of import or export.- (1) A sale or purchase of goods shall be deemed to take place in the course of the export of goods out of the territory of INdia only if the sale or purchase either occasions such export or is effected by a transfer of documents of title to the goods after the goods after the goods have crossed the customs frontiers of INdia. (2) A sale or purchase of goods shall be deemed to take place in the course of the import of the goods into the territory of INdia only if the sale or purchase either occasions such import or is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of INdia. " IN this case, we are conceded with section 5 (2 ). Article 286 (1) (b) of the Constitution prohibits a State from imposing or authorising the imposition of a tax on the sale or purchase of goods, where such sale or purchase takes place in the course of import of the goods into, or export of the goods out of, the territory of INdia. Section 5 (1) and 5 (2) of the Central Sales Tax Act point out as to when the sale or purchase of goods, is to be regarded as being in the course of export to import. As to when a sale or purchase of goods shall be deemed to take place in the course of the export or import, has been explained in a catena of decisions of the Supreme Court of INdia beginning from the first Travancore case. Important among them are - State of travancore-Cochin v. Bombay Co. Ltd. [1952] 3 STC 434 (SC), State of Travancore-Cochin v. S. V. C. Factory [1953] 4 STC 205 (SC), Ben Gorm Nilgiri Plantations Co. v. Sales Tax Officer [1964] 15 STC 753 (SC), Coffee Board v. Joint Commercial Tax Officer [1970] 25 STC 528 (SC), Mod. Serajuddin v. State of Orissa [1975] 36 STC 136 (SC ). These cases dealt with "export". A few important cases which dealt with sales "in the course of import", are - Khosla & Co. (P.) Ltd. v. Deputy Commissioner of Commercial Taxes [1966] 17 STC 473 (SC), Deputy Commissioner of Agricultural INcome-tax and Sales Tax v. Kotak & Co. [1973] 32 STC 6 (SC), Binani Bros. (P.) Ltd. v. Union of INdia [1974] 33 STC 254 (SC) and Deputy Commissioner of Agricultural INcome-tax and Sales Tax v. INdian Explosives Ltd. [1985] 60 STC 310 (SC ). IN Bombay Company's case [1952] 3 STC 434 (SC), a sale by export was explained as involving a "series of integrated activities commencing from 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 resultant export form parts of a single transaction. Of these two integrated activities, which together constitute an export sale, whichever first occurs can well be regard as taking place in the course of the other". This view was amplified in the later case - Shanmugha Vilas' case [1953] 4 STC 205 (SC) wherein it was stated as follows : " The phrase 'integrated activities' was used in the previous decision to denote that 'such a sale' (i. e. , a sale which occasions the export) 'cannot be dissociated from the export without wchich it cannot be effectuated, and the sale and the resultant export form parts of a single transactions. It is in that sense that the two activities - the sale and the export - were said to be integrated. A purchase for the purpose of export, like production or manufacture for export, is only an act preparatory to export and cannot, in our opinion, be regarded as an act done 'in the course of the export of the goods out of the territory of INdia', any more than the other two activities can be so regarded. " IN Ben Gorm Nilgiri Plantations Company [1964] 15 STC 753 (SC) at page 759, the Supreme Court held : " A sale in the course of export predicates a connection between the sale and export, the two activities being so integrated that the connection between the two cannot be voluntarily interrupted, without a breach of the contract or the compulsion arising from the nature of transaction. IN this sense to constitute sale in the the course of export it may be said that there must be an intention on the part of both the buyer and the seller to export, there must be an obligation to export, and there must be an actual export. The obligation may arise by reason of statute, contract between the parties, or from mutual understanding or agreement between them, or even from the nature of the transaction which links the sale to export. A transaction of sale which is a preliminary to export of the commodity sold may be regarded as a sale for export, but is not necessarily to be regarded as one in the course of export, unless sale occasions export. And to occasion export there must exist such a bond between the contract of sale and the actual exportation, that each link is inextricably connected with the one immediately preceding it. Without such a bond, a transaction of sale cannot be called a sale in the course of export of goods out of the territory of INdia. There are a variety of transactions in which the sale of a commodity is followed by export thereof. . . . . . . . . . . . . . . . IN general where the sale is effected by the seller, and he is not connected with the export which actually takes place, it is a sale for export. Where the export is the result of sale, the export being inextricably linked up with the sale so that the bond cannot be dissociated without a breach of the obligation arising by statute, contract or mutual understanding between the parties arising from the nature of the transaction, the sale is in the course of export. " Still later, after an exhaustive survey of earlier cases, in Mod. Serajuddin's case [1975] 36 STC 136 (SC) at page 145, the Supreme Court observed as follows : " It was said that to occasion export there must exist such a bond between the contract of sale and the actual exportation that each link is inextricably connected with the one immediately preceding it. . . . . . . . . . . . . . . A sale in the course of export predicates a connection between the sale and export. . . . . . . . . . . The features which point with unerring accuracy to the contract between the appellant and the Corporation on the one hand and the contract between the Corporation and the foreign buyer on the other as two separate and independent contracts of sale within the ruling in the Coffee Board case [1970] 25 STC 528 (SC) and the Binani Bros. case [1974] 33 STC 254 (SC) are these. " Again in Murarilal Sarawagi v. State of A. P. [1977] 39 STC 294 (SC), the Supreme Court held at page 299 : " The correct law is laid down by this Court in Coffee Board case [1970] 25 STC 528 (SC) and Serajuddin's case [1975] 36 STC 136 (SC ). The law is this. It has to be found out whether the contracts between the merchants and the Corporation are integrated contracts in the course of export or they are different. If they are different contracts, as they are in the present case, the last purchaser within the State is the M. M. T. C. " The Supreme Court has likewise dealt with the question as to when a sale can be considered to be one "in the course of import", in a series of decisions referred in this judgment. IN the latest decision, reported as Deputy Commissioner of Agricultural INcome-tax and Sales Tax v. INdian Explosives Ltd. [1985] 60 STC 310 (SC) at page 313, the court observed : ". . . . . . . . . . . . . in order that the sale should be one in the course of import, it must occasion the import there must be integral connection or inextricable link between the first sale following the import and the actual import provided by an obligation to import arising from statute, contract or mutual understanding or nature of the transaction which links the sale to imports which cannot, without committing a breach of statute or cannot or mutual understanding, be snapped. " It is in the light of the above Principles laid down by the Supreme Court' we have to examine the rival contentions put forward by the parties.