FOB sale and transfer of title on shipment failed to qualify as a sale in the course of export.

An FOB sale with delivery on board the vessel, freight and transit risk passing to the buyer after loading, and the seller's obligation ending on shipment was held to transfer property in the goods at the time of shipment. On those contractual terms, the later handing over of shipping documents against payment did not constitute a fresh transfer of title after the goods had crossed the customs frontiers of India. The court therefore held that the transaction did not fall within the second limb of section 5(1) of the Central Sales Tax Act, 1956 as a sale in the course of export, and answered the questions in favour of the Revenue.

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Issues: Whether the sale was effected by transfer of documents of title to the goods after the goods had crossed the customs frontiers of India so as to fall within the second limb of section 5(1) of the Central Sales Tax Act, 1956 and qualify as a sale in the course of export.

Analysis: The transaction was governed by the contractual terms under which the goods were sold on f.o.b. basis, with delivery on board the vessel, onward freight and transit risk after loading being on the buyer, and the seller's obligation ending on shipment. Those terms showed that the intention of the parties was for property and risk to pass when the goods were placed on board the vessel, not upon later presentation of shipping documents. A sale under the Central Sales Tax Act takes place on transfer of property in goods, and on the facts the transfer occurred on shipment. The later handing over of documents against payment did not amount to a fresh transfer of title after the goods had crossed the customs frontiers, because the seller had already parted with the property in the goods. The authorities relied upon by the assessee were distinguishable on their contractual terms.

Conclusion: The sale was not effected by transfer of documents of title after the goods had crossed the customs frontiers of India and did not fall within section 5(1) of the Central Sales Tax Act, 1956. The questions were answered in the negative, in favour of the Revenue and against the assessee.

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