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The Minerals and Metals Trading Corporation of India Limited Vs. Deputy Commissioner, Commercial Taxes and ors. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Petition Nos. 472, 473, 750 and 752 of 1976 and C.R.P. Nos. 587 and 832 of 1976
Judge
Reported in[1978]42STC372(AP)
AppellantThe Minerals and Metals Trading Corporation of India Limited
RespondentDeputy Commissioner, Commercial Taxes and ors.
Appellant AdvocateS. Dasaratharama Reddi and ;S.R. Ashok, Advs.
Respondent AdvocateGovernment Pleader and ;Government Pleader for G.A.D.
DispositionPetition dismissed
Excerpt:
- maximssections 2(xv) & 3(1) & (3): [v.v.s. rao, n.v. ramana & p.s. narayana, jj] ghee as a live stock product held, [per v.v.s. rao & n.v. ramana, jj - majority] since ages, milk is preserved by souring with aid of lactic cultures. the first of such resultant products developed is curd or yogurt (dahi) obtained by fermenting milk. dahi when subjected to churning yields butter (makkhan) and buttermilk as by product. the shelf life of dahi is two days whereas that of butter is a week. by simmering unsalted butter in a pot until all water is boiled, ghee is obtained which has shelf life of more than a year in controlled conditions. ghee at least as of now is most synthesized, ghee is a natural product derived ultimately from milk. so to say, milk is converted to dahi, then butter......b.j. divan, c.j.1. the petitioner in each of these six matters is the same, viz., the minerals and metals trading corporation of india limited, visakhapatnam. all these six matters relate to different assessment years for purposes of sales tax. the question arises in connection with the export of iron ore and manganese ore effected by the petitioner in each of these matters to foreign countries and the question is whether, in respect of the purchases and sales in connection with such exports, any sales tax is payable or not. w. p. no. 472 of 1976 relates to the assessment year 1956-57. w. p. no. 473 of 1976 relates to the assessment year 1957-58. w. p. no. 750 of 1976 relates to the assessment year 1968-69. w. p. no. 752 of 1976 relates to the assessment year 1967-68. c. r. p. no. 587 of.....
Judgment:

B.J. Divan, C.J.

1. The petitioner in each of these six matters is the same, viz., the Minerals and Metals Trading Corporation of India Limited, Visakhapatnam. All these six matters relate to different assessment years for purposes of sales tax. The question arises in connection with the export of iron ore and manganese ore effected by the petitioner in each of these matters to foreign countries and the question is whether, in respect of the purchases and sales in connection with such exports, any sales tax is payable or not. W. P. No. 472 of 1976 relates to the assessment year 1956-57. W. P. No. 473 of 1976 relates to the assessment year 1957-58. W. P. No. 750 of 1976 relates to the assessment year 1968-69. W. P. No. 752 of 1976 relates to the assessment year 1967-68. C. R. P. No. 587 of 1976 relates to the assessment year 1969-70 and C. R. P. No. 832 of 1976 relates to the assessment year 1970-71.

2. Under Section 5 of the Central Sales Tax Act (74 of 1956), exemption is given from payment of Central sales tax when a sale or purchase of goods is said to take place in the course of import or export. Sub-section (1) of Section 5 provides that a sale or purchase of goods shall be deemed to take place in the course of the export of the 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 have crossed the customs frontiers of India. under Sub-section (2) of Section 6, 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. Since the transactions in question relate to the export of iron ore and manganese ore from India, we are only concerned with Sub-section (1) of Section 5.

3. The question as to when the sale can be said to have taken place in the course of the export of the goods out of the territory of India has been engaging the attention of the courts and has been the subject-matter of several decisions of the Supreme Court commencing from the decision of the Supreme Court in State of Travancore-Cochin v. Bombay Company Ltd. [1952] 3 S.T.C. 434 (S.C.) and ending with the decision of the Supreme Court in Mod. Serajuddin v. State of Orissa [1975] 36 S.T.C. 136 (S.C.). It is not necessary for us to go into all these cases decided by the Supreme Court because in Mod. Serajuddin v. State of Orissa [1975] 36 S.T.C. 136 (S.C.) the Supreme Court considered each one of the decisions delivered by it earlier in point of time, viz., State of Travancore-Cochin v. Bombay Company Ltd. [1952] 3 S.T.C. 434 (S.C.), State of Travancore-Cochin v. Shanmugha Vilas Cashew-nut Factory [1953] 4 S.T.C. 205 (S.C.), Ben Gorm Nilgiri Plantations Company v. Sales Tax Officer [1964] 15 S.T.C. 753 (S.C.), Khosla and Co. (P.) Ltd. v. Deputy Commissioner of Commercial Taxes [1966] 17 S.T.C. 473 (S.C.), Coffee Board v. Joint Commercial Tax Officer [1970] 25 S.T.C. 528 (S.C.), National Tractors v. Commissioner of Commercial Taxes [1971] 27 S.T.C. 271 (S.C.), Binani Bros. (P.) Ltd. v. Union of India [1974] 33 S.T.C. 254 (S.C.) and several other decisions and out of the five judges who decided the matter, H. R. Khanna, J., dissented from the majority view and the remaining four judges delivered the majority judgment. In that case, the appellant before the Supreme Court, Mohammed Serajuddin, entered into two contracts with the State Trading Corporation for the sale of mineral ore and the corporation, in its turn, entered into similar contracts with foreign buyers for the sale of the identical goods purchased by the corporation from the appellant. Under the terms of the contract between the appellant and the State Trading Corporation the price was expressed in U. S. dollars per long ton, f. o. b. ocean liner vessel, Calcutta and the material should be ready in Calcutta harbour for shipment by a particular steamer. The final sampling and moisture determination and the final ascertainment of weight should be done at the port of discharge by certain named persons and their certificate should be final and binding on both the buyer and the seller. The clause in the contract regarding payment was as follows : '90 per cent payment against shipping documents as described in buyers' corresponding sale contract. Buyers will assign the relevant foreign letter of credit which is to be opened in their name by their foreign buyer, Messrs. Associated Metals and Minerals Corporation, on receipt from the sellers of a bank draft for difference between buyers' f. o. b. purchase value and f. o. b. sale value, that is, $1.00 (Rs. 4.75) per dry long ton for a bank guarantee from a scheduled bank guaranteeing that sellers will pay buyers immediately upon shipment/shipments the difference between buyers' f. o. b. purchase value as shown in this contract and buyers' f. o. b. sale value as shown in foreign letter of credit, that is, $1.00 (Rs. 4.75) per dry long ton by bank draft for each shipment and the buyers will endorse the bills of lading and deliver the same to sellers to negotiate against the above-mentioned letter of credit. Balance after destinational weight and analysis on the basis of documents mentioned in S. T. C.'s corresponding sale contract with buyers. If the balance 10 per cent is insufficient to cover shortfall in weight and analysis at destination or any penalty imposed by the S. T. C.'s foreign buyers, the additional amount shall be payable by sellers to buyers on demand.' There was also a clause in the contract to the effect that the contract should be deemed to be cancelled if for any reason whatsoever Messrs. Associated Metals and Minerals Corporation cancelled their corresponding purchase contract with the buyer's for supply of chrome ore and that the terms and conditions of the buyers' corresponding sale contract with Messrs. Associated Metals and Minerals Corporation would apply to the contract between Mohammed Serajuddin and the State Trading Corporation except to the extent specified in the purchase contract between Mohammed Serajuddin and the State Trading Corporation. A true copy of the buyers' sale contract with Messrs. Associated Metals and Minerals Corporation was attached to the contract between Mohammed Serajuddin and the State Trading Corporation.

4. The contention on behalf of Mohammed Serajuddin before the Supreme Court was that the sales of the mineral ore by the appellant to the State Trading Corporation were 'sales in the course of export' and were, therefore, exempt from sales tax under Section 5 of the Central Sales Tax Act, 1956, read with Article 286(1)(b) of the Constitution. It was contended before the Supreme Court that Mohammed Serajuddin had entered into negotiations with foreign purchasers and settled all the conditions of the contract and thereafter the corporation entered into an f. o. b. contract with the appellant and with the foreign buyer on identical terms. All the necessary steps including the payment of customs duty for shipment and export had been done by the appellant and, therefore, the sale by the appellant to the corporation and the export by the corporation to the foreign buyer constituted one integrated transaction. It was further contended that the export could not be made except by the corporation which could not have diverted the goods to a buyer in India without violating the Export and Import Control Order and, therefore, the sale was in the course of export. It was thirdly contended that there was no sale in the taxable territory inasmuch as the contract between the appellant and the corporation being on f.o.b. basis, the property in the goods passed only on shipment when the goods were in the stream of export. It was further contended that even if it was held that the appellant did not have any contract with the foreign buyer and that privity was essential, the rigid rule of privity of contract should be relaxed on considerations of equity and justice and a realistic approach should be adopted. The manner of entering into contracts through the channel of the corporation raised in reality a presumption of the corporation being an agent of the appellant in the integrated transaction. On these contentions, the learned Judges, who constituted the majority of the Bench of five Judges, held that the corporation alone had agreed to sell the goods to the foreign buyer and was the exporter of the goods; that there was no privity of contract between Mohammed Serajuddin and the foreign buyer ;. and that the privity of contract was between the corporation and the foreign buyer. It was further held that the immediate cause of the movement of goods and export was the contract between the foreign buyer, who was the importer and the corporation, who was the exporter and shipper of the goods. All the relevant documents were in the name of the corporation whose contract of sale was the occasion of the export. According to the learned Judges, who constituted the majority, the expression 'occasions' in Section 5 of the Central Sales Tax Act means the immediate and direct cause and, but for the contract between the corporation and the foreign buyer, there was no occasion for export and, therefore, the export was occasioned by the contract of sale between the corporation and the foreign buyer and not by the contract of sale between the corporation and Mohammed Serajuddin. The circumstance that Mohammed Serajuddin sold the goods directly to the corporation to facilitate the performance of the contract between the corporation and the foreign buyer on terms which were similar did not make the contract between Mohammed Serajuddin and the corporation the immediate cause of the export. It was held by the learned Judges who constituted the majority that Mohammed Serajuddin was under no contractual obligation to the foreign buyer either directly or indirectly and the rights of Mohammed Serajuddin were against the corporation. Similarly, the obligations of Mohammed Serajuddin were to the corporation. The foreign buyer could not claim any right against Mohammed Serajuddin nor did Mohammed Serajuddin have any obligation to the foreign buyer. All acts done by Mohammed Serajuddin were in performance of his obligation under the contract with the corporation and not in performance of the obligations of the corporation to the foreign buyer. It was further held that there was no principal and agent relationship between the appellant and the corporation and, in the absence of such relationship, the agency of necessity did not arise. The relationship between the appellant and the corporation was between two principals and there was no aspect whatever of principal and agent. The mention of the f. o. b. price in the contracts between the appellant and the corporation did not render the contracts f. o. b. contracts with the foreign buyer. The shipment of the goods by the corporationvto the foreign buyer was the f. o. b. contract to which the appellant was not a party. The directions given by the corporation to the appellant to place the goods on board the ship were pursuant to the contract of sale between the appellant and the corporation. These directions were not in the course of export, because the export sale was an independent one between the corporation and the foreign buyer. The taking of the goods from the appellant's place to the ship was completely separate from the transit pursuant to the export sale. It was further held that the fact that the exports could be made only through the State Trading Corporation did not have the effect of making the appellant the exporter where there was direct contract between the corporation and the foreign buyer. Restriction on export that export could be made only through the State Trading Corporation was a reasonable restriction and was valid and the decision of the High Court that the sales of the appellant to the corporation were exigible to tax because they were not sales in the course of export was upheld by the Supreme Court.

5. After the decision of the Supreme Court in Mod. Serajuddin v. State of Orissa [1975] 36 S.T.C. 136 (S.C.), a Bill was introduced in Parliament for amending the Central Sales Tax Act and the statement of objects and reasons pointed out that the Central Sales Tax Act, 1956, had formulated the principles for determining when a sale or purchase of goods takes place in the course of inter-State trade or commerce or outside a State or in the course of import into, or export from, India. The Act also provides for the levy, assessment and collection of tax on sales of goods in the course of inter-State trade or commerce. Further, the Act declares certain goods to be of special importance in inter-State trade or commerce and specifies the restrictions and conditions to which State laws relating to sales tax shall be subject in regard to the levy of tax on the sale or purchase of such goods. It was pointed out in the statement of objects and reasons that, according to Section 5(1) of the Central Sales Tax Act, a sale or purchase of goods can qualify as a sale in the course of export of the goods out of the territory of India only if the sale or purchase has either occasioned such export or is by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India. The statement of objects and reasons referred to the decision of the Supreme Court in Mod. Serajuddin v. State of Orissa [1975] 36 S.T.C. 136 (S.C.) and pointed out that, in that case, the Supreme Court had held that the sale by an Indian exporter from India to the foreign importer alone qualifies as a sale which has occasioned the export of the goods. According to the Export Control Orders, exports of certain goods can be made only by specified agencies such as the State Trading Corporation. In other cases also, manufacturers of goods, particularly in the small-scale and medium sectors, have to depend upon some experienced export house for exporting the goods because special expertise is needed for carrying on export trade. A sale of goods made to an export house or an agency such as the State Trading Corporation or to enable such agency or export house to export those goods in compliance with an existing contract or order is inextricably connected with the export of the goods. Further, if such sales do not qualify as sales in the course of export, they would be liable to State sales tax and there would be a corresponding increase in the price of the goods. This would make Indian exports uncompetitive in the fiercely competitive international markets. It was, therefore, proposed in the Bill to amend, with effect from the beginning of the financial year, i. e., 1st April, 1976, Section 5 of the Central Sales Tax Act to provide that the last sale or purchase of any goods preceding the sale or purchase occasioning export of these goods out of the territory of India shall also be deemed to be in the course of such export if such last sale or purchase took place after and was for the purpose of complying with, the agreement or order for, or in relation to such export.

6. It is thus clear that, in the light of what was held by the Supreme Court in Mod. Serajuddin v. State of Orissa [1975] 36 S.T.C. 136 (S.C.), the Parliament gave relief to exports of goods from India if, either by statute or because of the requirement of trade, the export of goods was done through a statutory agency such as the State Trading Corporation or through the machinery of an export house to enable such agency or export house to export those goods in compliance with an existing contract or order. Therefore, the Parliament proposed to provide, by amending Section 5 of the Central Sales Tax Act, that the sale or purchase of any goods preceding the sale or purchase occasioning export of those goods out of the territory of India shall also be deemed to be in the course of such export if such last sale or purchase took place after and was for the purpose of complying with, the agreement or order for, or in relation to, such export. This Bill, being Bill No. 84 of 1976, was enacted as the Central Sales Tax (Amendment) Act, 1976 (103 of 1976) and it became law with effect from 7th September, 1976. By Section 3 of the Central Sales Tax (Amendment) Act, 1976, in Section 5 of the principal Act, i. e., the Central Sales Tax Act, 1956, after Sub-section (2), a new Sub-section, viz., Sub-section (3), was inserted and it should be deemed to have been inserted with effect from the 1st April, 1976. The new Sub-section reads as follows :

Notwithstanding anything contained in Sub-section (1), the last sale or purchase of any goods preceding the sale or purchase occasioning the export of those goods out of the territory of India shall also be deemed to be in the course of such export, if such last sale or purchase took place after and was for the purpose of complying with, the agreement or order for or in relation to such export.

7. So far as the facts relating to this particular petitioner, the Minerals and Metals Trading Corporation of India Limited, Visakhapatnam, are concerned, it has been pointed out that the petitioner is the successor to the State Trading Corporation of India Limited in the matter of foreign trade in minerals. Iron ore and manganese ore were taxable at last purchase point under the Andhra Pradesh General Sales Tax Act for the assessment year 1957-58 and under the Madras General Sales Tax Act for the assessment year 1956-57. The petitioner entered into f. o. b. contracts with the local suppliers for the purchase of iron and manganese ore for the purpose of export to foreign buyers with whom also the petitioner entered into contracts for the sale of the said ore on the same terms. Pursuant to the contracts entered into between the suppliers and the petitioner, the ore had to be placed on board the vessels at Visakhapatnam Port or Kakinada Port. The purchase from the local suppliers and the export to foreign buyers were closely interconnected and integrated transactions and thus the purchase transactions were purchases in the course of export within the meaning of Section 5 of the Central Sales Tax Act and Article 286(1)(b) of the Constitution of India. For the assessment years 1956-57 and 1957-58, the petitioner claimed exemption from tax, besides other turnover, on the turnover of Rs. 30,80,054.00 and Rs. 4,47,18,889 respectively representing the purchase turnover of iron and manganese ore from the local suppliers on the ground that the transactions were in the course of export. The Commercial Tax Officer disallowed the exemption on the ground that the transactions were last purchases within the State and, against those orders, the petitioner filed appeals to the Assistant Commissioner of Commercial Taxes. The petitioner also filed writ petitions in 1961 in the Supreme Court under Article 32 of the Constitution of India. Those writ petitions were dismissed by the Supreme Court on the ground that the petitioner was not a citizen entitled to fundamental rights. Thereafter, writ petitions were filed in this court contending that the transactions were exempt from sales tax. Those writ petitions were dismissed by this Court in 1968 on the ground of alternative remedy being available to the petitioner ; but the merits of the case were not examined by this Court while dismissing those writ pelitions. The Assistant Commissioner of Commercial Taxes gave relief to the petitioner in the light of the decisions of the Supreme Court in Ben Gorm Nilgiri Plantations Co. v. Sales Tax Officer [1964] 15 S.T.C. 753 (S.C.) and Khosla and Co. (P.) Ltd. v. Deputy Commissioner of Commercial Taxes [1966] 17 S.T.C. 473 (S.C.). However, after the Supreme Court delivered the judgment in Mod. Serajuddin v. State of Orissa [1975] 36 S.T.C. 136 (S.C.), the Deputy Commissioner of Commercial Taxes, the 1st respondent in W. P. No. 472 of 1976, invoking Section 20 of the Andhra Pradesh General Sales Tax Act, issued a show cause notice dated 28th January, 1976, to the petitioner proposing to revise the order passed by the Assistant Commissioner of Commercial Taxes granting exemption for the assessment years 1956-57 and 1957-58. It may be pointed out that the order of the Assistant Commissioner of Commercial Taxes had been received by the petitioner on 29th August, 1972. That date is material in view of the provision of Section 20 of the Andhra Pradesh General Sales Tax Act. under Section 20(3), the powers of revision shall be exercisable only within such period not exceeding four years from the date on which the order was served on the dealer as may be prescribed. Therefore, the order passed by the Assistant Commissioner of Commercial Taxes could be revised by the Deputy Commissioner before 29th August, 1976 and the show cause notice was issued by the Deputy Commissioner of Commercial Taxes on 28th January, 1976, proposing to revise the order of the Assistant Commissioner of Commercial Taxes granting exemption for the assessment years 1956-57 and 1957-58 and it is this notice of the Deputy Commissioner which has been challenged in the present proceedings.

8. Writ Petition No. 472 of 1976 challenges the notice relating to the assessment year 1958-57, whereas W. P. No. 473 of 1976 challenges the notice relating to the assessment year 1957-58. Similar action regarding the exemption granted to the petitioner for the assessment year 1967-68 is challenged in W. P. No. 752 of 1976 and the show cause notice regarding granting of exemption for the assessment year 1968-69 is the subject-matter of W. P. No. 750 of 1976. In C. R. P. No. 587 of 1976, the question of exercise of jurisdiction under Section 20 by the Deputy Commissioner is also under challenge. The notice, which is the subject-matter of C. R. P. No. 587 of 1976, is in connection with the exemption granted by the Assistant Commissioner in respect of the assessment year 1969-70 and similarly in C. R. P. No. 832 of 1976, the challenge is to the notice issued in connection with the assessment year 1970-71.

9. It has been pointed out by Mr. Dasaratharama Reddi appearing for the petitioner in each of these six matters that the Commercial Tax Officer had not levied any tax on the transactions partly for the assessment year 1968-69 and wholly for the assessment years 1969-70 and 1970-71, whereas, even in respect of the assessment years 1956-67, 1957-58 and 1967-68 and partly for the assessment year 1969-70, the Assistant Commissioner had given relief to the petitioner. As regards the assessment year 1969-70, against the order of the Assistant Commissioner of Commercial Taxes refusing to grant relief on the turnover in respect of export of iron ore and manganese ore, an appeal was pending before the Sales Tax Appellate Tribunal. It has been pointed out that, for the assessment years 1958-59, 1960-61 and 1963-64, the Sales Tax Appellate Tribunal had given complete relief to the petitioner in Tribunal Appeals Nos. 702, 703 and 701 of 1968 and the Tribunal's decision was dated 26th March, 1969.

10. At the hearing of these six matters before us, Mr. Dasaratharama Reddi, the learned Advocate for the petitioner in each of these matters, urged the following contentions:

(1) There is no illegality in the order of the Commercial Tax Officer or the Assistant Commissioner of Commercial Taxes and merely because the Supreme Court changed its view or laid on certain aspects of the matter, it could not be said that there was any illegality which was required to be rectified under the powers of revision under Section 20 of the Andhra Pradesh General Sales Tax Act and hence the powers of revision could not be invoked in any of these six cases.

(2) It was contended in the alternative to the first contention that the same issue or question as was raised in the present proceedings had been decided by the Sales Tax Appellate Tribunal for the assessment years 1958-59, 1960-61 and 1963-64 in Tribunal Appeals Nos. 702, 703 and 701 of 1968 decided on 26th March, 1969 and as regards the assessment year 1969-70, the appeal against the Assistant Commissioner's order was pending before the Sales Tax Appellate Tribunal and it was therefore contended that, under Section 20(2-A) of the Andhra Pradesh General Sales Tax Act, the power of revision cannot be exercised by the Deputy Commissioner in respect of the issue or question, which was the subject-matter of appeal pending before the Sales Tax Appellate Tribunal or which was decided on appeal by the Sales Tax Appellate Tribunal under Section 21.

(3) It was lastly contended that, in any event, the question of limitation regarding the exercise of the powers of revision arises in each of these cases and hence the Deputy Commissioner has no power to exercise powers of revision. It was contended that what the Deputy Commissioner wanted to do was to exercise powers under Section 14(4-C) for which the period of limitation was 31st March, 1963, for the assessment year 1956-57 and 31st March, 1964, for the assessment year 1957-58 and not the period of limitation expiring on 29th August, 1976, under Section 20(3). It must be fairly pointed out that, in view of the decision of a Division Bench of this Court in Meenakshi Corporation v. Deputy Commissioner of Commercial Taxes [1977] 40 S.T.C. 101 (W. P. Nos. 1806, 702 and 1831 of 1975 decided on 16th September, 1976), Mr. Dasaratharama Reddi has not argued the point of limitation under Section 14(4-C) as the point of limitation was decided against the petitioner in that case. Though Mr. Dasaratharama Reddi has not argued the question of limitation, he has not given it up.

11. It has been pointed out by Mr. Dasaratharama Reddi that, in the show cause notice issued by the Deputy Commissioner of Commercial Taxes, the main reliance is on the decision of the Supreme Court in Mod. Serajuddin v. State of Orissa [1975] 36 S.T.C. 136 (S.C.) and that forms the basis of the show cause notice. The show cause notice points out:

The benefits of Article 286(1)(b) of the Constitution extends to transactions which come within the meaning of the phrase 'in the course of export'. In view of the decision of the Supreme Court in Serajuddin case [1975] 36 S.T.C. 136 (S.C.), it is clear that the transaction anterior to the actual export does not fall within the scope of the exemptions.

12. It was under these circumstances that the Deputy Commissioner proposed to exercise his powers of revision, as pointed out in the show cause notice, so that the orders of the Assistant Commissioner of Commercial Taxes, which were no longer good in view of the decision of the Supreme Court in Mod. Serajuddin v. State of Orissa [1975] 36 S.T.C. 136 (S.C.), could be rectified.

13. Mr. Dasaratharama Reddi, in connection with the first point, emphasised that the powers of revision could be exercised only if there was illegality in the orders of the Assistant Commissioner of Commercial Taxes and that merely because there was a change of view regarding the correct legal position, the powers of revision could not be invoked. Reliance was placed on the observations of the Supreme Court, of the Gujarat High Court and of this Court regarding the exercise of the powers of revision. But the question arises whether there has been a change in the legal position or whether the Supreme Court, after considering all the decisions on the point and without overruling any one of those earlier decisions, has culled out the legal principles relating to the concept of sale in the course of export. under Article 286(1)(b), 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 the import of the goods into, or export of the goods out of, the territory of India. Section 5(1) of the Central Sales Tax Act lays down that a sale or purchase of goods can be deemed to take place in the course of the export of the 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 have crossed the customs frontiers of India. It is with reference to the words 'occasions such export' occurring in Section 5(1) that the controversy has arisen in all these decisions depending upon the facts of each case. As pointed out by the majority of the learned Judges of the Supreme Court in Mod. Serajuddin v. State of Orissa [1975] 36 S.T.C. 136 (S.C.), it is only the contract between the foreign buyer and the Indian exporter which can occasion the export and not the immediate contract of sale or purchase which is anterior to the last contract of sale between the exporter from India and the foreign importer. The rigour of the rule laid down in Mod. Serajuddin v. State of Orissa [1975] 36 S.T.C. 136 (S.C.) has been removed by Act No. 103 of 1976 with effect from 1st April, 1976, so as to provide that the last sale or purchase of any goods preceding the sale or purchase occasioning export of those goods out of the territory of India shall also be deemed to be in the course of such export if such last sale or purchase took place after and was for the purpose of complying with, the agreement or order for, or in relation to, such export. Even the statute which affects such sales after 1st April, 1976, does not put any new interpretation upon the words 'sale or purchase occasions such export' occurring in Section 5(1) of the Central Sales Tax Act in a manner different from what has been explained by the Supreme Court in Mod. Serajuddin v. State of Orissa [1975] 36 S.T.C. 136 (S.C.) and it is only to mitigate the hardships of genuine small-scale exporters or those who were directed to export through statutory agencies like the State Trading Corporation, that the sale immediately preceding the sale which occasioned the export is exempt with effect from 1st April, 1976, if the conditions of Sub-section (3) of Section 5, as inserted by Act No. 103 of 1976, are satisfied.

14. It is erroneous to contend, as has been done by Mr. Dasaratharama Reddi, that in Mod. Serajuddin's case [1975] 36 S.T.C. 136 (S.C.), the Supreme Court laid down any new legal position. All that the Supreme Court did was that after considering all the decisions on the point, it emphasised that it is only the last contract of sale between the exporter from India and the foreign importer that can be said to be a sale that occasions the export and hence, by virtue of Section 5(1) of the Central Sales Tax Act read with Article 286(1)(b) of the Constitution, is exempt from sales tax. In our opinion, the first contention of Mr. Dasaratharama Reddi must be rejected, because the Supreme Court itself explained in State of Madras v. Gurviah Naidu & Company [1955] 6 S.T.C. 717 (S.C.), the meaning of the words 'sales occasioning the export'. Similarly, in Gordhandas Lalji v. B. Banerjee [1958] 9 S.T.C. 581 at 587 (S.C.), the Supreme Court pointed out:

The scope and effect of the provisions of Article 286(1)(b) has been considered by this court on several occasions and it can be stated without any difficulty that in the light of the decisions of this court the appellant would not be entitled to claim the protection of this article once it is held that the title to the goods had passed in favour of the Bombay party long before the goods were entrusted to the carrier. It is clear that what is taxed are the sales made by the appellant in favour of the Bombay party and not the sales made by the Bombay party in favour of outsiders. The appellant sold the goods to the Bombay parties who had their place of business in Bombay. As soon as the goods were sold to the Bombay parties the appellant's interest in the goods ceased and whatever happened to the goods subsequently was no concern of the appellant.

15. Looking to the facts of the instant case, the petitioner before us is in the position of the Bombay party and the suppliers of iron and manganese ore to the petitioner are in the position of Gordhandas Lalji, who was the appellant before the Supreme Court and the Supreme Court, in that particular case, had emphasised that, as soon as the goods were sold to the Bombay parties (equivalent to the petitioner in the instant case), the appellant's interest (interest of the suppliers) in the goods ceased and whatever happened to the goods subsequently was no concern of the suppliers. There was no privity of contract between the suppliers and the foreign buyers to whom the goods were ultimately exported. The same is the legal position in State of Mysore v. Mysore Spinning and Manufacturing Company Limited [1958] 9 S.T.C. 188 (S.C.). Relying upon the decision in State of Travancore-Cochin v. Shanmuga Vilas Cashew-nut Factory [1953] 4 S.T.C. 205 (S.C.), the Supreme Court pointed out that the last purchase of goods made by the exporter for the purpose of exporting them to implement orders already received from a foreign buyer or expected to be received subsequently in the course of business was not protected under Article 286(1)(b) of the Constitution.

16. Thus what has been done by the Supreme Court in Mod. Serajuddin v. State of Orissa [1975] 36 S.T.C. 136 (S.C.) is not to lay down a new legal position. It was merely emphasising what was being stated by the Supreme Court since the decision in State of Travancore-Cochin v. Shanmuga Vilas Cashew-nut Factory [1953] 4 S.T.C. 205 (S.C.). It is, therefore, clear that the position as to what is the meaning of the words 'the sale that occasions the export' has been clearly explained all along by the Supreme Court. It is true that, in the show cause notice, the Deputy Commissioner of Commercial Taxes has emphasised the aspect of the legal position as explained by the Supreme Court in Mod. Serajuddin v. State of Orissa [1975] 36 S.T.C. 136 (S.C.), but it cannot be said, in the light of what is just now pointed out, that the Supreme Court has laid down a new legal position. In that view, the first contention of Mr. Dasaratharama Reddi must be rejected.

17. As regards the contention based on Section 20(2-A) of the Andhra Pradesh General Sales Tax Act, it must be pointed out that, if the contentions of Mr. Dasaratharama Reddi regarding the interpretation which he wants us to place on Sub-section (2-A) of Section 20 were to be accepted, it would mean incorporating the principle of res judicata in sales tax matters. It is well-settled law that, so far as income-tax matters are concerned, the decision given in respect of one assessment year cannot be binding in respect of a subsequent assessment year on the same question and the same principle has been accepted in the context of sales tax law as well. In State of Andhra v. Arisetty Sriramulu [1957] 8 S.T.C. 153 at 160 (F.B.), a Full Bench of this Court had pointed out:

Moreover, an order of assessment or an order of the Appellate Tribunal on appeal fixing the liability to tax in a particular year does not operate as res judicata or estoppel so as to prevent that decision from being reopened in assessments for subsequent years. Compare Commissioner of Income-tax v. Massey & Company (1929) 56 M.L.J. 451.

18. In Instalment Supply (Private) Limited v. Union of India [1961] 12 S.T.C. 489 at 501 (S.C.), the Supreme Court observed:

It is well-settled that in matters of taxation there is no question of res judicata because each year's assessment is final only for that year and does not govern later years, because it determines only the tax for a particular period [see the decision of the House of Lords in Society of Medical Officers of Health v. Hope (Valuation Officer) [1960] A.C. 551 approving and following the decision of the Privy Council in Broken Hill Proprietary Company Limited v. Municipal Council of Broken Hill [1925] A.C. 94].

19. The same principle was reiterated by the Supreme Court in Doma Sao Mohanlal v. Stale of Bihar [1971] 27 S.T.C. 473 at 476 (S.C.):

Reliance was sought to be placed by the State upon a decision of the High Court of Patna in Writ Petition M. J. C. No. 11574 of 1960 between Messrs. Doma Shaw Mohanlal Shaw v. Board of Revenue and Ors.. In that case, the High Court had observed that the Muradpur business of the firm Doma Shaw Kishun Lall was entirely transferred to the petitioner-firm and hence the tax payable in respect of the said business, which remained unpaid at the time of the transfer, was payable by the transferee. The tax sought to be recovered in the proceedings out of which that writ petition arose related to the assessment year 1949-50. But each assessment period is distinct and any decision by the authorities declaring liability to tax cannot operate as res judicata in respect of another period.

20. Under these circumstances, Section 20(2-A) of the Andhra Pradesh General Sales Tax Act cannot be so read as to bring in the concept of res judicata. The fact that, in appeal, any particular issue or question is either pending decision of the Tribunal or has already been decided by the Tribunal cannot operate as res judicata for other assessment years and cannot prevent the exercise of revisional powers by the Deputy Commissioner except in relation to the particular assessment year in respect of which an appeal is pending before the Sales Tax Appellate Tribunal or in respect of which the question or issue has been decided by the Tribunal. It should be borne in mind that, if the sales tax authorities are aggrieved by the issue or question decided by the Sales Tax Appellate Tribunal either in the appeal, which was pending at the time or in a particular appeal which has already been decided, they can always approach the High Court on a reference so that the matter can be ultimately decided or they can come to the High Court in the exercise of the revisional powers. Under these circumstances, this contention based on Section 20(2-A) cannot help the petitioner.

21. In the light of the above discussion, it is clear that each of the three contentions urged by Mr. Dasaratharama Reddi on behalf of the petitioner must be decided against the petitioner. Each of these petitions therefore fails and is dismissed with costs. Advocate's fee Rs. 150 in each case.

22. We wish to make it clear that we are not deciding any of the points except those which we have specifically dealt with and it is open to the petitioner to raise the contentions other than those specifically dealt with in this judgment when the matter is argued before the Deputy Commissioner.


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