Appeal No 25 of 1952
Appeals from the Judgment and Order dated the 10th day of January 1952 of the High Court of Judicature of Travancore Cochin at Ernakulam Kunhiraman CJ and Subra mania Iyer J in Original Petitions Nos 4 23and 24 of 1951 respectively
TN Subramania Iyer Advocate General of Travancore Cochin TR Balakrishna lyer and MR Krishna Pillai with him for the State of Travancore Cochin
NC Chatterjee CR Pattabhirarnan with him for the respondent in Civil Appeal No 25 of 1952
C R Pattabhiraman for the respondent in Civil Appeal No 28 of 1952
NC Chatterjee Thomas Vellappally with him for the respondent in Civil Appeal No 29 of 1952
M C Setalvad Attorney General for India and CK Daphtary Solicitor General of India GN Joshi with them for the Union of India
October 16
The Judgment of the Court was delivered by PATANJALI SASTRI CJ
These are connected appeals from the judgment and order of the High Court of Travancore Cochin quashing the assessments under the United State of Travancore and Cochin Sales Tax Act No 11 of 1125 ME hereinafter referred to as the Act on the respond ents on the turnover of the sales of the commodities coif products in CA 25 lemon grass oil in CA 28 and tea in CA 29 in which they respectively deal
The dealings followed more or less the same pattern in all the cases and consisted of export sales of the respec tive commodities to foreign buyers on cif or fob terms as the case may be
The respondents in each case claimed exemption from assessment in respect of the sales effected by them on the ground inter alia that such sales took place in the course of the export of the goods out of the territory of India within the meaning of article 1115 2861 b of the Constitution
The Sales Tax Authorities rejected the contention as in their view the sales were completed before the goods were shipped and could not therefore be considered to have taken place in the course of the export
Thereupon the respondents by separate petitions applied to the High Court of the United State of Travancore and Cochin hereinafter referred to as the State under article 226 of the Constitution for issue of writs of certiorari and prohibition quashing the assessments made On them and pro hibiting such assessment in future
The applications were heard along with nine other applications for similar re liefs by dealers in cashew nuts by a Division Bench Kunhi raman CJ and Subramania Iyer J who upheld the claim of exemption and quashed the assessment orders in respect of the transactions subsequent to the commencement of the Constitution
From that decision the State has preferred appeals in all the cases on a certificate granted by the High Court under article 132 1 of the Constitution
As the appeals involved important questions of law which may have a bearing on the sales tax legislation of the various States in India this Court directed notice of these proceedings to the Attorney General for India and the Advo cates General of those States and they have intervened and participated in the debate at the hearing of these appeals
When the argument had proceeded for some time it was discovered that the material facts relating to the course of dealings in cashew nuts which were more complex in charac ter had not been clearly ascertained and consequently the relative appeals were remitted to the High Court for find ings on certain points agreed upon by the parties
These three appeals were however fully heard as they were found to admit of disposal on the materials on record
Article 2861 on which the respondents found their claim to exemption runs thus 1116 No law of a State shall impose or authorise the imposi tion of a tax on the sale or purchase of goods where such sale or purchase takes place
a outside the State or b in the course of the import of the goods into or export of the goods out of the territory of India
Explanation
For the purposes of sub clause a a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consump tion in that State notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State
On the scope and meaning of clause b the learned Judges expressed their view as follows  The words in the course of  make the scope of this clause very wide
It is not restricted to the point of time at which goods are imported into or exported from India
The series of transactions which necessarily precede export or import of goods will come within the purview of this clause
Therefore while in the course of that series of transactions the sale has taken place such a sale is exempted from the levy of sales tax
The sale may have taken place within the boundaries of the State
Even then sales tax cannot be levied if the sale had taken place while the goods were in the course of import into India or in the course of export out of India
We are stressing this point because both parties in what we may describe as the cashew nut cases entered into a lengthy discussion as to the exact point of time when the sale became completed and as to the exact place where the goods were when the sale became a completed transaction
 On this interpretation local purchases made for the purpose of export were held by the learned Judges to be integral parts of the process of exporting
In support of this construction the learned Judges referred 1117 to the debates in the Constituent Assembly on clause 264 A of the draft Constitution which corresponded to article 286 and quoted from the speech of one of the members who unsuc cessfully moved an amendment defining export as meaning the last transaction and import as meaning the first transac tion
In view of the wide construction thus placed upon clause b of article 286 1 the arguments before us ranged over a large field and as many as four different views as to its scope and meaning were pressed upon us for our acceptance  1 The exemption is limited to sales by export and purchases by import that is to say those sales and pur chases which occasion the export or import as the case may be and extends to no other transactions however directly or immediately connected in intention or purpose with such sales or purchases and wheresoever the property in the goods may pass to the buyer
This is the view put forward on behalf of the State of Madras
The Advocate General thought that a State could not impose sales tax though title passed within State limits while the goods were still under trans port on the high seas and no question of exemption could therefore arise
He said however that no such ease had actually arisen
2 In addition to the sales and purchases of the kind described above the exemption covers the last purchase by the exporter and the first sale by the importer if any so directly and proximately connected with the export sale or import purchase as to form part of the same transaction
This view was sponsored  by the Attorney General who was also inclined to think as advised at the moment that sales or purchases made while the goods were on the high seas would be exempt but he would prefer not to go into the wider question because whatever view was taken sales such as those involved in the present cases must in any event be exempt
3 The exemption covers only those sales and purchases under which the property in the goods 1118 concerned is transferred from the seller to the buyer during the course of the transit that is after the goods begin to move and before they reach their foreign destination
This view is supported by the State of Bombay and certain other States
4 The view which found favour with the learned Judges of the High Court in the passage already extracted
It will be seen that the construction first mentioned is the narrowest and the last mentioned the widest
We are clearly of opinion that the sales here in ques tion which occasioned the export in each case fall within the scope of the exemption under article 2861b
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 activi ties commencing from the agreement of sale with a foreign buyer and ending with the delivery of the goods to a common carrier for transport out of the country by land or sea
Such a sale cannot be dissociated from the export without which it cannot be effectuated and the sale and resultant export form parts of a single transaction of these two integrated activities which together constitute an export sale whichever first occurs can well be regarded as taking place in the course of the other
Assuming without deciding that the property in the goods in the present cases passed to the foreign buyers and the sales were thus completed within the State before the goods commenced their journey as found by the Sales Tax Authorities the sales must never theless be regarded as having taken place in the course of the export and are therefore exempt under article 2861b
That clause indeed assumes that the sale had taken place within the limits of the State and exempts it if it took place in the course of the export of the goods concerned
In the foregoing discussion we have assumed that the word sale used in the Constitution has the same 1119 meaning as in the law relating to the sale of goods but it has been suggested in the course of the argument that it imports a wider concept than the passing of title from the seller to the buyer which under that law is determined by highly technical rules based upon the presumed intention of the parties and liable to be displaced by their expressed intention
We leave the point open as it is unnecessary for the purpose of these appeals to pronounce any opinion upon it
It was said that on the construction we have indicated above a sale in the course of export would become practi cally synonymous with export and would reduce clause b to a mere redundancy because article 246 1 read with entry 83 of List I of the Seventh Schedule vests legisla tive power with respect to duties of customs including export duties exclusively in Parliament and that would be sufficient to preclude State taxation of such transactions
We see no force in this suggestion
It might well be argued in the absence of a provision like clause b prohibiting in terms the levy of tax on the sale or purchase of goods where such sales and purchases are effected through the machinery of export and import that both the powers of taxation though exclusively vested in the Union and the States re spectively could be exercised in respect of the same sale by export or purchase by import the sales tax and the export duty being regarded as essentially of a different character
A similar argument induced the Federal Court to hold in Province of Madras vs Boddu Paidanna and Sons1 that both central excise duty and provincial sales tax could be validly imposed on the first sale of groundnut oil and cake by the manufacturer or producer as the two taxes are economically two separate and distinct imposts
Lest similar reasoning should lead to the imposition of such cumulative burden on the export import trade of this country which is of great importance to the nation s economy the Constituent Assembly may well have thought it necessary to exempt 1 1120 in terms sales by export and purchases by import from sales tax by inserting article 286 1 b in the Constitution
We are not much impressed with the contention that no sale or purchase can be said to take place in the course of export or import unless the property in the goods is transferred to the buyer during their actual movement as for instance where the shipping documents are indorsed and delivered within the State by the seller to a local agent of the foreign buyer after the goods have been actually shipped or where such documents are cleared on payment or on acceptance by the Indian buyer before the arrival of the goods within the State
This view which lays undue stress on the etymology of the word course and formulates a mechanical test for the application of clauseb places in our opinion too narrow a construction upon that clause in so far as it seeks to limit its operation only to sales and purchases effected during the transit of the goods and would if accepted rob the exemption of much of its useful ness
We accordingly hold that whatever else may or may not fall within article 286 1 b sales and purchases which themselves occasion the export or the import of the goods as the case may be out of or into the territory of India come within the exemption and that is enough to dispose of these appeals
Our attention was called in the course of the debate to various American decisions which hold that the power to regulate inter State commerce vested exclusively in the Congress by article 1 section 83 of the American Constitu tion the Commerce clause excludes by implication the States  power of taxation only when the goods enter the export
stream and until then such goods form part of the general mass of property in the State subject as such to its jurisdiction to tax and that this principle was also applicable to cases arising under article 1 section 95 and section 102 the Import Export clause see eg Empresa Siderurgica vs Merced Co1
These clauses 1  1121 are widely different in language scope and purpose and a varying body of doctrines and tests have grown around them interpreting extending or restricting from time to time their operation and application in the context of the ex panding American commerce and industry and we are of opin ion that not much help can be derived from them in the solution oil the problems arising under article 286 of the Indian Constitution
It remains only to point out that the use made by the learned Judges below of the speeches made by the members of the Constituent Assembly in the course of the debates on the draft Constitution is unwarranted
That this form of ex trinsic aid to the interpretation of statutes is not admis sible has been generally accepted in England and the same rule has been observed in the construction of Indian stat utes see Administrator General of Bengal vs Prem Nath Mallick1
The reason behind the rule was explained by one of us in Gopalan s case2 thus  A speech made in the course of the debate on a bill could at best be indicative of the subjective intent of the speaker but it could not reflect the inarticulate mental process lying behind the majority vote which carried the bill
Nor is it reasonable to assume that the minds of all those legislators were in accord or as it is more tersely put in an American case Those who did not speak may not have agreed with those who did and those who spoke might differ from each other United States vs Trans Missouri Freight Association3   This rule of exclusion has not always been adhered to in America and sometimes distinction is made between using such material to ascertain the purpose of a statute and using it for ascertaining its meaning
It would seem that the rule is adopted in Canada and Australia see Craies on Statute Law 5th Ed p 122
1 895 22 IA Io7118
21950 SCR88
3 169 US290318
144 1122 In the result agreeing with the conclusion of the High Court though on different grounds we dismiss the appeals with costs
Appeals dismissed
Agent for the respondent in CA No 25 of 52 MSK Sastri
Agent for the respondent in CA No 28 of 52 Sardar Bahadur
Agent for the respondent in CA No 29 of 52 VPK Nambiyar
Agent for the Interveners Union of India State of Bombay State of Madras State of Hyderabad State of Punjab State of MysOre and State of Orissa PA Mehta
Agent for the State of Uttar Pradesh CP Lal


Summary:
Whatever else may or may not fall within article 286 1 b of the Constitution sales and purchases which themselves occasion the export or the import of the goods as the case may be out of or into the territory of India come within the exemption
The view that no sale or purchase can be said to take place in the course of export or import unless the property in the goods is transferred to the buyer during their actual move ment as instance where the shipping documents are in dorsed and delivered within the State by the seller to a local agent of the foreign buyer after the goods have been actually shipped or where such documents are cleared on payment or on acceptance by the Indian buyer before the arrival of the goods within the State puts too narrow a construction upon article 286 1b and is not correct
A sale by export involves a series of integrated activi ties commencing from the agreement of sale with a foreign buyer and ending with the delivery of the goods to a common carrier for transport out of the country by land or sea
Such a sale cannot be dissociated from the export without which it cannot be effectuated and the sale and the result ant export form parts of a single transaction
Of these two integrated activities which together constitute an export sale whichever first occurs can well be regarded as taking place in the course of the other
Even in cases where the property in the goods passed to the foreign buyers and the sales were thus completed within the State before the goods commenced their journey from the State the sales must be regarded as having taken place in the course of the export and therefore exempt under article 286 1 b
The Commerce clause article 1 section 8 3 and the Import Export clauses article I sections9 5 and 10 2 of the American Constitution are widely different in lan guage scope and purpose and a varying body of doctrines and tests have grown around them interpreting extending or restricting from time to time their operation and applica tion in the context of the expanding American commerce and industry and much help cannot be derived from them in the solution of the problems arising under article 286 of the Indian Constitution
Speeches made by the members of the Constituent Assembly in the course of the debates on the draft Constitution cannot be used as aids for interpreting the Constitution
Administrator General of Bengal vs Prem Nath Mullick 22 IA 107 at 118 AK Gopalan vs The State 1950 SCR 88 United States vs Trans Missouri Freight Association at 318 referred to
143 1114