Export sale exemption turns on passing of property and shipment control before goods enter the export stream.

Revisional jurisdiction under the Madras General Sales Tax Act was upheld because the disputed turnover had been disclosed and the assessing officer had already accepted the exemption, so the revisional authority could examine the legality and propriety of that allowance. The export exemption issue turned on whether property in the goods passed only after the goods had entered the export stream. Applying Sale of Goods Act principles on appropriation, reservation of title, delivery against shipping documents, and passing of property, the Court treated the C. and F./F.O.B. contracts as integrally connected with export. The sales were therefore sales in the course of export under Article 286(1)(b) and were not taxable.

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Issues: (i) Whether the Commercial Tax Officer had jurisdiction under section 12(1) of the Madras General Sales Tax Act to revise the assessment and withdraw the exemption earlier granted. (ii) Whether the turnover arising from the three contracts was exempt as sales in the course of export under Article 286(1)(b) of the Constitution of India.

Issue (i): Whether the Commercial Tax Officer had jurisdiction under section 12(1) of the Madras General Sales Tax Act to revise the assessment and withdraw the exemption earlier granted.

Analysis: The turnover questioned by the revising authority was not treated as escaped turnover in the true sense. The sales were already disclosed in the books and had been considered by the assessing officer, who had accepted the assessee's claim of exemption, though not formally recorded in the assessment order. The revisional authority therefore examined the legality and propriety of the exemption already granted, which fell within the revisional power. On that footing, the objection that the officer had assumed the role of an assessing authority was not made out.

Conclusion: The revisional jurisdiction was validly exercised, and the objection to the assessment failed.

Issue (ii): Whether the turnover arising from the three contracts was exempt as sales in the course of export under Article 286(1)(b) of the Constitution of India.

Analysis: The sales were made by local sellers to Bombay buyers, not to foreign buyers, so they were not export sales in the sense of sales occasioning export through privity with the foreign purchaser. The decisive inquiry was whether property in the goods passed only after the goods had entered the export stream. Applying the Sale of Goods Act principles on ascertainment, appropriation, reservation of the right of disposal, delivery against documents, and passing of property, the Court held that the sellers retained control until at least shipment and presentation of the bills of lading, and in any event until the goods were put on board at Cochin. By that stage the goods had crossed the customs barrier and were already on their way to foreign destinations. The contracts on C. and F. and F.O.B. terms, together with payment against shipping documents, supported the conclusion that the sales were integrally connected with export.

Conclusion: The turnover was covered by the constitutional exemption as sales in the course of export and was not taxable.

Final Conclusion: The assessment was set aside because the disputed turnover could not validly be included in the taxable turnover, the sales being protected by the export exemption.

Ratio Decidendi: Where the seller retains property or control over goods until shipment or presentation of shipping documents, and the goods have entered the export stream by crossing the customs frontier, the sale is one in the course of export and is exempt from State sales tax under Article 286(1)(b) of the Constitution of India.

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