COMMISSIONER OF TRADE TAX Vs. RAJESH SPICES COMPANY

JUDGEMENT

(1.) THESE revisions are at the instance of Commissioner of Trade Tax in respect of the same assessee involving similar question of law and fact for the assessment year's 1986 -87 and 1987 -88. The opposite party deals in kirana spices, oil -seed and dry fruits, etc. In the assessment year 1986 -87 the dealer -opposite party claimed exemption from payment of tax on the sale of spices and haldi of Rs. 2,90,079.50 on the basis of export to Nepal. Similarly it claimed exemption from payment of tax for the subsequent assessment year on sale of haldi worth Rs. 2,24,579 on the basis of export to Nepal. The assessing authority accepted the books of account of the dealer but rejected the claim of exemption in respect of the aforesaid turnover. However, the first appellate authority and the Tribunal allowed the claim of the dealer -opposite party. Challenging the orders of the Tribunal present revisions have been filed by the Commissioner of Trade Tax under Section 11 of the U.P. Trade Tax Act, 1948.

(2.) HEARD learned Counsel for the parties and perused the record. Learned Standing Counsel submitted that the Tribunal has committed an illegality in treating the sales in the course of export. The traders from Nepal came to Varanasi and purchased the goods from the establishment of the dealer and took delivery of the goods and thereafter exported the goods to Nepal at their own convenience and the dealer -opposite party had no control over the goods after the sale and, as such the sale was not effected in the course of export. On the other hand it was claimed by the dealer that these sales were in the course of export. Therefore no sale tax was leviable. The appellate authority of Varanasi accepted these contentions. The Tribunal has also approved the said contentions.

(3.) THE phrase '(in the course of export)' infact has been borrowed from Article 286 of the Constitution. The Supreme Court has considered this matter in number of cases including in Ben Gorm Nilgiri Plantations Co. v. Sales Tax Officer [1964] 15 STC 753. It has laid down following principles of law on page 759: 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 the transaction. In this sense to constitute a sale in 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 the 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. At one end are transactions in which there is a sale of goods in India and the purchaser, immediate or remote, exports the goods out of India for foreign consumption. For instance, the foreign purchaser either by himself or through his agent purchases goods within the territory of India and exports the goods and even if the seller has the knowledge that the goods are intended by the purchaser to be exported, such a transaction is not in the course of export for the seller does not export the goods, and it is not his concern as to how the purchaser deals with the goods. Such a transaction without more cannot be regarded as one in the course of export because etymologically 'in the course of export' contemplates an integral relation or bond between the sale and the export.