TaxTMI 
TaxTMI 
TaxTMI 
1995 (2) TMI 414
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....e assessee is registered as a dealer under the Bombay Sales Tax Act, 1959 ("the Bombay Act"), as also under the Central Sales Tax Act, 1956 ("the Central Act"). One M/s. Kamani Engineering Corporation Ltd. ("Kamani") entered into a contract with a foreign buyer in Iran for sale of standard galvanised steel wire ropes. For performing this contract Kamani entered into an agreement with Aluminium Industries Ltd., for purchase of these goods. Aluminium Industries Ltd., in turn entered into a written contract dated October 28, 1977, with the assessee for purchase of the very same goods in order to enable it to perform its contract with Kamani. Certain correspondence in this regard was exchanged between the assessee and Aluminium Industries Ltd., under letters dated January 5, 1978 and March 16, 1978. In furtherance of the said agreement, the assessee shipped the goods out of India under bill of lading No. PK 33 dated May 19, 1980, and raised an invoice No. 2062286 dated June 4, 1980 for Rs. 8,29,600 in the name of Aluminium Industries Ltd., Bombay. Since, according to the assessee, this sale was covered by section 5(1) of the Central Sales Tax Act, 1956, no sales tax was recovered by it....
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.... the sale, being a sale on f.o.b. basis, was a sale in course of export falling under section 5(1) of the Central Sales Tax Act, 1956. It was contended that taking of the bill of lading under instructions from the buyer M/s. Associated Industries, in the name of Kamani Engineering Corporation, did not and could not alter the true character of the transaction. It was also pointed out that the payment of full consideration even before taking the goods on board was not a relevant circumstance in deciding the true nature of the transaction in view of the subsequent developments which necessitated such payment. According to Mr. Jetley, the sale by the assessee was a sale in the course of export and not an intra-State sale as held by the Tribunal. 4.. Miss Anklesaria, learned counsel for the Revenue, on the other hand, supports the order of the Tribunal. According to her, the finding of the Tribunal is based on the uncontroverted facts of the case and cannot be faulted with. In support of this submission, Miss Anklesaria drew our attention to the terms of the contract dated October 28, 1977, letters dated January 5, 1978 and March 16, 1978, and subsequent conduct of the parties to show ....
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....We request you to kindly supply minimum 100 KM by 10th December, 197 since Kamani are planning a shipment from Bombay of this quantity by 15th December, 1977. SHIPPING MARKS: The shipping marks shall be as follows: F O R T A V A N I R Tabriz II Project Contract No. MQ 9/12 Package No. Khorramshakr, Iran. INSPECTION AND SUPERVISION: Inspection of the material will be carried out by M/s. Iteng Engg. Pvt. Ltd., Bombay and/or the representative of the consultant M/s. Merz Quanta. In addition to this inspection by Export Inspection Agency must be carried out. TRANSFER OF PROPERTY IN GOODS: As a specific condition of this contract you shall be under an absolute obligation to export the abovementioned goods to TAVANIR (Iran Power Generation and Transmission Co., Brezil Avenue, Vanak, Teheran, Iran) by taking out the shipping documents in the name of Kamani Engineering Corporation Limited, Bombay as the shippers. However, you shall not transfer the documents until after the goods cross the customs frontiers of India as defined in the Central Sales Tax Act, 1956. The documents shall be transferred by you to us, negotiating the same through your bankers. Property in the goods c....
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.... who agreed to sell the goods to the foreign buyer. It was, therefore, the exporter of the goods. There was no privity of contract between the assessee and the foreign buyer. The privity of contract is between Kamani Engineering and the foreign buyer. Even Aluminium Industries was not a party to the contract with the foreign buyer. The immediate cause of movement of goods and export was the contract between the foreign buyer who was the importer and Kamani Engineering who was the exporter and shipper of the goods. All relevant documents were in the name of Kamani Engineering whose contract of sale had occasioned the export. It was made clear in the contract of sale between the assessee and Aluminium Industries that "All export benefits on the order will be to Kamani Engineering Corporations account". It was also obligatory on the assessee under the terms of the contract to take out shipping documents in the name of Kamani Engineering Corporation, though the assessee was not a party to the contract of sale between the purchaser Aluminium Industries and Kamani Engineering. The mention of f.o.b. price in the contract, in such circumstances, cannot render a transaction of intra-State s....
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.... letter of credit which is to be opened in their name by their foreign buyer, Messrs. Associated Metals and Minerals Corporation, on receipt from the sellers of a bank draft for difference between buyers' f.o.b. purchase value and f.o.b. sale value, that is, $ 1.00 (Rs. 4.75) per dry long ton for a bank guarantee from a scheduled bank guaranteeing that sellers will pay buyers immediately upon shipment/shipments the difference between buyers' f.o.b. purchase value as shown in this contract and buyers' f.o.b. sale value as shown in foreign letter of credit, that is $ 1.00 (Rs. 4.75) per dry long ton by bank draft for each shipment and the buyers will endorse the bills of lading and deliver the same to seller to negotiate against the abovementioned letter of credit. Balance after destinational weight and analysis on the basis of documents mentioned in S.T.C.'s corresponding sale contract with buyers. If the balance 10 per cent is insufficient to cover shortfall in weight and analysis at destination or any penalty imposed by S.T.C.'s foreign buyers, the additional amount shall be payable by sellers to buyers on demand." The assessee claimed that the sales of mineral ore by it to the C....
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....al parlance as back to back contracts. In export trade it is not unnatural to find a string of contracts for export of goods. It is only the contract which occasions the export of goods which will be entitled to exemption. The appellant was under no contractual obligation to the foreign buyer either directly or indirectly. The rights of the appellant were against the Corporation. Similarly the obligations of the appellant were to the Corporation. The foreign buyer could not claim any right against the appellant nor did the appellant have any obligation to the foreign buyer. All acts done by the appellant were in performance of the appellant's obligation under the contract with the Corporation and not in performance of the obligations of the Corporation to the foreign buyer." The Supreme Court accordingly held (at page 150): "The expression 'sale' in section 5 of the Act has the same meaning as in the Sale of Goods Act. String contracts or chain contracts are separate transactions even when there is similarity relating to quantity, quality of goods, shipment, sampling and analysis, weighment and force majeure, etc., or other similar terms. A contract of sale is a contract whereby....
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....in's case [1975] 36 STC 136 (SC) was followed by the Supreme Court in State of Punjab v. New Rajasthan Mineral Syndicate [1975] 36 STC 378. In this case, the assessee carried on the business of quarry contractors and held a licence to quarry iron-ore. The Government of India had authorised the State Trading Corporation as the sole authority for the purpose of exporting iron-ore to foreign countries. The Corporation had nominated N & Co. to procure iron-ore for the purpose of export. N & Co., who were mere brokers entered into agreement with the assessee for procuring the iron-ore. The agreement between the assessee and N & Co., for the sale of 25,000 tons of iron-ore at Rs. 14-8-0 per ton plus actual railway freight, inter alia, provided as follows: "The sellers agree to stock the ore at the railway siding or sidings and the buyers have the right to reject any ore or cancel at any stage before the same is loaded into wagons. The buyers have the option to appoint any good analytical and consulting chemist and their findings shall be binding on both the buyers and sellers. Rs. 25,000 (twenty-five thousand) will be arranged for payment to the sellers after the acceptance of Re. 1 (rup....
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....rt following its decision in that case, accepted the contention of the State and held that the sale by the assessee to the Corporation was not a sale in the course of export. 9.. Reference may also be made to another decision of the Supreme Court in Murarilal Sarawagi v. State of Andhra Pradesh [1977] 39 STC 294. The assessee in this case, who sold manganese ore to M.M.T.C. for export to foreign buyers, contended before the sales tax authorities that the sales of manganese ore to M.M.T.C. was complete within the State of Andhra Pradesh and therefore M.M.T.C. was the last purchaser within the State and the M.M.T.C. was liable to pay sales tax. The High Court came to the conclusion that the appellants (assessee) were the last purchasers within the State inasmuch as the contract entered into by the appellants with the M.M.T.C. was integrally connected with the contract entered into by the M.M.T.C. with their foreign buyers and the appellants' contract of sale occasioned the export and was therefore exempt from the sales tax. On appeal to the Supreme Court, counsel for the State placed reliance on the f.o.b. character of the contract between the appellants and the M.M.T.C. and conten....