Case: State of Punjab (Now Haryana) &amp; Another Vs. M/s. New Rajasthan Mineral Syndicate

these terms:"The Coffee Board case as well as the of Binani Bros. (supra) clearly indicates that the distinction between sales for export and sales in the course of export is never to be lost sight of. The features which point with unerring accuracy to the contract between the appellant and the Corporation on the one hand and the contract between the Corporation and the foreign buyer on the other as two separate and independent contracts or sale within the ruling in the Coffee Board case (supra) and the Binani Brothers case, are these. The Corporation entered on the scene and entered into a direct contract with the foreign buyers to export the goods. The Corporation alone agreed to sell the goods to the foreign buyer. The corporation was the exporter of the goods. There was no privity of the contract between the appellant and the foreign buyer the privity of contract is between the Corporation and the foreign buyer. The immediate cause of the movement of goods and export was the contract between the foreign buyer who was the importer and the Corporation who was the exporter and shipper of the goods. All relevant documents were in the name of the Corporation whose contract of sale was the occasion of the export. The expression "occasions" in Section 5 of the Act means the immediate and direct cause. But for the contract between the Corporation and the foreign buyer, there was no occasion for export. Therefore, the export was occasioned by the contract of sale between the corporation and the foreign buyer and not by the contract of sale between the corporation and the appellant.The appellant sold the goods directly to the Corporation. The circumstances that the appellant did so to facilitate the performance of the contract between the Corporation and the foreign buyer on terms which were similar did not make the contract between, the appellant and the Corporation the immediate cause of the export. The Corporation in regard to its contract with the foreign buyer entered into a contract with the appellant to procure the goods. Such contracts for procurement of goods for export are described in commercial 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 appellants 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 appellants obligation under the contract with the Corporation and not in performance of the obligations of the Corporation to the foreign buyer."22. With regard to the contention that the contracts between the assessee and the Corporation were F.O.B. contracts, the learned Chief Justice said:"In the present case, the mention of F.O.B. price in the contracts between the appellant and the Corporation does not render the contracts F.O.B, contracts with the foreign buyer. The Corporation entered into independent contracts with the foreign buyers on F.O.B. basis. The appellants were required under the contracts between the appellant and the Corporation to bring the goods to the ship named by the Corporation. The shipment of the goods by the Corporation to the foreign buyers is the F.O.B. contract to which the appellants are not the parties. The course of export in the export stream is possible in direct contracts between the Indian seller and the foreign buyer. The Corporation purchased goods from the appellants in order to fulfil the contracts with the foreign buyer. The only scope of the deeming provision in the Act is to final out the contract of sale which is the direct cause or which occasions the export. . ..The directions given by the Corporation to the appellant to place the goods on board the ship are pursuant to the contract of sale between the appellant and the Corporation. These directions are not in the course of export, because the export sale is an independent one between the Corporation and the foreign buyer. The taking of the goods from the appellants place to the ship is completely separate from the transit pursuant to the export sale.The fact that the exports can be made only through the State Trading Corporation does not have the effect of making the appellants the exporter where there is direct contract between the Corporation and the foreign buyer."23. The above observations, reproduced in extenso, furnish a complete and effective answer to all the arguments advanced on behalf of the assessee, in the instant case, to support the judgment of the High Court. Indeed, the factual premises on which Mr. Sharmas contentions are based, are weaker and less favourable to the assessee than those in Serajuddins case (AIR 1975 SC1564) (supra). Here there is no direct agreement between the assessee and the S.T.C, the agreement is between the assessee and N. and Co. Here is thus room for argument that the export sale made by the S.T.C. to the foreign buyers was preceded by two separate sales, namely, the first made by the assessee to N and Co. and the second made by N and Co, to S.T.C. Further, in the case before us, the assessee was entitled to payment even before ship ment, if the goods were weighed and approved by ,S.T.C. at Kandla Port.24. Be that as it may, the basic features of the case in hand are the same as those in ,Serajuddins case (AIR1975 SC 1564) (supra). Respectfully following the ratio and reasoning of this Court in the above quoted observations in Serajuddins case by which we are bound we accept the contentions canvassed on behalf of the appellant and negative those advanced by the assessee.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]23. The above observations, reproduced in extenso, furnish a complete and effective answer to all the arguments advanced on behalf of the assessee, in the instant case, to support the judgment of the High Court. Indeed, the factual premises on which Mr. Sharmas contentions are based, are weaker and less favourable to the assessee than those in Serajuddins case (AIR 1975 SC1564) (supra). Here there is no direct agreement between the assessee and the S.T.C, the agreement is between the assessee and N. and Co. Here is thus room for argument that the export sale made by the S.T.C. to the foreign buyers was preceded by two separate sales, namely, the first made by the assessee to N and Co. and the second made by N and Co, to S.T.C. Further, in the case before us, the assessee was entitled to payment even before ship ment, if the goods were weighed and approved by ,S.T.C. at Kandla Port.24. Be that as it may, the basic features of the case in hand are the same as those in ,Serajuddins case (AIR1975 SC 1564) (supra). Respectfully following the ratio and reasoning of this Court in the above quoted observations in Serajuddins case by which we are bound we accept the contentions canvassed on behalf of the appellant and negative those advanced by the assessee.