Case: C.T. Ltd., &amp; Anr Vs. Commercial Tax Officer &amp; Ors

commission agency charges and certain out of pocket expenses, and in the event of any loss his right to be indemnified by the principal." * 11. The learned counsel for the appellants drew our attention to the Tea Export Licence held by the appellants, which was specific for the export of 550 M/tonnes of tea to Iran. This licence was requisite under the provisions of Section 17 of the Tea Act, 1953. Our attention was drawn to the invoice issued by the appellants, which stated that the tea had been sold to the foreign buyers and it was signed by the appellants after stating "A/c. The State Trading Corporation of India Ltd.". The Bill of Lading issued in respect of the tea by the Irano-Hind Shipping Company Ltd. showed the appellants to be the shippers; the words "A/c. The State Trading Corporation of India Ltd." were typed immediately after the appellants name and address in the column shipper only to identify the tea with the contract between the Iranian buyer and STC. The learned counsel drew our attention to the fact that the advantage of duty drawback in respect of the aforesaid contracts had been received by the appellants. In his submission, the property in the tea had not passed from the appellants to STC. The purchase of the tea by the appellants at the auctions was, therefore, the penultimate sale in the course of export and, therefore, exempt from the levy of sales tax by the provisions of Section 5(3). 12. The learned counsel for the respondent Sales Tax authorities submitted that the export sale covered by Section 5(1) was the sale of tea by STC to the Iranian buyer, the penultimate sale in the course of export was the sale of tea by the appellant to STC, which was covered by the provisions of Section 5(3); therefore, the purchase by the appellants of the tea at the auctions was eligible to sales tax. 13. The learned counsel for the respondents drew our attention to the judgment of this Court in Mohd. Serajuddin v. State of Orissa [ 1975 (2) SCC 47 : 1975 SCC(Tax) 269 : 1975 (36) STC 136 ]. This was a case in which, admittedly, the Indian company had sold the goods to STC. The situation, therefore, was entirely different and the judgment has no application to the present case, where the contention on behalf of the appellants is that STC was only the agent of the appellants. We should also note that the judgment in Mohd. Serajuddin case [ 1975 (2) SCC 47 : 1975 SCC(Tax) 269 : 1975 (36) STC 136 ] led to the introduction of sub-section (3) in Section 5 (see Statement of Objects and Reasons thereof) so that the judgment does not reflect the law as it now stands. 14. The learned counsel for the respondents pointed out that in the contract between the appellants and STC, the appellants were referred to as the shipper not as the seller, whereas the Iranian buyer was referred to as the buyer. Emphasis was laid upon the fact that all documents were required to be prepared by the appellants marked "A/c STC" in all relevant places and these were to be forwarded to the STC for negotiation. It was pointed out that the contract contemplated disputes between the Iranian buyer and STC and not between the Iranian buyer and the appellants. The learned counsel for the respondents referred to the Bill of Lading and submitted that it had been endorsed in favour of STC and that, by reason thereof, the property in tea had passed to the STC. The endorsement was by the typing of the words "A/c. The State Trading Corporation of India Ltd." after the name and address of the appellants in the column shipper upon the Bill of Lading. 15. In our view, no term in the contract between the appellants and STC clearly contemplates a sale, that is, the transfer of property in tea from the appellants to STC. Such indication as there is to the contrary, particularly the requirement that the appellants should prepare all documents required for negotiation and the "sellers official invoice ... should be in 5 copies". The requirement that the words "A/c STC" be used was only to enable the Iranian buyer to identify the tea as being sent in fulfilment of the obligation under the contract between STC and itself. 16. The manner in which the contract between the appellants and STC was executed reinforces our view. The Tea Export Licence for the tea was that of the appellants. The invoice of the appellants showed the Iranian buyer against the column "Sold To", and no objection in this regard was raised by STC. The duty drawback benefit accrued entirely to the appellants. The Bill of Lading issued by the Irano-Hind Shipping Co. Ltd. showed the Iranian buyers Tehran bank as consignee of the tea shipped by the appellants. 17. Certainly, there is no endorsement on the Bill of Lading in favour of STC that would suggest transference to it of title in the tea. The typing of the words "A/c. The State Trading Corporation of India" below the name and address of the appellants against the column shipper does not constitute an endorsement. There was no endorsement upon the Bill of Lading signed by or on behalf of the Tehran bank, which is the consignee, or the Iranian buyer. 18. There is, therefore, nothing in the contract between the appellants and STC or in the manner of its execution that establishes that there was a transfer of the property in tea by the appellants to STC before it was transferred to the Iranian buyer. Hence, the purchase of the tea by the appellants at the auctions in fulfilment of the export obligation to the Iranian buyer was the penultimate sale in the course of export and covered by the terms of Section 5(3). It was, accordingly, exempt from the payment of sales tax

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

Explanation:
1[ds]15. In our view, no term in the contract between the appellants and STC clearly contemplates a sale, that is, the transfer of property in tea from the appellants to STC. Such indication as there is to the contrary, particularly the requirement that the appellants should prepare all documents required for negotiation and the "sellers official invoice ... should be in 5 copies". The requirement that the words "A/c STC" be used was only to enable the Iranian buyer to identify the tea as being sent in fulfilment of the obligation under the contract between STC and itself16. The manner in which the contract between the appellants and STC was executed reinforces our view. The Tea Export Licence for the tea was that of the appellants. The invoice of the appellants showed the Iranian buyer against the column "Sold To", and no objection in this regard was raised by STC. The duty drawback benefit accrued entirely to the appellants. The Bill of Lading issued by the Irano-Hind Shipping Co. Ltd. showed the Iranian buyers Tehran bank as consignee of the tea shipped by the appellants17. Certainly, there is no endorsement on the Bill of Lading in favour of STC that would suggest transference to it of title in the tea. The typing of the words "A/c. The State Trading Corporation of India" below the name and address of the appellants against the column shipper does not constitute an endorsement. There was no endorsement upon the Bill of Lading signed by or on behalf of the Tehran bank, which is the consignee, or the Iranian buyer18. There is, therefore, nothing in the contract between the appellants and STC or in the manner of its execution that establishes that there was a transfer of the property in tea by the appellants to STC before it was transferred to the Iranian buyer. Hence, the purchase of the tea by the appellants at the auctions in fulfilment of the export obligation to the Iranian buyer was the penultimate sale in the course of export and covered by the terms of Section 5(3). It was, accordingly, exempt from the payment of sales tax