SWAIKA OIL MILLS Vs. MEMBER BOARD OF REVENUE

JUDGEMENT

(1.) This is a reference under Section 21(1) of the Bengal Finance (Sales Tax) Act, 1941. The applicant is a registered dealer under the Act. The assessment is for the period of four quarters ending on 1st Ashar Sudi 2010. During this period, according to the statement of the case, Messrs Netherland Selling Organisation Ltd. had entered into an agreement with the applicant for purchase of linseed oil on f.o.b. Calcutta terms. The purchasers agreed to insure the goods. The payment was to be made against the first presentation of "clean on board" mate's receipt along with the relevant G.R. 1 forms in triplicate. A copy of the relevant document has been produced before us on behalf of the department and has been kept in the records of this reference by consent of parties. This is a letter addressed by Netherland Selling Organisation Ltd. to the applicant containing the terms and conditions of the agreement which the applicant was invited to accept. From this letter as well as from the statement of the case we find that the linseed oil purchased by Netherland Selling Organisation Ltd. was to be exported under export licences which the applicant had held. The letter also shows that the goods would bear various "shipment marks" stating, inter alia, different places in Indonesia as their destination. In terms of this agreement, it is stated, the goods were to be put on board the ship arranged by the purchasers. The bills of lading were in the name of the purchasers as shippers of the goods. The sales aforesaid were to the extent of Rs. 16,200.10.

(2.) Before the Commercial Tax Officer the dealers claimed exemption under Section 5(2)(a)(v) of the Act. According to these provisions a dealer's "taxable turnover" is to be determined after deducting there from his turnover during the relevant period on, inter alia, sales of goods in the course of export of the goods out of the territory of India within the meaning of Section 5 of the Central Sales Tax Act, 1956. In the instant reference, however, we are not concerned with Section 5 of the Central Sales Tax Act but with Article 286(1) of the Constitution. It provides, inter alia, that no law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place in the course of export of the goods out of the territory of India. The point for our decision, therefore, in this reference is whether the transaction between the applicant and the Netherland Selling Organisation was in the course of export of the goods in question out of India. The Commercial Tax Officer rejected the applicant's claim. Before the Assistant Commissioner of Commercial Taxes the applicant specifically claimed exemption under the above provisions of the Constitution. But the Assistant Commissioner observed: In the present case the seller divested himself of the ownership of the goods by unconditional appropriation of the goods to the purchasers. That the seller had no right, title or interest in the goods is evident from the fact that the insurance policy was taken by the purchasers in their own name. Further, the actual shippers were the purchasers themselves. The seller only in accordance with the directive of the purchasers placed the goods on board the ship. It is, therefore, evident that the sales in question were not the last sales which occasioned the export. Rather, these are the purchases by the exporters...for the purpose of export and as such they are not within the exemption of Article 286(1 )(b).

(3.) The applicant had the same fate before the Additional Commissioner of Commercial Taxes and came to the Board of Revenue. The applicant contended before the Board that the actual sale took place on delivery of the goods on board a particular ship beyond the customs barrier, and that, as such the State Government could not levy any tax on it. The Board observed: The fact that the petitioner held an export licence and that on the strength of it paid customs duty and shipped the goods, does not establish that the sale of the goods took place in the course of export out of the territory of India. The material order issued by the purchaser...is in the file. It will appear therefrom that the purchasers on the 10th September, 1952, confirmed having bought from the petitioner the goods in question. The price was on f.o.b. Calcutta basis, insurance was to be covered by the purchaser and export was to be made under the export licence of the petitioner. Payment was to be made on presentation of 'clean on board' mate's receipt along with the relative G.R. 1 forms in triplicate. It will appear that the bill of lading was made out, not in the name of the petitioner but in the name of the purchaser.... In acceptance of the terms of this letter, the sale was evidently made. The circumstances fit in more with a case of sale before the goods entered the export stream. The sale does not appear to be one which occasioned export; it was a sale for the purpose of export.