1. T.C. (A) No. 1393 of 1977 is an appeal against the order of the Board of Revenue for the assessment year 1969-70. The others are revision petitions filed against the order of the Sales Tax Appellate Tribunal dated 30th June, 1977, and 1st November, 1977. The order dated 1st November, 1977, relates to the assessment year 1972-73, while the others relate to the assessment years 1970-71 and 1971-72. For the assessment year 1972-73, there are two appeals, one against the assessment under the Tamil Nadu General Sales Tax Act and the other under the Central Sales Tax Act. All these cases raise certain common contentions and, therefore, they can be disposed of together here.
2. For the assessment year 1970-71 the assessee, a manufacturer of textile and the machinery, was granted exemption on the turnover of Rs. 46,41,305 on account of export sales of machinery to the State Trading Corporation. On a re-examination of the facts it was considered that there were two independent sales, one by the assessee in favour of the State Trading Corporation and the other by the State Trading Corporation in favour of the foreign buyer. The assessing authority, therefore, proposed to revise the assessment and bring to tax a sum of Rs. 46,41,305 representing sales to the State Trading Corporation. After hearing the assessee's objections, the said amount was taxed in the assessment under the Tamil Nadu General Sales Tax Act. Similarly, the assessments under the Central Sales Tax Act and under the State Act for the years mentioned above were revised or made bringing to tax the sales to the State Trading Corporation on the ground that they were only local sales and not sales in the course of export. The Appellate Assistant Commissioner and the Tribunal have confirmed the respective assessments. The revision petitions arise out of the Tribunal's orders.
3. For the assessment year 1969-70 by his order dated 26th February, 1971, the assessing authority made an assessment. Subsequently it was noticed that a sum of Rs. 42,21,119.53 was deducted as export sales relating to the supply of machinery to the State Trading Corporation for export to United Arab Republic. Assessing authority brought to tax the said amount. However, on appeal the Appellate Assistant Commissioner set aside the assessment to the extent of the said turnover. The Board took suo motu revision proceedings and after hearing the assessee's objections, the turnover of Rs. 42,21,119.53 was restored to the assessment. The appeal has been filed against this order.
4. The State Trading Corporation entered into an agreement with a foreign buyer on 18th July, 1968. We have before us a copy of the agreement dated 12th May, 1969, entered into between the General Organisation for Industrialisation, Cairo, U.A.R., and the State Trading Corporation. The General Organisation is referred to as the 'customer'. The customer was desirous of purchasing certain items of textile machinery. Annexure I to the agreement contains a summary of the various items of machinery to be supplied by the State Trading Corporation. One of the items of machinery was known as 'Lakshmi Reiter' machinery. The State Trading Corporation undertook to supply the said goods from 'sub-suppliers' mentioned in the annexure of whom the assessee is one. The State Trading Corporation agreed to train engineers and technicians of the customer in the sub-supplier's works for a period of three months each free of cost. The customer was to pay the f.o.b. price of all machinery and equipment with the relevant accessories. The customer was also to pay the State Trading Corporation a sum of Rs. 9,10,582 being the total f.o.b. price of the spare parts sufficient for one year of normal operation of the machinery and equipment contracted for. The total price contemplated by the contract as payable was Rs. 28,702,380 (Rupees twenty eight million, seven hundred and two thousand and three hundred and eighty only). This was to be paid as follows :
2 1/2 per cent of the total price by opening of an irrevocable, 'divisible' and assignable letter of credit without recourse to the customer in favour of the State Trading Corporation. The payment would be made out of the letter of credit against presentation of the invoices, clean bill of lading, inspection certificate, certificate of origin and packing list. 97 1/2 per cent of the price was to be paid in 10 successive equal annual instalments, the first instalment being due 12 months after the date of the first consignment or four months after the last consignment whichever was later. Payments were to be made in the Indian rupee through an irrevocable, 'divisible' and assignable revolving letter of credit. The customer's authorised representative was to have access to the sub-suppliers' manufacturing works to inspect and test the deliveries contracted for, during and after its manufacture. The State Trading Corporation was to inform 45 days in advance about any consignment being ready for inspection and testing. The goods were to be shipped through the competent organisation for maritime transport in U.A.R. The State Trading Corporation was to supervise the complete erection of the machinery. Article 18 provided for the State Trading Corporation assigning its rights and obligations in whole or in part with the previous written consent of the customer and in that event the State Trading Corporation was to remain jointly and severally responsible with the assignee for the execution of the contract. In annexure I to the agreement in several places the types of machinery required to be supplied by the assessee are referred to. As regards 97 1/2 per cent of the price payable by the foreign customer, there is form of letter of guarantee as in annexure No. IV providing payment in 10 equal successive annual instalments.
5. It is in pursuance of this agreement that the further agreement was entered into between the State Trading Corporation and the assessee on 2nd December, 1969. In this agreement also the foreign customer is referred to as the customer. It refers to the assessee agreeing to supply to the customer on behalf of the State Trading Corporation on f.o.b. basis textile machinery and equipment with relevant accessories and spare parts as per annexure I to the agreement. The goods were to be delivered in accordance with the specifications. The total f.o.b. price was referred to as Rs. 64,00,236 and the spare parts as being of the value of Rs. 2,16,159 sufficient for the period of one year were also to be supplied. The State Trading Corporation had to assign the foreign letter of credit in favour of the assessee. The assessee had to instruct the Bank of Baroda, Coimbatore, its banker through whom the letter of credit was operated to-deduct 1 per cent of the f.o.b. value of the goods as service charges payable to the State Trading Corporation, out of the realisation of 97 1/2 per cent of the contract value. The assessee was to instruct the Bank of Baroda to deduct in addition 2 per cent of the f.o.b. value relating to each shipment as guarantee commission payable to the State Trading Corporation out of the 21 per cent of the contract value of each shipment. All banking charges, commission and other expenses were to by borne by the assessee. There is a reference to the 97 1/2 per cent of the price being payable by the foreign customer in instalments. There is mention in clause 4 of the contract of the technical services to be rendered by the assessee to the customer. The customer had agreed to pay a sum of Rs. 8,54,550 out of which Rs. 1,39,000 was payable to the assessee as remuneration for the specialists to be deputed to U.A.R. The State Trading Corporation was also entitled to have access to the assessee's manufacturing works to inspect and test the goods. The expenses relating to storage, insurance and maritime transportation were to be on account of the customer, and were to be passed on to the assessee as and when received by the State Trading Corporation from the customer. Article 22 specifically provided that the parties understood that the basis of the contract was the foreign agreement dated 12th May, 1969.
6. It is in accordance with this contract, which is called 'back to back contract' that the supplies were made by the assessee. The goods were duly booked on different dates and Voltas who were the distributors of the assessee's products undertook to erect the machinery in U.A.R. There were also inspections of the machinery as contemplated by the parties during and after the manufacture.
7. The contention of the assessee was that in all these cases the goods were actually exported by the assessee to U.A.R. and that the sales were in the course of export and, therefore, exempt. The contention for the State was that in all these cases there were separate contracts between the assessee and the State Trading Corporation and the State Trading Corporation and the foreign customer, and that the sales effected by the assessee to the State Trading Corporation cannot be treated as export sales. It is in this context that we have to refer to the relevant provisions of the Act.
8. It is not in dispute that in all these cases the sales would be exempt only if they fell within the scope of section 5(1) of the Central Sales Tax Act. Section 5 of the Central Sales Tax Act deals with the question when the sale or purchase of goods is said to take place in the course of the import or export of the goods, Section 5(1) 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. Thus, section 5(1) deals with two alternative cases, (1) where a sale or purchase occasions an export out of the territory of India and (2) where a sale or purchase is effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India. In the course of the arguments attention was drawn to the decision of a Bench of this Court in M.R.K. Abdul Salam and Co. v. Government of Madras  13 S.T.C. 629. In that case there were transactions in favour of Gordon Woodroffe and Co. and Dharamsee Parpia. These transactions had been entered into through an agent of the assessee, who worked on commission basis. The Tribunal refused to accept the transactions as export sales on the ground that the agent delivered the goods to the exporter, and thereafter the exporter obtained the bill of lading and that the sale became complete in Madras before shipment. In the course of the judgment at page 643 it was observed as follows :
'Where there is privity of contract between the foreign buyer and the seller in the taxing territory and the concluded sale between them occasions the export even if the property in the goods sold passes within the territory the transaction is nevertheless one in respect of which article 286 imposes a ban on the State to levy tax.'
9. This passage came to be considered by the Supreme Court in Ben Gorm Nilgiri Plantations Co., Coonoor v. Sales Tax Officer, Special Circle, Ernakulam : 7SCR706 . In that case the manufacturers of tea applied for and obtained from the Tea Board allotment of export quota rights on payment of the necessary licence fee. The manufactured tea in chests was then sent to Stanes and Company Limited, who warehoused the chests at Willingdon Island. The chests of tea were then sold by public auction through brokers at Fort Cochin. The foreign buyers and their agents in Cochin bid at the auction and purchased the tea chests with export quota rights. The chests were delivered at the warehouses by Stanes and Company to the purchasers whose bids were accepted. The agents of the foreign buyers then obtained licences from the Central Government for export of the tea chests and actually exported them out of the territory of India. The question was whether the sale by auction to the agents or intermediaries of the foreign buyers was a sale in the course of export and was exempt from sales tax. It was held that the sales did not occasion the export even though the assessee knew that the buyers in offering the bids were acting on behalf of the foreign principals and that they intended to export the goods. It was pointed out that there was between the sale and the export no such bond as would justify the inference that the sale and the export formed parts of a single transaction or that the sale and export were integrally connected. The conclusion was that the sales were for export and not in the course of export. At page 759 it was observed as follows :
'To constitute a sale in the course of export of goods out of the territory of India, common intention of the parties to the transaction to export the goods followed by actual export of the goods to a foreign destination is necessary. But intention to export and actual exportation are not sufficient to constitute a sale in the course of export, for a sale by export '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' : State of Travancore-Cochin v. Bombay Company Ltd.  3 S.T.C. 434 S.C.. A sale in the course of export predicates a connection between the sale and export, the two activities being so integrated that the connection between the two cannot be voluntarily interrupted, without a breach of the contract or the compulsion arising from the nature of the transaction. In this sense to constitute a sale in the course of export it may be said that there must be an intention on the part of both the buyer and the seller to export, there must be an obligation to export, and there must be an actual export. The obligation may arise by reason of statute, contract between the parties, or from mutual understanding or agreement between them, or even from the nature of the transaction which links the sale to export. A transaction of sale which is a preliminary to export of the commodity sold may be regarded as a sale for export, but is not necessarily to be regarded as one in the course of export, unless the sale occasions export. And to occasion export there must exist such a bond between the contract of sale and the actual exportation, that each link is inextricably connected with the one immediately preceding it. Without such a bond, a transaction of sale cannot be called a sale in the course of export of goods out of the territory of India.'
10. A variety of transactions in which the sale of a commodity was followed by export thereof was then explained. At one end were transactions in which there was a sale of goods in India and the purchaser, immediate or remote, exported the goods out of India for foreign consumption. For instance, the foreign purchaser, might either by himself or through his agent, purchase goods within the territory of India and export them and even if the seller had the knowledge that the goods were intended by the purchaser to be exported, such a transaction was not considered by their Lordships to be in the course of export, for the seller did not export the goods, and it was not his concern as to how the purchaser dealt with the goods. At the other end was the transaction with a foreign buyer under which the goods might under the contract be delivered by the seller to a common carrier for transporting them to the purchaser. Such a sale would indisputably be one of export, whether the contract and delivery to the common carrier were effected directly or through agents. But in between these two types of transactions lies a variety of transactions in which the question whether the sale was one for export or was one in the course of export would have to be determined on a correct appraisal of all the facts. There was no single test laid down in the pronouncement of the Supreme Court to determine this question, and each case has to be decided on its own facts. However, in all these cases it is necessary to bear in mind the distinction between the transactions which may be called sales for export and sales in the course of export.
11. In the course of this judgment reference was made to the passage extracted earlier from the decision in Abdul Salam and Co. v. Government of Madras  13 S.T.C. 629. In relation to the passage it was pointed out by their Lordships that they were not concerned to decide whether there was evidence in that case on which the High Court could come to the conclusion that the sale occasioned the export and that they did not read the judgment as laying down a proposition that in all cases where there was a contract for purchase of goods in the taxing territory, between a local merchant and a foreign buyer acting through his agent, and the goods were after purchasing the same exported by the agent, the transaction must be deemed to be one in the course of export. In the same case it was also pointed out that the knowledge on the part of the assessee that the goods were intended to be exported did not furnish the necessary bond between the sale and the export. The judgment of the majority was dissented from by Wanchoo and Rajagopala Ayyangar, JJ. But, for our present purpose, it is not necessary to go into the judgment of the minority.
12. In Murarilal Sarawagi v. State of Andhra Pradesh : 2SCR441 , the Supreme Court was again concerned with a similar problem. In that case, the assessee sold manganese ore to M.M.T.C. for export to foreign buyers. It was contended that the sales of manganese ore to M.M.T.C. were complete within the State of Andhra Pradesh and that M.M.T.C. was the last purchaser within the State so as to be under duty to pay tax. The Andhra Pradesh High Court held that the assessee was the last purchaser in the State, as the contract entered into with the M.M.T.C. was integrally connected with the export. The assessee appealed and in the Supreme Court reference was made to the f.o.b. character of the contract between the assessee and M.M.T.C. and the further contention was that M.M.T.C. was not the last purchaser of the goods within the State, because the property in the goods passed to M.M.T.C. on board the ship. It was held that the contract between the assessee and M.M.T.C. was different from the contract between M.M.T.C. and the foreign purchaser, and the last purchaser within the State was, therefore, the M.M.T.C. In that case the decision in the Serajuddin's case : AIR1975SC1564 was followed and it was pointed out that the decision in National Tractors, Hubli v. Commissioner of Commercial Taxes, Bangalore : AIR1971SC2277 , of the Supreme Court was no longer good law.
13. Thus, it is now well-established that there is a difference between a sale for export and a sale in the course of export. The delivery by the assessee of the goods on board as the agent of the State Trading Corporation is only in discharge of an obligation of a term of the contract between the assessee and the State Trading Corporation. It is the State Trading Corporation which had entered into the contract with the customer in U.A.R. There is absolutely no privity of contract between the assessee and the customer in U.A.R. Though the State Trading Corporation had procured the machinery from the assessee only for export, still the transaction of sale in the course of export was actually effected only by the State Trading Corporation. As pointed out in Ben Corm Nilgiri Plantations Co., Coonoor v. Sales Tax Officer, Special Circle, Ernakulam : 7SCR706 , the knowledge on the part of the assessee that the goods were to be exported had no relevance to the determination of the question whether the sale was in the course of export. Even though the assessee was to be paid for only out of the letter of credit opened by the foreign purchaser, and the payment to the assessee was thus simultaneous with the payment to the State Trading Corporation under the letter of credit, still the fact that the assessee was actually effecting a sale only in favour of the State Trading Corporation cannot be ignored. If there was an assignment of contract with the foreign customer, by the State Trading Corporation, in favour of the assessee, then the position would have been different. But that is not the case here. The assessee could not have filed a suit against the customer in U.A.R. for any default in payment of price. The assessee could only look to the State Trading Corporation for breach of any obligation under the contract. There was no privity of contract with and no sale to the customer in U.A.R.
14. Even in the invoice that was raised by the assessee against the foreign customer, it is stated :
'A/c. The State Trading Corporation of India Ltd.'
15. Thus, in putting the goods on board and raising the invoice the assessee acted only as the agent of the State Trading Corporation, thereby showing that the assessee occupied two capacities, viz., (1) as the seller of the goods to the S.T.C. and (2) as the agent of the State Trading Corporation in performance of the obligations under the contract between it and the foreign purchaser. In the absence of any privity of contract between the assessee and the foreign purchaser and having regard to the terms of the contract between the assessee and the State Trading Corporation, it has to be held that the assessee effected the sales only in favour of the State Trading Corporation. The subsequent sale by the State Trading Corporation in favour of the U.A.R. customer would be the only sale in the course of export. It may be that the State Trading Corporation did not raise any further invoice. But what it did with its customer does not in any way affect the legal character of the transaction between it and the assessee.
16. During the course of the hearing, one of the contentions urged was that there was a right of inspection available to the foreign customer and that there was a sale as soon as the goods were appropriated to the contract. It is unnecessary to go into this contention further. Suffice it to say that the transfer of property in the goods depends on the intention of the parties, and in the present case the assessee had tendered the documents to the bank and put the goods on board. Until these were done, even assuming that there was any appropriation, it cannot be treated as an unconditional appropriation. In the view that we have already taken, viz., there was a local sale in favour of the State Trading Corporation as soon as the goods were put on board on its behalf, there is a liability to tax.
17. There are two other points which arise in some of these cases. One is with reference to the power of revision and the problem arises in T.C. (R) Nos. 1300 to 1302 of 1977 and 1393 of 1977. This point has already been covered by two decisions of this Court in Yercaud Coffee Curing Works Ltd. v. State of Tamil Nadu  40 S.T.C. 531 and Surya Fertilisers and Chemicals v. State of Tamil Nadu  40 S.T.C. 538. We do not think it necessary to deal with the point over again in these cases and following the said judgments we hold that the exercise of power of revision cannot be questioned.
18. The only other point that survives for consideration arises in T.C. (R) Nos. 1300 to 1302 of 1977. This raises the question of limitation, which has already been dealt with in K. Lakshmanaswami Chettiar and Sons v. State of Tamil Nadu  46 S.T.C. 327 and following the said judgment we hold that the assessment cannot be said to be time-barred.
19. The result is that the appeal and the revision petitions fail and are dismissed. In the circumstances, there will be no order as to costs.
20. Petitions dismissed.