1. This is a revision petition by the Government against the order of the Sales-tax Tribunal. The turnover in dispute is Rs. 1,99,179-3-4, which represents the price of coffee seeds, which the assessee exported outside the Indian territory during the assessment year. The contract for the sale with the foreign buyers was on 26-10-1949, and the Coffee seeds were booked on 25-1-1950 at Mangalore. The ship actually left the port on 28-1-1950. The foreign purchasers opened a letter of credit which was confirmed by the branch of the Imperial Bank at Mangalore. On 1-2-1950, two drafts were drawn, and on 2-2-1950, they were discounted by the assessee at the Imperial Bank branch at Mangalore. This bill of lading, it is common ground, was taken, as is usual in such cases to the order of the seller; but the insurance was paid by the buyer. The agreement to sell, therefore, was before the Constitution, and the goods were actually put on board at Mangalore on 25-1-1950. Viewed from whatever point either under the law before the Constitution came into force on 26-1-1950, or under Article 286(1)(b) after the Constitution came into force, we think the assessee is not liable to pay tax on the sale price of the coffee seeds exported.
2. Viewing the question apart from the Constitution we are clearly of opinion that the property in the goods passed to the buyer outside the Indian territory only when the bill of exchange was accepted by the buyer and the bill of lading was handed over to the buyer or his bank. A similar question was considered under the Income-tax Act by this Court in -- 'Commrs. of Income-tax, Madras v. Mysore Chromite Ltd.', : 20ITR546(Mad) (A) and the conclusion reached by the Bench was that similar circumstances and on similar facts, the sale took place outside the Indian territory. As the sale is entirely outside the Indian territory the State is not entitled to impose Sales-tax on the sale transaction.
3. If the question is viewed under the Constitution undoubtedly, the sale was in the course of export, as interpreted by the Supreme Court in the recent decisions, and the sale itself was after 26-1-1950, and the assessee would be entitled to the exemption under Article 286(1)(b).
4. The decision of the Tribunal is correct andthis revision-petition is dismissed with costsRs. 250.