Case: Ben Gorm Nilgiri Plantations Company, Coonoor And Ors Vs. Sales Tax Officer, Special Circle, Ernakulam And Ors

1. The Sales-tax Officer, Special Circle Ernakulam assessed the appellants under the Travancore-Cochin General Sales tax Act XI of 1125 M. E. , to pay sales-tax of transaction of sale of tea chests at the auctions held at Fort Cochin in the years 1956-57 to 1958-59, rejecting their contention that the sales were exempt from tax by virtue of Art. 286(1) (b) of the Constitution. The appellants then petitioned the High Court of Kerala for writs of certiorari quashing the orders of assessment and for writs of prohibition restraining the Sale Tax Officer from proceeding with the collection of tax in pursuance of the orders of assessment. Vaidialingam, J., rejected the petitions and his order was confirmed in appeal by Division Bench of the High Court of Kerala. With special leave, the appellants have appealed to this Court.

Reasoning:
We are not concerned to decide whether there was evidence in that case on which the High Court could come to the conclusion that the sale occasioned the export. But Mr. Setalvad relied upon the observation in support of the proposition that in all cases where there is a contract for purchase of goods in the taxing territory, between a local merchant and a foreign buyer Acting through his agent, and the goods are after purchasing the same exported by the agent, transaction must be deemed to be one in the course of export. We are unable to accept the contention. We do not read the judgment as laying down any such proposition, and none such is legitimately deducible. The second transaction in favour of Gordon Woodroffe and Co. was found to be one in which property in the goods passed beyond the customs frontier. Such a transaction would indisputably be a sale in the course of export17. In our view the transaction of sale in the present case did not occasion the export of the goods, even though the appellants knew that the buyers in offering the bids for chests of tea and the export quotas were acting on behalf of foreign principals, and that the buyers intended to export the goods. There was between the sale and the export no such bond as would justify the inference that the sale and the export formed parts of a singe transaction or that the sale and export were integrally connected . The appellants were not concerned with the actual exportation of the goods, and the sales were intended to be complete without the export, and as such it cannot be said that the said sales occasioned export. The sales were therefore for export, and not in the course of export.