K.K. Desai, J.
1. This is a suit for repayment and refund of the principal amount of Rs. 1,90,590-8-0 paid towards sales-tax levied under the Bombay Sales of Motor Spirit Taxation Act, 1946 (Bombay Act No. VI of 1946) and interest and costs.
2. The plaintiffs' case is that between April 1, 1948, and September 30, 1952, as also subsequent thereto the plaintiffs had in accordance with and as required by Section 10 of the Act submitted every month statements of sales of aviation spirit and aviation oil and before submitting such statements paid into the government treasury the full amount of the tax stated in such statements to be due from them under the Act. These statements included particulars of sales of goods supplied to foreign going aircrafts for consumption during the flights and payments made by the plaintiffs included the tax on the amounts of price on such sales.
3. By correspondence beginning with a letter dated August 16, 1952, the plaintiffs through 'Oil Industry Supply sub-committee' wrote to the Collector of Sales-tax asking him to let them have his confirmation that sales of aviation spirit and aviation turbine fuel to foreign going aircrafts were exempt from sales-tax with effect from January 26, 1950. That correspondence was obviously addressed because under Article 286(1)(b) of the Constitution a State is prevented from imposing a tax on 'the sale of goods' where such sale is made 'in the course of export of the goods out of the territory of India.
4. By a letter dated December 24, 1953, addressed to the Standard Vacuum Oil Co. the Collector of Sales Tax expressed an opinion that sales of aviation spirit and oil to foreign going aircrafts for actual consumption during the flights was exempt from payment of sales-tax. Before the plaintiffs had received a copy of that letter the Sales-tax Officer, L. C. Ward, took up the assessment of the returns made by the plaintiffs in respect of sales mentioned above. By three different letters each dated January 9, 1953, the Sales-tax Officer intimated to the plaintiffs that assessment of the plaintiffs' returns had been completed under Section 4 of the Act:-(i) for the period from April 1, 1948, to March 31, 1951, and no balance of tax was due from the plaintiffs for that period, (ii) for the period from April 1, 1951, to June 17, 1952, and in respect of that period Rs. 75,307-14-6 were refundable to the plaintiffs, (iii) and for the period from June 18, 1952, to September 30, 1952, and Ks. 17,763-12-0 were refundable to the plaintiffs.
5. The Collector of Sales-tax thereafter by his letter dated April 23, 1954, wrote to the plaintiffs that with effect from January 26, 1950, by virtue of Sub-clause (b) of Article 286(1) of the Constitution sales of goods supplied to foreign going aircrafts for actual consumption during the flights would be exempt from sales-tax. The plaintiffs thereafter by their letter dated January 6, 1955, addressed to the Collector of sales-tax claimed refund of Rs. 5,13,956-11-0 as being the aggregate amount of tax paid by the plaintiffs on the sales of aviation spirit and aviation turbine fuel to foreign bound aircrafts during the period January 26, 1950, to April 30, 3954. The Collector of Sales-tax forwarded the plaintiffs' application to the Sales-tax Officer and informed the plaintiff's of that fact. The Sales-tax Officer by his letter dated January 28, 1955, informed the plaintiffs that the plaintiffs had already been assessed under Section 4 of the Act for the periods which I have already referred to above and the plaintiffs' claim for refund for the period January 26, 1950, to September 30, 1952, was not entertainable by him at; that stage. The Sales-tax Officer also further stated that the plaintiffs' claim for refund for the period from October 1, 1952, to April 30, 1954, would be considered by him at the time of assessments for that period.
6. The plaintiffs thereafter addressed certain correspondence to the Collector of Sales-tax and subsequently by a letter dated February 19/21, 3955, applied to the State of Bombay through its Secretary that the plaintiffs' case should be reopened and instructions should be given to the Collector of Sales-tax to take up the plaintiffs' claim for refund of sales-tax for the period January 26, 1950, to September 30, 1952. That request of the plaintiffs was rejected by a letter dated June 23, 1955.
7. The plaintiffs thereafter addressed a notice under Section 80 of the Code of Civil Procedure and filed this suit on February 23, 1956. The cause of action on which the plaintiffs' claim is based is contained in paras. 14 to 16 of the plaint and is as follows:-
The said sales of aviation spirit and/or aviation turbine fuel to foreign going aircrafts were sales in the course of export out of the territories of India within the meaning of Article 286(7)(6) of the Constitution. The plaintiffs were entitled to exemption from Bombay sales-tax in respect of such sales for the period January 26, 1950, to September 30, 1952. In respect of such sales the plaintiffs had paid Rs. 1,90,590-8-0 and the plaintiffs were under the aforesaid circumstances entitled to refund of that amount with interest thereon at the rate of 6 per cent, per annum from December 23, 1955, being the date of the service of the notice for that purpose on the defendants. According to the plaintiffs aviation spirit and/or aviation turbine fuel sold to foreign going aircrafts for consumption during flight was exempt from payment of sales-tax and the order of the State of Bombay rejecting the application of the plaintiffs made in January 1955, for reopening of the plaintiffs' case and for giving instructions to defendant No. 2 to take up the plaintiffs' claim for refund of sales-tax was inequitable and contrary to law. Without prejudice to that contention the plaintiffs also contend that the plaintiffs had made payments of the above amount of sales-tax under coercion and by mistake and accordingly the State of Bombay was under obligation to repay and refund that amount to the plaintiffs. The plaintiffs relied upon the letter dated April 23, 1954, addressed by the Collector of Sales-tax as an acknowledgment available to the plaintiffs under Section 19 of the Limitation Act for the purpose of extension of time prescribed for limitation.
8. The defendants by their written-statement denied that the claim in suit related to sales of goods in the course of export of the goods out of the territory of India. The defendants accordingly denied that the plaintiffs were exempt from payment of sates-tax in respect of sales mentioned in the plaint. The defendants also denied that the plaintiffs paid the aforesaid amount of Rs. 1,90,590-8-0 under mistake or coercion. The defendants denied liability to refund the principal amount of tax paid and/or interest as claimed.
9. The defendants also raised technical contentions that:-the suit was barred by law of limitation; in any event the suit was barred by reason of the provision of Section 22 of the Bombay Sales of Motor Spirit Taxation Act, 1946; this Court had no jurisdiction to enquire into the fact and/or correctness of the assessment orders which are referred to in the plaint and the written-statement; the suit was not maintainable by reason of notice under Section 80 of the Code of Civil Procedure being defective.
10. Mr. Joshi for the defendants informed me that he is not pressing the contention about the notice under Section 80 of the Code of Civil Procedure being defective.
11. As regards the question as to whether the. sales mentioned in the plaint were 'sales of goods' 'in the course of export of the goods out of the territory of India' as mentioned in Article 286(1)(b) of the Constitution, the plaintiffs led evidence of four witnesses. The plaintiffs also produced documentary evidence consisting of two agreements for sale respectively made between (1) the plaintiffs and the Air India International Ltd. as also (2) the plaintiffs' parent Co. viz., Shell Petroleum Co. Ltd. and British Overseas Airways Corporation. It is the plaintiffs' case that at the relevant period the plaintiffs sold aviation spirit and oil to Air India International Ltd. in pursuance of the agreement for sale dated April 1, 1949, between the plaintiffs and the Air India International Ltd. It is the plaintiffs' case that the plaintiffs sold aviation spirit and oil to the British Overseas Airways Corporation on behalf of the Shell Petroleum Co. Ltd. in pursuance of the agreement dated June 18, 1951. These agreements are produced in evidence and marked respectively exhs. 1 and E. Before referring to the provisions of these two agreements reference may be made to the oral evidence led in connection with the sales. The procedure for supplying aviation spirit and oil to the aircrafts proceeding out of India is mentioned as follows:-Applications similar to a specimen produced as exh. A were made every time to the customs authorities before the plaintiffs supplied fuel to aircrafts proceeding out of India. It was under customs supervision that refuelling was done by direct supply into the tanks of the aeroplanes. For this purpose the plane was brought on the apron which was directly under the supervision of the customs. An officer of the customs would come to the apron and record the meter reading in the equipment for supply of aviation spirit and oil. He then would sign the relevant drawback shipping bill under the words 'Let Export'. After the refuelling was completed the customs officer would record the meter reading and certify the quantity of the fuel supplied by entering the quantity in the column meant for that purpose in the drawback shipping bill by signing the same.
12. Evidence of this procedure was led in support of the contention that the plaintiffs were exporters of goods sold to aircrafts proceeding outside India. According to the plaintiffs delivery is effected subsequent to the grant of clearance of the goods for export by the customs authorities. It is the case of the defendants that the procedure adopted has nothing to do with clearance of these goods for export by the plaintiffs. The procedure is adopted because in respect of the goods sold under the Sea Customs Act refund of duty as drawbacks on export became due. According to the defendants the procedure adopted cannot be proof of and is irrelevant for the decision of the question as to whether 'the sales of these goods' by the plaintiffs were 'in the course of the export of these goods from out of the territory of India.
13. I will discuss that question after discussing the effect of the evidence led on, behalf of the plaintiffs in respect of the contracts for sale of these goods as also the procedure adopted for delivery and completion of sales of these goods.
14. The evidence in that connection is in substance as follows:-The plaintiffs are called upon by the representatives of aircraft companies to supply aviation spirit and oil because of the agreements between the companies and the plaintiffs for such purpose. The supply is always made by delivery into the tanks of the aircrafts at the airport. The spirit is taken by trucks which are driven to the airfields for refuelling the aircrafts. The supply is made by the plaintiffs because the aircraft required the same for consumption during the flights. When the supply is made to aircrafts it is for completing sale of these goods to the owners of the aircrafts. Upon delivery of the aviation spirit and the oil into the tanks of the aircrafts the plaintiffs company is in no manner concerned with the goods supplied. The goods are in all respects then of the ownership of the aircrafts-owners. The plaintiffs do not export these goods to any one The supplies are made by adopting the above procedure for delivery even to inland aircrafts. To these inland aircrafts also direct delivery is effected into the tanks of the aircrafts on the airfields. The difference in delivery to the international aircrafts and the inland aircrafts only is that in respect of the international aircrafts drawback shipping bills and the application for supervision by Customs in that connection are made and tendered. Charles Rossiter-Smith being Aviation Manager of the plaintiffs stated that the supplies were made for flights to foreign countries and the claim made in the Suit related to supplies made to aircrafts which proceeded out of India from the Santa Cruz airport at Bombay. The supplies were made under customs supervision within the customs barrier. According to him the sale of the plaintiff's supplies takes place subsequent to the clearance given by the customs and delivery is effected within the customs barrier. When cross-examined in this connection he informed me that the plaintiffs sold aviation spirit and oil to aircrafts for the general trading of the aviation companies and that all the supplies were made for the use of aircraft companies. The aircraft companies would have no right to use the supplies made for any purpose except the working of the engines of the aircrafts. When asked as to whether the supplies made by the plaintiffs were completed in India or outside India, he stated that supplies to Air India International were completed in India, As regards the supplies to British Overseas Airways Corporation according to him the sale was completed in England because the payment of price was received in England. When asked as to whether the delivery in respect of these supplies was completed in India he stated as follows: 'As the delivery is completed within the customs barrier I am not sure whether the same is complete inside or outside India.' Vijay Nirvane was senior traffic assistant in Air India Ltd. in 1952. He stated that in respect of aircrafts travelling outside India cargo manifest was required to be prepared. He also stated that in respect of all goods on the aircrafts there would be a shipping bill and the goods would be mentioned in the manifest. As regards the form of manifest he had produced he informed me that the form was not applicable in respect of oil and spirit supplied to the aircraft. As however there used to be a shipping bill for the oil and spirit, ho included particulars of these goods from the shipping bill in the manifest. He, however, admitted that the entry made for these goods was not columnwise as required in the form for 'cargo manifest'. The particulars were only typed out from the shipping bill. He admitted that there was no consignment note in respect of the spirit and the oil supplied to the aircrafts, whilst in respect of every cargo there should be consignment notes showing the ownership of the goods. He also admitted that the Air India International never charged any transportation charges for the aviation spirit and oil supplied to the aircrafts by the plaintiffs. This was so because the spirit and the oil belonged to the company as soon as the supply was made. He also stated that in respect of spirit and oil supplied by the plaintiffs to the aircrafts there could be no point of unloading as the spirit and the oil was not to be delivered at any point of unloading. There was no fuel manifest which the captain of the aircraft carried and that was so because the fuel is consumed.
15. The two agreements for sale which have been produced are related to sales by the plaintiffs to Air India International Ltd. and British Overseas Airways Corporation. What need be noticed about these two contracts is that they are contracts for sale of the total requirements of the two aircraft companies at places where sales are agreed to be made. The contract for sale is not, therefore, restricted to sales to aircrafts proceeding outside India and is a contract for sales to all aircrafts without any distinction being made between inland and international aircrafts. The price payable is as in the current list posted at the airfields. The delivery in all cases is to be effected into the air-crafts tanks at the airfields. Though credit is given and delayed payment is agreed to be made in respect of the price, the contract so far as the plaintiffs are concerned is completely performed upon delivery being effected into the tanks of the aircrafts at the airfields. The airfield as mentioned in the contract for Air India International is Santa Cruz, Bombay, India, whilst the airfields mentioned in the contract with British Overseas Airways Corporation are Alimedabad, Allahabad, Bombay, Calcutta, Delhi. In respect of sales to Air India International the price is agreed to be payable in rupee currency provided the same remains immediately convertible into sterling. Obviously there is no mention in either of the contracts to the plaintiffs being under an obligation to export the goods agreed to be sold under the contracts.
16. Having noticed the nature of the evidence led in connection with the contracts for sale of goods mentioned in the plaint, with reference to the question to be decided in this suit it is first convenient to refer to the provisions of Article 286(1)(b) of the Constitution and then to find out the facts which the plaintiffs must prove to establish that the provisions of the article are applicable to the sales mentioned in the plaint. I will examine the evidence which I have already related in the light of such facts. After having done that I will refer to the authorities relied upon by the parties to show that the eon-elusions arrived at are not inconsistent 'with the rulings contained in the authorities.
17. The relevant parts of Article 286 of the Constitution run as follows:
No law of a State shall impose, or authorise the imposition of, a tax on the sale.. .of goods where such sale...takes place-
(b) in the course of the...export of the goods out of, the territory of India.
18. Having regard to that language of the article, it appears to me that if the sales mentioned in the plaint are to he held to constitute 'sales in the course of export of the goods out of the territory of India' as referred to in the article the sales must necessarily involve as their ingredients and elements the following:-
(1) Delivery of goods (sold) to aircraft companies as carriers (of goods) under a contract to carry the goods outside the territory of India.
(2) Physical delivery of the contract goods towards completion of sales must take place outside the territory of India.
(3) There must necessarily exist documents of title representing the goods in the course of the export which would entitle the purchaser (owner) to receive delivery of the goods outside the territory of India.
19. Conversely if the result of the facts proved in this case is:
(i) that the sales are completed inside the territory of India, and
(ii) that there is no obligation on the plaintiffs as sellers to procure a eon-tract for carriage of the goods sold outside the territory of India, or
(iii) to have effected physical delivery of the goods sold to the purchaser outside the territory of India in performance of the sales;
the sales are not 'in the course of the export of the goods out of the territory of India'. In other words in cases where the carrier itself is the purchaser, the sale is completed before the export of the goods outside the territory of India. There is no connection in such cases at all between the sales and the export of the goods outside the territory of India. The result in such cases must be that the purchaser is exporter for itself (himself) and the seller is not in fact an exporter nor are the sales connected as such with the exports. The above appears to me to be patent on the language and the purpose of the article as discussed in the decisions of the Supreme Court which have been cited before me. Before referring to those authorities, it is necessary to summarise the effect of the evidence which I have already related above, for ascertaining whether the plaintiffs' sales are covered by the provisions of the article.
20. The important facts which have emerged on the evidence led as regards the contracts for sale in the suit and performance thereof by the plaintiffs are as follows: The terms of the written contracts for sale of goods to Air India International and British Overseas Airways Corporation are the same as regards the sales to international aircrafts and inland aircrafts, without any reference to the nature of the journey involved in either case. As regards the place and method of delivery, the provision made is for physical delivery of the goods into the tanks of the aircrafts at the airfields. The necessary result of that is that the plaintiffs as sellers completely perform and carry out all their obligations as sellers before the goods are carried outside the territory of India. The sales are not for any foreign destination or delivery is not to be effected at any place outside the territory of India. The price becomes payable subject to the provisions for credit upon completion of local delivery of the goods. There is no document representing the goods for symbolic and physical delivery of the goods to any purchaser or any one outside the territory of India. The goods are accordingly not mentioned in the cargo manifest of the carrier. The goods in question are exported by the carriers for consumption during the flights of the aircrafts. The carrier purchasers are the exporters. The sale contracts have no reference to the relevant exports. The sellers are unconcerned with the exports by the carrier-purchaser.
21. This being the nature of the contracts for sale of the goods mentioned in the plaint apart from certain observations of the Supreme Court on which reliance is placed by Mr. Jhaveri for the plaintiffs there is no case at all for the plaintiffs to argue.
22. The extremely important observation of the Supreme Court on which reliance is placed on behalf of the plaintiffs is in the case of State of Travancore-Cochin v. Shanmugha Vilas Cashew Nut Factory : 1SCR53 . It may at once be mentioned that in that case the Supreme Court was dealing with facts which involved sales of shipping documents which represented the goods which had already crossed the customs barrier and were in the course of the export by reason of the contracts for sale for ultimate delivery at foreign destinations. The facts in that case were thus substantially different from the facts of sales mentioned in the plaint in this suit.
23. The relevant part of the observations are as follows (pp. 67-68) :.As clause (1)(b) is concerned only with exempting certain sales or purchases from taxation by the States in this country, it is sufficient to determine where the course of export begins and where the course of import ends.
Reference is thereafter made to the power to make laws, with respect to customs duties in respect of export across customs frontiers, as vested in the Central Legislature and provisions made in that connection in the Sea Customs Act. Reference is made to the provisions for levy of export duty in respect of goods exported and then it is further observed (p. 68) :.It would seem, therefore, logical to hold that the course of the export out of,... the territory of India does not commence.. .until the goods cross the customs barrier.
24. Having reached that result at page 69 a finding is made that 'purchases in the State by the exporter for the purpose of export are not within the exemption'. It is further found that 'sales in the State by the exporter by transfer of shipping documents while the goods are beyond customs barrier are within the exemption'. It has to be admitted on behalf of the plaintiffs that in this suit there are no sales by transfer of shipping documents. Even so reliance is placed on the observations of the Supreme Court that it was 'logical to hold that the course of export does not commence until the goods crossed the customs barrier''. The necessary result, according to Mr. Jhaveri, is that where any goods cross the customs barrier as envisaged under the provisions of the Sea Customs Act, the goods are in the stream of export. He, therefore, contends that when the plaintiffs were under supervision, authority and consent of the customs, allowed to effect physical delivery of the contract goods into the tanks of the international aircrafts the goods had crossed the customs barrier and sales must be held to be in the course of export journey of the goods. It is in that connection that he relied upon the evidence as regards the procedure for delivery involving claim for drawback of the duty already paid at the time of import. Now it is apparent to me that when reference is made by the Supreme Court to the crossing of customs barrier by the goods and commencing thereby of the goods in export journey the same is directly intended to refer to the journey of the goods bound for foreign destination under shipping documents. Reference is directly in respect of sales by transfer of shipping documents. It appears to me that the above observations were never intended to refer to a sale, which is, as necessary consequence of agreement (contract) between the parties, to be completed locally by physical delivery of the goods in the territory of India. The goods carried into spaces defined as customs barrier still continue in the territory of India and Would stand exported only when carried beyond such territory.
25. Having regard to the statutory rules made in connection with the levy of customs duty and prohibition for carriage of goods without clearance given for that purpose by the customs, ordinarily no person carries goods beyond the customs barrier. Must it, therefore, logically follow that when clearance is given for the purpose of effecting physical delivery towards the performance of a contract for sale for local delivery and goods are physically delivered in the territory of India but within the customs barrier that the Court must come to the conclusion that the sale was in the course of export of the goods outside the territory of India? That in my view is not the correct reading of the observations, as mentioned above, of the Supreme Court. The Supreme Court was only concerned to deal with the sales of goods by sales of shipping documents whilst making the above observations and the same are for all purposes and at all times applicable to all goods which are in the course of export in pursuance of sales which must of necessity be ultimately completed by export of the goods outside the territory of India.
26. It appears to me that in all cases where a sale is completed prior to the carriage of goods beyond the territory of India and the goods are not deliverable outside the territory of India towards completion of any contract (whatever) for sale of such goods, the sales must be held to be local sales.
27. Reference in this connection may be made to the observations made by the Supreme Court not only in the case referred to above, but also to the case of State of Travancore-Cochin v. The Bombay Co. Ltd. : 1SCR1112 That was also a case involving sales on C.I.F. and F.O.B. terms which of necessity must involve dealing with shipping documents representing the goods in the course of export out of the territory of India. At page 1117 in the report the following is mentioned as the third argument advanced on behalf of the petitioners in that case:
The exemption (under Article 286(1)(b)) covers only those sales and purchases under which the property in the goods concerned is transferred from the seller to the buyer during the course of the transit, that is, after the goods begin to move and before they reach their foreign destination.
28. In dealing with the arguments in that case it was observed as follows (p. 1118) :-
We are clearly of opinion that the sales here in question, which occasioned the export in each case, fall within the scope of the exemption under Article 286(1)(b). Such sales must of necessity be put through by transporting the goods by rail or ship or both out of the territory of India, that is to say, by employing the machinery of export. A sale by export thus involves 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 resultant export form parts of a single transaction.
It is permissible at this stage to intervene in the above observations to make a finding that in the case of the plaintiffs none of the above ingredients exist. The sales of goods as mentioned in the plaint are not associated with any contract for export of the goods and the sales are (permissible) to be completely effectuated by physical delivery of the goods locally in India without any export of the goods outside the territory of India.
29. The further observation made is 'of these two integrated activities which together constitute an export sale, whichever first occurs can well be regarded as taking place in the course of the other.' In the ease reported in State of Travancore-Cochin v. Shanmugha Vilas Cashew Nut Factory, the above observations about the integrated activities for export of goods out of India have again been repeated. At page 63, it is observed that.The previous decision proceeded on this view and emphasised the integral relation between the two where the contract of sale itself occasioned the export as the ground for holding that such a sale was one taking place in the course of export.
It is further observed as follows (p. 63) :
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 which it cannot be effectuated, and the sale and the resultant export form parts of a single transaction'. It is in that sense that the two activities-the sale and the export-were said to be integrated.
30. Having regard to that position in connection with a purchase made or production or manufacture for the purpose of export were held as 'merely acts preparatory to export and not acts done in the course of the export of the goods out of the territory of India.' It was held that such purchase or production or manufacture for export had distinct 'character and quality' dissociated from sale 'in the course of export'.
31. The relevant discussion, as at page 68 of the report, I have already quoted above. There is nothing in either of the above decisions of the Supreme Court which supports the plaintiffs' contention that inspite of the physical delivery of goods sold being effected in the territory of India I must come to the conclusion that the sales of the plaintiffs were in the course of export of the goods out of the territory of India.
32. Mr. Joshi has in this connection relied upon the purpose and object of the Article 286 as expounded by Das J. in State of Travancore-Cochin v. Shanmugha, Vilas Cashew Nut Factory where it is stated as follows (p. 90) :-
I now pass on to another important object of Article 286 which is to encourage our foreign trade. Power is given exclusively to Parliament to make laws under entry 41 with respect to trade and commerce with foreign countries and under entry 83 with respect to duties of cotton including export duties. If in addition to the import or export duty, which Parliament alone can impose, the State Legislatures were left free to make a law under entry 54 in the State List levying another tax on a sale or purchase which takes place in the course of the import of the goods into or the export of the goods out of the territory of India such double taxation will necessarily increase the price of the goods. Such imposition may easily result in our not getting imported goods which may be of everyday requirement at a reasonable price or our not being able to compete in the world market with our exported goods. This will discourage and hamper our foreign trade and eventually affect the Union revenue. It is to avoid that calamity that Article 286(1)(b) was introduced in the Constitution.
Article 286(1)(b) has to be construed in the light of its aforesaid constitutional purpose and against its commercial background.
33. Mr. Joshi has emphasised that the sale by the plaintiffs being local sale as mentioned above was not covered by the above purpose and object of Article 286(1)(b). There was no question of increase or decrease in price of goods sold by the plaintiffs to the aircraft companies. There was no question of levying of export duty on the plaintiffs in respect of these goods. There was no question of earning foreign exchange by reason of the sales in this suit,
34. It is necessary to mention that Mr. Jhaveri argued that tests for sales in the course of export were the following:
1. Whether the vendor remains owner of the goods until the goods cross customs barrier.
2. The export journey begins when the goods cross customs barrier.
3. Whether sales are completed in India or not is immaterial so long as they are sales in the course of export.
4. If the property passes after the goods have entered export journey the sale is in course of export.
5. There need be no foreign buyer in connection with sales in course of export.
It is true that one or other of the above factors may be found to exist in a sale that may be covered by the provisions of Article 286(1)(b). It is true that there can be a complete sale between parties in India of shipping documents: and that sale would have to be held to be the sale of goods in the course of export of the goods out of the territory of India. It is, however, not true that in a case where there is completed local sale as between two parties by effecting physical delivery of the goods sold in the territory of India that it can be held that such a sale is in the course of the export of the goods outside the territory of India. It is also true that property in goods can pass from buyer to buyer and seller to seller by sale of shipping documents. That may also happen whilst all the parties are in India. But such a sale is in respect of goods in course of the export of the goods out of the territory of India and relates to a contract wherein the ultimate destination of goods or the delivery of goods in performance of a contract for sale thereof is to be effected outside the territory of India. I am not impressed with the argument that because a sale of goods is effected within the customs barrier and after clearance by customs the necessary consequence is that the sale is of the goods in the course of the export of the goods out of the territory of India. It is true that in almost all cases where the goods have been allowed clearance by customs, the outstanding sales of the goods would involve export journey of the goods to a foreign destination. Such journey by the export of the goods may, however, be by the owner himself for and on his own account and accordingly would not involve any sale at all. If such sales are to a carrier the direct effect is that the technical export journey of the goods is not towards any sales involving export of the goods out of the territory of India. In such cases the carrier will carry the goods purchased as its own stores, and/or as goods belonging to the carrier and the aircraft companies. Such goods when taken out and exported by the carriers or aircraft companies are so dissociated with the contracts for sales thereof that the same cannot be held to be sales of goods in the course of the export of the goods out of the territory of India as mentioned in Article 286(1)(b).
35. [His Lordship after dealing with some points not material to this report, proceeded.] Mr. Joshi for the defendants has contended that the suit is barred by reason of Section 22 of the Bombay Sales of Motor Spirit Taxation Act, 1946. Section 22, Sub-section (2) runs as follows:-
No suit shall be instituted against the State of Bombay and no prosecution or suit shall be instituted against any officer of the Government in respect of anything done or intended to be done, under this Act unless the suit or prosecution has been instituted within six months from the date of the act complained of.
The defendants' case is that the true nature of the plaintiffs' suit is that the assessments made in respect of sales of aviation spirit and oil to aircrafts in so far as the same included sales to aircrafts proceeding out of India were invalid and not sustainable. Admittedly payments of diverse amounts towards tax were made in anticipation under the provisions of Section 10 of the Act. The assessments were made under the provisions of Section 4 of the Act. The defendants' case is that the substance of the claim in the suit is challenging of those assessments made under Section 4 of the Act. It is admitted in para. 2 of the plaint that the statements on the basis whereof the assessments were made included the particulars of all the sales of aviation spirit and oil. There were no separate statements furnished on behalf of the plaintiffs in connection with aviation spirit and oil sold to foreign going aircrafts. The statements included the sales to inland aircrafts as well as international aircrafts. Payments towards the tax were made by single payments in respect of all sales without making any difference between the sales to foreign going aircrafts and the inland aircrafts. The assessments must accordingly be held to be made with reference to all the sales of aviation spirit and oil by the plaintiffs during the relevant periods. Mr. Joshi has accordingly argued that these assessment orders must be held to be 'anything done or intended to be done under this Act' as mentioned in Section 22(2) of the Act.
36. The argument made on behalf of the plaintiffs in reply to this contention is that the act of assessment is not at all 'the thing' 'complained of' by the plaintiffs. According to Mr. Jhavieri the thing that is complained of by the plaintiffs is the rejection of the plaintiffs' application by. the State of Bombay by its letter dated June 23, 1955. In that connection Mr. Jhaveri has relied upon the relief claimed in prayer (a) that the order of defendant No. 1 dated June 23, 1955, rejecting the plaintiffs' claim for refund is bad, inequitable and contrary to law. It is obvious that that relief is entirely unnecessary for the substantial claim in the suit for refund of tax paid. The rejection as contained in the letter of June 23, 1955, relates to the plaintiffs' letter dated February 19/21, 1955, whereby relief was asked for in the following' words:
We feel that our case should be re-opened, and we should be grateful if you would kindly give necessary instructions to the Collector of Sales Tax to take up our claims for refund of sales-tax...
37. The case of the plaintiffs is that that relief was claimed in accordance with Sub-section (3) of Section 23 which provides that:
the State Government may call for and examine the record of any order of or the proceedings for the purpose of satisfying itself as to the legality or propriety of such order or as to the regularity of such proceedings and may pass such order in reference thereto as it thinks fit.
It is apparent that Sub-section (3) does not create any right in any citizen. The sub-section is an empowering provision authorising the Government to examine the record if it so thinks fit in its own discretion. I have, therefore, not understood how a refusal by the Government to consider a case, because it is invited to do so, can ever be any cause of action for relief in a proceeding in a Court of law. Refusal of the Government in its own discretion to consider any matter under Sub-section (3) of Section 23 cannot form the basis of any complaint in a suit or other proceedings and cannot be an act complained of within the meaning of Section 22(2) of the Act. The declaration claimed in this suit and the arguments advanced as above are only to evade the mentioning of the true nature of the suit and are misleading. The acts which must be complained of in this suit, if the plaintiffs have to succeed, must be the acts of assessments made in January 195.1 or in any event the refusal of the Sales-tax Officer to reopen the assessments as he. did by his letter dated January 28, 1955. The acts of which complaint could be made are those which came into existence in January 1951 and January 1955. The suit having been filed more than six months after such acts (on February 23, 1956) is not instituted within six months as mentioned in Section 22(2) and must be held to be barred by limitation as provided in the section.
38. In this connection Mr. Jhaveri has argued that the assessments and the rejection of the plaintiffs' application by the State of Bombay, as referred to above, would have to be held nullity if the plaintiffs' case is true. The contention is that the sales mentioned in the plaint being exempt from taxation under Article 286(1)(b) of the Constitution the assessments made as well as the rejection cannot be. held to be 'anything done or intended to be done under this Act'. In this connection. Mr. Jhaveri relied upon the decision in the case of Datlatrayn v. Poona City Mun'pal Corp. (1959) 62 Bom. L.R. 71. In dealing with arguments advanced on the basis of provisions similar to Section 22(2) of the Act the Court referred to its finding that the action of the Municipal Corporation in refusing to make refund was ultra vires the Corporation. The Court then considered the contention that ultra vires and illegal, wrongful recovery of tax and refusal to refund the same could not be said to be 'an act done or purported to be done in pursuance of or in execution of the Act.' The Court referred to the decision in the case of Jalgaon Mun. v. Khandesh Spg. Etc. Co. (1962) 35 Bom. L.R. 68 where the words considered were 'done or purporting to have been done in pursuance of this Act.'' In that previous decision Mr. Justice Bhagwati, as he then was, held as follows (p. 69):- .The distinction is really between ultra vires and illegal acts, on the one hand, and wrongful acts, on the other-wrongful in the sense that they purport to have been done in pursuance of the Act; they are intended to seem to have been done in pursuance of the Act and are done with a vestige or semblance of authority, or sort of a right invested in the party doing those acts. If the defendants, therefore, not having the power to levy octroi duty at all, either wholly or in regard to some classes of goods, had purported to levy the same, it would certainly have been an act which was outrageous and extraordinary, with not a vestige or semblance of authority, or not even a shadow of a right.
39. In the case of Dattaram Nagesh v. Poona Municipal Corporation, having regard to the finding made that the action of the Corporation was altogether ultra vires, it was held that the same was not done with any vestige of authority and that accordingly the levy and collection of duty and refusal to refund the same were not 'anything done under the Act.
40. Mr. Jhaveri contends that the position in the plaintiffs' case is absolutely similar. According to him having regard to the provisions of Article 286(1)(b) there was no jurisdiction whatsoever in the Sales-tax Officer to make the assessments which he made and refusal and the rejection by the State of Bombay of the plaintiffs' application for directing reopening of the plaintiffs' assessment was also without jurisdiction. Every act of the assessing authority in connection with the tax recovered and refusal to refund the same should not be considered as 'anything done under the Act' as provided in Section 22(2). I am bound to apply to the facts of this case the principles as appearing in the decisions mentioned above.
41. The question is whether on the facts in this ease I can make a finding that the assessments made and rejection of the plaintiffs' application for refund were not 'anything done under the Act.' It is important in this connection to repeat that the statements as furnished by the plaintiffs under Section 10 of the Act included sales of aviation spirit and oil to inland aircrafts. The anticipated payments made in pursuance of the provisions of the Act towards the tax also were combined payments in respect of tax payable for sales to inland as well as foreign going aircrafts. In this suit it is not contended that there was no jurisdiction in the Sales-tax Officer to assess tax payable by the plaintiffs in respect of sales to inland aircrafts. In other words, in so far as tax was paid and collected in connection with the sales to inland aircrafts, there was jurisdiction in the Sales-tax Officer to assess the plaintiffs on the returns made by the plaintiffs and to recover tax. The test to be applied, according to the observations of Bhagwati J., is that the assessment should not have been done with any vestige or semblance of authority. The 'act complained of' by the plaintiffs must be so outrageous and extraordinary that the same must be held to be without any vestige or semblance of authority and without even a shadow of a right. I cannot make such findings in respect of the assessments made and sales-tax collected in respect of the relevant periods as regards sales to inland aircrafts. The assessment orders and refusal to reopen the assessments and rejection of the application made to the State of Bombay each was connected with sales to inland aircrafts and matters in which the assessing authority and the government had jurisdiction to assess and collect tax and to reject the application. Even so I would have upheld the contention made by Mr. Jhaveri if I had come to the conclusion that the assessments made were not severable as regards the sales to inland aircrafts on the one hand and international air-crafts on the other. The plaintiffs have by their own plaint made a complete severance of the tax collected in respect of sales to foreign going aircrafts. It is the plaintiffs' case that in respect of such sales the tax collected for the relevant period was to the tune of Rs. 1,90,590-8-0. It is, therefore, entirely incorrect for the plaintiffs BOW to argue that the assessment in respect of sales to foreign going aircrafts and the sales to inland aircrafts is not severable. The assessments were made under the provisions of Section 4 by one single order. The assessment must be held to be as regards part of the assessment orders as validly made under the provisions of Section 4 of the Act, The rejection of the Government as relied upon by the plaintiffs must be held to be under the provisions of Section 23(3) of the Act. The orders and rejection cannot be held to be an act without vestige of power or authority or shadow of a right. The assessment orders cannot be held to be without jurisdiction altogether. As a part of the assessment orders and rejection must be held to be 'under the Act', I do not see how a finding can be made that the assessment orders and rejection: are not 'anything done or intended to be done' under this Act as mentioned in Section 22(2) of the Act. I have already discussed several of the aspects of this question in my decision in the case of Bennet Colenum & Co. v. State of Bombay (1959) O.C.J. Suit No. 894 of 1953 decided by K.K. Desai, J., on November 30, 1959.
42. In this connection Mr. Joshi relied upon the decision of the Privy Council in the case of Baleigh Investment Co. Ld. v. Governor-General in Council (1947) L.R. 74 IndAp 50 It is clear from the observations made by the Privy Council in that case that the question such as assessment being ultra vires the Constitution could be raised before the assessment authorities and the questions raised of that kind could be decided and were within the jurisdiction for decision of the assessment authorities. I find it unnecessary to discuss, in detail this authority as I have come to the conclusion that the assessment orders in question and the rejection on which the plaintiffs rely must be held to be 'anything done under the Act' as mentioned in Section 22(2) of the Act. The plaintiffs' claim is more than six months after the acts which the plaintiffs must of necessity challenge in this case, viz. the assessments made in January 1955. The suit is, accordingly, barred under the provisions of Section 22(2) of the Act.
43. [The rest of the judgment is not material to this report.]