TaxTMI 
TaxTMI 
1994 (7) TMI 292
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....hether, in the facts and circumstances of the case, the learned Tribunal, having held that there was no contravention of section 5(2)(A)(a)(ii) of the Act, acted within its jurisdiction in remanding the appeal. (3) Whether, in the facts and circumstances of the case, the sale by the petitioner-company to the Japanese buyers comes within the ambit and scope of article 286(1)(b) of the Constitution of India read with section 5 of the Central Sales Tax Act." A three-Judge Bench of the High Court by its judgment dated May 11, 1976, answered the questions as under: "(1) On the facts and in the circumstances of the case, the Tribunal was correct in holding that there was no contravention of the declarations given under rule 27(2) of the Orissa Sales Tax Rules and, therefore, the proviso to section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act was not attracted. (2) In the facts and circumstances of the case, the sales by the assessee to the Japanese buyer are covered by the embargo under article 286(1)(b) of the Constitution of India read with section 5 of the Central Sales Tax Act and, therefore, are not exigible to sales tax under the Orissa Act. The remaining question, in ....
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....of the undertaking in the declarations but the assessee's sale in favour of the Japanese buyers was found liable to tax. As the accounts had to be re-verified to ascertain the correct figures, the Tribunal remanded the matter. The Tribunal stated the cases and referred the questions at the instance of both the Revenue as also the assessee for the opinion of the High Court. We have already set out the answers given by the High Court. Sections 2(g) and 5(2)(A)(a)(ii) of the Act and rule 27(2) of the Rules are reproduced hereunder: "Section 2(g): Sale means, with all its grammatical variations and cognate expressions, any transfer of property in goods for cash or deferred payment or other valuable consideration, but does not include a mortgage, hypothecation, charge or pledge and the words 'buy' and 'purchase' shall be construed accordingly. Explanation.-(a) A sale or purchase of goods shall be deemed to take place inside the State if the goods are within the State- (i) in the case of specific or ascertained goods at the time the contract of sale is made; and (ii) in the case of unascertained or future goods at the time of their appropriation to the contract of sale....
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....se of export of the goods out of the territory of India only if the sale or purchase either occasions such export or is effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India." The undisputed scheme of the Act is that a dealer becomes liable to pay tax at the time of purchase but being a registered dealer under the Act a facility is given to him and the liability to pay the tax is deferred to a later stage, when he resells the goods. To ensure that the sale does not escape tax altogether a declaration is taken from the dealer to the effect that the goods are meant for resale within the State. In other words, the Act has adopted a single point tax. Under the scheme, the taxable event is postponed until a registered dealer sells the goods to an unregistered dealer, a consumer or in breach of the undertaking diverts the goods for other purposes. The proviso to section 5(2) of the Act operates when the purchasing dealer violates his undertaking and he becomes liable to pay the tax which he had avoided on the basis of the declaration. It is not disputed that the assessee purchased mineral ores from the mine owners-w....
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....the loading port. Article 10 provides that each shipment shall be deemed as delivered when it is loaded on board the vessel and trimmed. Under article 12, Paradeep is a port of delivery. Insurance cover in terms of article 9 after the ore is loaded on board the vessel is to be arranged by the buyer at its expense. Under article 13, risk with respect to the shipment passes from the seller to the buyer when ore has been loaded and trimmed on board the vessel. The heading of this article is "title and risk" and the obvious intention is that title passes to the buyer with the contemplated activity being over. Under article 14, in the event of loss of cargo, in part or in full, the result of the loading port analysis is deemed to be final. Article 16 obliges the buyer to arrangement of ships for transport. Provision has also been made for payment by irrevocable, transferable, assignable, divisible and confirmed without recourse to drawer letters of credit to cover 100 per cent value of each shipment. On the basis of these clauses, which reflect the true intention of the contracting parties, it is claimed that the title in the ores passed at Paradeep and thus there were local sales withi....
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....tered into by the assessee and the Japanese buyers are wholly irrelevant and are of no consequence. Even if on the construction of the contract of "export sale" the sale part of it is completed within the State it would still not be considered as legally complete because till the time the "sale" and the "export" both are completed none can be taken to be complete. It is, therefore, inherent in the concept of "export sale" that both the "sale" and the "export" are completed when the goods are appropriated by the foreign buyer. Patanjali Sastri, C.J., speaking for this Court in State of Travancore-Cochin v. Bombay Company Ltd. [1952] 3 STC 434; [1952] SCR 1112, examining the scope of the "export sale" under article 286(1)(b) of the Constitution of India observed as under: "We are clearly of opinion that the sales here in question, which occasioned the export in each case, fall within the scope of the exemption under article 286(1)(b). Such sales must of necessity be put through by transporting the goods by rail or ship or both out of the territory of India, that is to say, by employing the machinery of export. A sale by export thus involves a series of integrated activities com....
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.... activities." It is, therefore, clear that the export sale envisaged under article 286(1)(b) of the Constitution of India continues to be in the process of completion till the goods reach the destination. The argument of the learned counsel for the respondent that the assessee by the deposit of the mineral ores at Paradeep Port made a "sale" to the foreign buyer at the port is fallacious and overlooks the fact that the purchase had been made by the assessee from the registered dealers, to satisfy his preexisting contract with the Japanese buyer and the goods were deposited or delivered at Paradeep port for transportation, out of the country, to the destination of the foreign buyer, to satisfy the requirements of the preexisting contract. The delivery of the goods at the Paradeep Port was thus in discharge of the obligation under the contract on the part of the exporter-assessee and formed but a single transaction. It was not a second "sale" to the foreign buyer in the State of Orissa. The effort to confuse the delivery of goods at Paradeep Port for transportation to the destination of the foreign buyer with a "sale" at Paradeep port is a futile attempt to wriggle out of hi....