M.U. Isaac, J.
1. The petitioner is a dealer in cashew and cashew kernel. He imports raw cashew-nut, converts it into kernel and sells it to foreign buyers. He also buys kernel from producers in the State for the purpose of export. Under the Kerala General Sales Tax Act, 1963 (hereinafter referred to as the State Act), cashew and cashew kernel are taxable at the point of last purchase in the State, In the assessment for the year 1963-64, the petitioner claimed that the purchases of cashew-nut from outside India and of cashew kernel from local producers for the purpose of export were not liable to tax under the State Act by virtue of Article 286 of the Constitution, on the ground that the purchase of cashew-nut took place in the course of import and the purchase of cashew kernel took place in the course of export. Both claims were disallowed by the respondent, the Sales Tax Officer, Special Circle, Quilon. The petitioner filed O.P. No. 941 of 1966 to quash the assessment in so far as it did not grant the exemption claimed by him. Balakrishna Eradi, J., who disposed of the case by his judgment dated 25th July, 1968, a copy of which is marked herein as exhibit P2, held that the petitioner was entitled to exemption in respect of cashew-nut purchased by him from outside India. Regarding the purchase of cashew kernel the learned Judge, after referring to the nature of the transaction, stated as follows :
From this it would appear that as part of the arrangement between the vendor and the purchaser the goods were to be shipped by the vendor, in the purchaser's name to foreign destinations, the vendor having undertaken as an integral term of the contract to move the goods across the customs frontiers, put them on board the vessels which would carry them to the foreign destinations to which the goods were being exported, and present the bill of lading to the assessee when alone the assessee was bound to pay for the goods. If this be so, it is a matter for serious consideration whether such purchases would not be purchases in the course of export, because besides the fact of the export being very closely and inextricably interlinked with the contract of purchase so as to form an essential and integral part of the very bargain between the parties, there is also the circumstance that there was absolutely no possibility of the goods being diverted by the purchaser for internal consumption within the country, since the seller retained custody of the goods until they were actually carried across the customs frontiers and put on board the ships for export. However, there has not been a final and detailed examination of the relevant facts on this aspect of the case, probably on account of the fact that the petitioner had concentrated more on his plea that the purchase itself became effective under the contract only at a time when the goods had already crossed the customs frontiers of India. The rejection of the petitioner's plea for exemption based on Article 286(1)(b) of the Constitution without considering the vital aspect pointed out above cannot be sustained. Exhibit P1 will, therefore, stand quashed.
I make it clear that with respect to all matters other than the claim for exemption relating to the turnover of Rs. 6,13,673.38 referred to above, the findings recorded by the assessing authority will stand confirmed. The assessing authority is directed to make a fresh assessment within a period of three months from today after adjudicating on the petitioner's claim for exemption of the aforementioned turnover in the light of the observations contained in this judgment.
Pursuant to the above direction the case was taken up by the respondent; and after allowing the petitioner an opportunity to substantiate his claim for exemption he passed a fresh order of assessment, exhibit P3 dated 22nd October, 1968, by which he granted exemption to the petitioner in respect of a turnover of Rs. 1,01,452.91. The claim in respect of the balance turnover was rejected. This writ petition has been filed to quash exhibit P3 in so far as the respondent did not allow the petitioner's claim for exemption to the full extent.
2. The facts of the case relating to the purchase of cashew kernel from local producers are not in dispute. The petitioner enters into contracts with foreign buyers for sale of cashew kernel. For performing these contracts, he enters into contracts with producers in the State for purchase of cashew kernel. Under the latter contracts, the producers must pack the goods in a specified manner, mark the packages with specified marks, put them on board the ship and obtain bills of lading in the name of the petitioner for export to the foreign purchasers. Then the goods leave this country to their destination. The sales by the petitioner are admittedly export sales. The point of controversy is whether the purchases by the petitioner from the producers in this State are purchases in the course of export. The matter is governed by Section 5(1) of the Central Sales Tax Act. It reads:
5. When is a sale or purchase of goods said to take place in the course of import or export.--(1) A sale or purchase of goods shall be deemed to take place in the course of the export of 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.
The petitioner has no case that the purchases made by him occasioned 'the export of goods out of the territory of India'. So the first part of the Section does not apply. His case is that the purchases are effected by transfer of documents of title to the goods after the goods have crossed the customs frontiers of India; and that the case falls under the second part of the section. In the first place for the section to apply, there must be an export sale or an export purchase, that is to say a transaction which results in the export of the goods out of the territory of India. The sale by the local producer of the goods to the petitioner did not obviously result in the export of the goods. The local producers did not export the goods, nor did they intend to do so. It is the petitioner who exported the goods, and not those who sold the goods to the petitioner. Secondly, there is no sale of the goods in the instant case by transfer of documents of title to the goods. The local producers sold the goods to the petitioner by delivering the same on board the ship as per terms of the contract. They also obtained bills of lading in the name of the petitioner as per contract. The title to the goods passed to the petitioner, when the producers delivered the goods on board the ship. Even assuming that the title passed only on obtaining the bills of lading in the name of the petitioner, still there was no transfer of any documents of title to the goods. The bills of lading, which are the documents of title, were obtained in the name of the petitioner. In such a case, there is no scope for effecting the sale of the goods by transfer of documents of title. This is a case of contracts of sale under which local producers supplied the goods to the petitioner on board the ship, which the petitioner exported out of the territory of India. Section 5(1) of the Central Sales Tax Act has no application to the purchase of the goods by the petitioner.
3. Counsel for the petitioner contended that the respondent has not considered the matter as directed in the judgment of this Court, and that he must be directed to dispose of the case afresh in the light of those directions. The purchases in respect of which the petitioner claimed exemption consisted of 31 consignments. The respondent held that seven out of these consignments, which accounted for a turnover of Rs. 1,01,452.91 bore the marks of the sellers, while the remaining 24 consignments were packed and shipped by the petitioner himself. Counsel for the petitioner submitted that this finding is not supported by any material. The respondent has not referred to any material in support of the above finding ; and counsel for the petitioner is well founded in his submission that the above finding cannot be sustained. But this does not vitiate the impugned order of assessment, since Section 5(1) of the Central Sales Tax Act has no application on the admitted facts of this case; and that is the only matter which arises for decision. This writ petition cannot, therefore, succeed ; and it is accordingly dismissed. In the circumstances of the case, I make no order as to costs.