Agency-based export transaction treated as movement in the course of export, not an inter-State sale.

Goods moved from the assessee to the Bombay party under a written agency arrangement for procuring export orders and effecting exports. The Bombay party acted as agent, received export proceeds, deducted commission and remitted the balance to the dealers, showing a single export transaction linked to movement of goods to foreign buyers. The absence of a direct contract between the dealers and the overseas purchasers did not alter the export character of the arrangement, because agency principles and the doctrine of undisclosed principal preserve the real nature of the transaction. A Revenue precedent based on a principal-to-principal sale was distinguished. The movement was therefore treated as in the course of export, not an inter-State sale.

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Issues: Whether the movement of goods from the assessee to the Bombay party was in the course of export and not an inter-State sale.

Analysis: The transaction was governed by a written agency arrangement under which the Bombay party acted as agent for procuring export orders and exporting the goods. The agreement, which was not disputed, showed that the Bombay party received the export proceeds, deducted commission and credited the balance to the dealers, indicating that the export activity was part of a single transaction linked with the movement of goods from Mathura to the foreign buyers. The absence of a direct contract between the dealers and the foreign purchasers did not defeat the export character of the transaction, since the Bombay party acted as an agent and the provisions relating to an undisclosed principal recognize that the real nature of the contract is not altered by non-disclosure. The case relied upon by the Revenue was distinguished because it involved a sale on principal to principal basis, whereas the present transaction was one of agency.

Conclusion: The movement of goods was in the course of export and not an inter-State sale; the revisions therefore failed.

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