Integrated FOB sale and export treated as one transaction, qualifying for the constitutional export tax exemption.

An f.o.b. sale was treated as a sale in the course of export where the contract required shipment on the purchaser's nominated vessel, the goods were marked for overseas destination, export was carried out under the seller's licence, and customs formalities were completed before loading. Payment depended on a clean on board mate's receipt and G.R. 1 forms, showing that property passed on shipment. On these facts, the sale and export formed a single integrated transaction, and the export was the direct consequence of the contract. The transaction therefore occasioned export out of India and fell within the constitutional exemption from sales tax under article 286(1)(b).

---

---

Issues: Whether the sale of linseed oil under an f.o.b. Calcutta contract was a sale in the course of export out of India and therefore exempt from sales tax under article 286(1)(b) of the Constitution.

Analysis: The contract required the seller to place the goods on board the vessel named by the purchaser, the goods bore shipment marks for destinations in Indonesia, the export was undertaken under the seller's export licence, customs duty and port charges were paid by the seller, and customs clearance was obtained before loading. Payment was to be made only against a clean on board mate's receipt with the relevant G.R. 1 forms, indicating that property passed upon shipment and not before. On these facts, the sale and export formed a connected and integrated transaction. The export was not a separate or independent event after the sale, but the direct consequence of the contract of sale.

Conclusion: The sale occasioned the export and was in the course of export within article 286(1)(b) of the Constitution; the transaction was exempt from sales tax.

Final Conclusion: The reference was answered in favour of the assessee, and the sale was held not liable to State sales tax as an export sale.

Ratio Decidendi: Where the terms of an f.o.b. sale show that the sale and the export are part of a single integrated transaction, with export contemplated and carried out under the contract itself, the sale is one occasioning export and falls within the constitutional exemption.

---