FOB export contracts and last-purchase tax liability turn on title passing on shipment and local tax exposure.

In FOB contracts, title is presumed to pass when the goods are put on board ship unless special circumstances clearly displace that presumption. On the facts, the export documentation, railway papers and hypothecation arrangement did not override the FOB position, so the iron ore transaction was treated as a local purchase liable as the last taxable purchase under the Mysore Sales Tax Act. Sales of tyres and tubes were also treated as taxable sales because they were made with a profit motive, even though the tax on that item was ultimately not pressed.

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Issues: (i) Whether the assessee's purchase of iron ore from mine-owners was the last purchase liable to tax under section 5(3) of the Mysore Sales Tax Act, 1957, or whether the subsequent transaction with the State Trading Corporation was a purchase in the course of export immune from State tax. (ii) Whether sales of tyres and tubes to the transport concern were liable to sales tax.

Issue (i): Whether the assessee's purchase of iron ore from mine-owners was the last purchase liable to tax under section 5(3) of the Mysore Sales Tax Act, 1957, or whether the subsequent transaction with the State Trading Corporation was a purchase in the course of export immune from State tax.

Analysis: The contracts between the assessee and the State Trading Corporation were FOB contracts. In such contracts, property ordinarily passes when the goods are put on board ship unless special circumstances show otherwise. The documents of export were made out in the name of the State Trading Corporation, but the assessee retained responsibility for transport to the port and loading. The surrounding circumstances, including railway documents in the Corporation's name and the hypothecation arrangement, were not sufficient to displace the normal FOB presumption. The transaction was therefore treated as one for export, not as a sale in the course of export so as to exempt it from State tax.

Conclusion: The assessee was the last purchaser within the State and was liable to tax on the iron ore.

Issue (ii): Whether sales of tyres and tubes to the transport concern were liable to sales tax.

Analysis: The sales were admitted sales. Though the assessee was not a regular dealer in tyres and tubes, the supplies were made to facilitate performance of the export contracts with the State Trading Corporation. That connection was sufficient to show a profit motive for the transactions.

Conclusion: The sales of tyres and tubes were liable to tax, though the tax on that item was ultimately not pressed by the State.

Final Conclusion: The principal tax demand on the iron ore transactions was sustained, while the levy on the tyres and tubes was not enforced, leaving the assessee successful only to a limited extent.

Ratio Decidendi: In an FOB contract, property is presumed to pass on shipment unless special circumstances clearly show an earlier passing of title, and where the transaction is not shown to be in the course of export, the local purchaser remains liable as the last taxable purchaser.

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