1. This is an appeal against the decision of the Board of Revenue dated 29th December, 1976. The assessee was assessed for the assessment year 1971-72 under the Tamil Nadu General Sales Tax Act in due course. It had claimed exemption on a turnover of Rs. 21,85,920 relating to sales of mango juice exported to the U.S.S.R. This exemption was allowed by the assessing authority. The assessment was reopened, and the sum of Rs. 21,62,725.51 was added in the assessment by an order dated 3rd July, 1974. In the appeal before the Appellate Assistant Commissioner the inclusion of this turnover was disputed and the Appellate Assistant Commissioner accepted the plea of the assessee and allowed the claim.
2. The Board took suo motu revision proceedings, as it considered that the Appellate Assistant Commissioner acted erroneously in granting exemption on the said turnover. In the view of the Board, the sales were only local sales exigible to tax under the Tamil Nadu General Sales Tax Act. The objection of the assessee was called for and the Board restored the sum of Rs. 21,61,725.51 to assessment. The present appeal challenges the correctness of this order of the Board.
3. On 11th May, 1971, the State Trading Corporation entered into an agreement with an organisation for import and export of foodstuffs and agricultural products in U.S.S.R. The State Trading Corporation has been referred to as the seller and the Russsian entity as the buyer. In the agreement, it is stated that the sellers sold and the buyers purchased, on condition of f.o.b. stowage, canned mango juice 5,700 tonnes net of Indian origin out of 1971 crop. The price was Rs. 1,840 per metric tonne net, including the cost of tare, packing and marking, etc. The purchasers were allowed 1 per cent discount from the said price so as to cover losses during the transpiration of the goods from Indian ports to the Soviet ports. The goods were to be delivered in instalments between July and October. Within 10 days of this agreement, the State Trading Corporation was to produce to the buyers the names of actual suppliers as well as the quantity of goods to be supplied by each supplied with monthly schedules of the shipments. The payments for the goods were to be effect in accordance with the trade agreement between the U.S.S.R. and the Government of India dated 26th December, 1970. The payment was to be in Indian rupees out of an irrevocable commercial letter of credit established by the Russian buyers in favour of the State Trading Corporation covering the full value of the goods prepared for shipment with the bank for foreign trade of U.S.S.R. That bank would advise the sellers, viz., the State Trading Corporation, of the establishment of the commercial letter of credit through the State Bank of India. The charges connected with the extension of the letter of credit were to be at the expense of the State Trading Corporation. The payment was to be effected against the presentation of the shipping documents to the extent of 95 per cent. The remaining 5 per cent of the value was to be paid by the buyers to the sellers not later than 40 days after the date of drawing up of the survey reports and final acceptance of the goods.
4. On 21st May, 1971, the State Trading Corporation entered into an agreement with the assessee. In the said agreement, it is recited that the State Trading Corporation had entered into a contract with the foreign buyer for the export of mango juice and had contracted with the assessee as the supplier the obligations for supply and shipment of 1,200 metric tonnes of mango juice conforming to the specification set out in the contract with U.S.S.R. The price of the goods was to be at the rate per metric tonne as indicated in the export contract between the State Trading Corporation and the foreign buyer, and the State Trading Corporation gave a cash assistance of Rs. 75 per metric tonne for bridging the loss to the assessee. This cash assistance would be given after all the contractual obligations were fulfilled. There is a clause relating to the delivery schedule. Clause 7 provided for payment. Immediately on establishment of an irrevocable commercial letter of credit by the foreign buyer, an internal letter of credit, if desired by the assessee, was to be established by the State Trading Corporation on the condition that all the expenses connected with the opening of the letter of credit including interest were to be borne by the assessee. The payment for the goods was to be effected against the presentation of the shipping documents through the State Bank of India to the extent of 95 per cent less 1 per cent discount on the f.o.b. value of the goods shipped.
5. It is in pursuance of this contract that the assessee despatched from Madras to Odessa in the U.S.S.R. 400 tonnes on 27th July, 1971. The relevant bills of lading were dated 26th and 27th July, 1971, and the freight was to be paid by the buyer. The payment was to be against the irrevocable letter of credit dated 14th July, 1971, from the State Bank of India, Mount Road, Madras-2, opened by the State Trading Corporation of India. The bill of lading was made out 'On A/c. the State Trading Corporation of India Limited.'. Similar invoices and bills of lading were prepared in respect of the other consignments. The question for consideration is, whether the assessee effected any sales of goods in favour of the buyer in U.S.S.R., so that the sales can be considered to be export sales.
6. We consider that the sales were effected by the assessee only in favour of the State Trading Corporation. In the bills made out by the assessee it is only the State Trading Corporation that is referred to as the person against whom the bills were made out. The assessee drew on the letter of credit opened by the State Trading Corporation on the State Bank of India. The assessee had no privity of contract with the foreign purchaser. On these facts, the transactions are not sales 'in the course of export'. We have considered a similar claim in Lakshmi Machine Works Limited, Coimbatore-641 020 v. State of Tamil Nadu represented by the Joint Commercial Tax Officer, Coimbatore [T.C. (R) Nos. 1300 to 1302 of 1977 and T.C. (A) No. 1393 of 1977 and Tax (R) Case No. 315 of 1979] 48STC342 and by a judgment pronounced today, we have held that the sales were only for export and not in the course of export and that the purchaser from the assessee was only the State Trading Corporation and not the foreign buyer. For the same reasons as those contained therein, we hold that the transactions were rightly brought to tax by the Board of Revenue and that, therefore, there is no room for interference with the order of the Board.
7. The appeal is accordingly dismissed. There will be no order as to costs.