Case: Manganese Ore (India) Ltd. A Vs. The Regional Assistant Commissioner Of Sales Tax,Jabalpur

The appellant Company was formed in pursuance of an agreement dated June 8, 1962 between the President of India and the Central Provinces Manganese ore Company Limited. Before this agreement the said Company which will be hereafter referred to as the C.P.M.O.C. was a private company incorporated in the United Kingdom and carried on the business of extracting manganese ore from several mines in the erstwhile States of C.P. & Berar and Bombay. By virtue of the agreement referred to above a new Company was formed under which the Government of India, the Government of Maharashtra and the Government of Madhya Pradesh held shares in the ratio of 17% each whereas the original Company C.P.M.O.C. retained shares to the extent of 49%. Thus the position was that in the present commercial venture the Central Government had preponderance of share. The appellant, after the formation of the new Company, was known as Manganese ore (India) Ltd. which will here after be referred to as the M.O.I.L.. Fresh leases. to extract the minerals from the various mines were issued by the Government in favour of the M.O.I.L.. and the Company entered into contracts with buyers in India and outside for selling the manganese ore extracted from the various mines situated in the States of Madhya Pradesh and Maharashtra.2. A close analysis of the contracts entered into by the appellant Company and the business carried on by it would manifestly reveal that the contracts may be divided into four separate and clearare the contracts by which the manganese ore extracted by the appellant company is sent directly to a foreign company known r as M/s. Philips Brothers on f.o.b. terms. Another such contract was entered into by the appellant with B.I.S.C. (Ore) Ltd., London for sale of oriental manganese ore f.o.b. Visakhapatnam. Copies of these contracts were filed before the High Court as Annexures Q & R. The Regional Assistant Sales Tax Commissioner accepted the contention. . . Of the appellant that so far as the sales under these contracts were concerned, they occasioned export and were clearly exempt from the Central Sales Tax Act as they fell within the purview of s. 5(1) of the said Act. We might also mention here that the main dispute between the parties is regarding the applicability of ss. 3(a), 4(2) (b) and 9 of the Central Sales Tax Act, according to which the State of Madhya Pradesh was competent to levy tax on the sales made by the appellant in the course of which the manganese ore moved from the State of Madhya Pradesh to other States in India. The main contention of the appellant before the High Court as also before the Sales Tax Authorities was that all these sales were outside sales and not in the course oftrade or commerce and therefore the provisions of the Central Sales Tax Aat did not apply. The Assistant Sales Tax Commissioner negatived the contention of the appellant and hence a writ petition was filed before the High Court. We might also mention that the writ petition was filed by the appellant company before the High Court even before taking recourse to the normal procedure laid down under the Madhya Pradesh General Sales Tax Act, 1958. This was obviously done because the appellant chose to assail the levy of tax on the ground that the Sales Tax Authorities did not possess any jurisdiction to impose the tax inasmuch as the sales were not at all covered by the Central Sales Tax Act. We have stressed this fact particularly because before the High Court the appellant raised some questions relating to the merits of the matter which could be properly agitated before an Appellate or Revisional authorities under the Madhya Pradesh General Sales Tax Act. Thus so far as the sales inare to concerned, the Assistant Sales Tax Commissioner accepted the plea of the appellant and did not levy any tax on those sales. These sales, therefore, did not form the subject matter of the present appeal before us. This position was conceded by bothrepresents contracts which were entered into by the appellant company with the Minerals and Metals Trading Corporation of India Ltd. hereinafter referred to as MMTC under which the appellant despatched manganese ore of varying percentage to the MMTC f.o.b. Bombay. After having received the goods from the appellant the MMTC exported the goods to foreign buyers. The copies of the contracts comprising these sales are Annexures N, O and P, before the High Court.3.relates to sales as per agreements copies of which are Annexures S, T and U by which the appellant sold to M/s Ram Bahadur Thakur & Company, Bombay and other buyers which in turn sold the goods to the MMTC.4. As regards these two categories, Category II and Category III, the appellant advancedcontentions before us. In the first place it was argued that as the goods were eventually exported by the buyers from India to foreign countries, therefore, the sales made by the appellant were notsales but sales which occasioned exports and, therefore, fell within s. 5(1) of the Central Sales Tax Act. The High Court after consideration of various aspects of the matter overruled the contention of the appellant and held that as no export was involved so far as the sales made by the appellant to the buyers in India were concerned, therefore, s. 5(1) had no application at all. This matter need not detain us further, because it is no longer res integra and is now completely concluded by a Constitution Bench decision of this Court in Md. Serajuddin and others v. State of Orissa ([1975] 2 S.C.R. 47) where Ray, C.J., speaking for the majority observed as follows:"To establish export a person exporting and a person importing are necessary elements and the course of export is between them. Introduction of a third party dealing independently with the seller on the one hand and with the importer on the other breaks the link between the two for the n there are two sales one to the intermediary and the other to the importer. The first sale is not in the course of export because the export commences with the intermediary. The tests are that there must be a single s ale which itself causes the export or is in the progress or process of export. There is no room for two or more sales in the course of export.x x x x xThe expression "occasions" in Section S 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."5. The Court clearly held that where the sale was not directly and substantially connected with export, and where between the seller and ultimate buyers intermediaries were involved, such a sale would not occasion any export and would not fall within the purview of s. 5(1) of the Central Sales Tax Act. It is not disputed that all the sales covered by Category II and Category III were actually made by the appellant not to any foreign exporter but to buyers inside India whether it was MMTC or whether they were other private firms. In these circumstances, therefore, the sales mentioned above could not be said to be sales which occasioned any export. The High Court, therefore, rightly found that these sales were completed within the territory of India when the goods passed to the buyers. The High Court further found as follows:"For these reasons , it cannot be held that these sales occasioned the export within Section 5(1) of the Central Sales Tax Act and were sales in the course of export."6. The High court relied on a number of authorities, but in view of the decision of this Court in Md. Serajuddins (supra) case it is not necessary for us to consider those authorities at all, because the matter has now been concluded by a decision of this Court. In fact this position was conceded by Mr. Natu appearing for the appellant but he tried to persuade us to refer the case to a larger Bench for reconsidering Md. Serajuddins (supra) case. We are, however, unable to agree with the prayer made by the learned counsel for the appellant because this Court has given its decision recently and the doctrine of stare decisis is a very valuable principle of precedent which cannot be departed from unless there are extra ordinary or special reasons to do so. We are unable to find any special reasons for reconsidering Md. Serajuddins case (supra), particularly when this Court has laid down the rule, namely, that where the sale is in fact and in law a pure inter State sale, it cannot be treated to be a sale occasioning export. This, therefore, disposes of the first plank of attack made by the appellant on the judgment of the Madhya Pradesh High Court so far the sales contained in Categories II and III areis in respect of contracts of sale, copies of which are Annexures 1 to 7 before the, High Court. These sales were admittedly made by the appellant in favour of the buyers within the territory of India but outside the State. It was, however, contended that as the goods purported to have been sold to the buyers did not in fact move from the State of Madhya Pradesh, therefore, there was nosale, but only an inside sale in the State where the goods were delivered, and therefore the State of Madhya Pradesh had no jurisdiction t o levy tax under the Central Sales Tax Act. The same arguments were applied to Categories II and III on the ground that if the sales comprised in Categories II and III were not sales in the course of export they also were notsales, because the goods which moved from the State of Madhya Pradesh were not actually the goods which were sought to be sold to the buyers in other States in India. The High Court has considered this matter at great length and has relied on a number of authorities. In a recent judgment of this Court in Balabhgas Hulaschand and ors. v. State of orissa(1), after review of all the authorities on the point, this Court held as follows:"That the following conditions must be satisfied before a sale can be said to take place in the course oftrade or commerce:(1) that there is an agreement to sell which contains a stipulation express or implied regarding the movement of the goods from one State to another;(ii) that in pursuance of the said contract the goods in fact moved from one State to another; and(iii)that ultimately a concluded sale takes place in the State where the goods are sent which must be different from the State from which the goods move.If these conditions are satisfied then By virtue of s. 9 of the Central Sales Tax Act it is the State from which the goods move which will be competent to levy the tax under the provisions of the Central Sales Tax Act."

Reasoning:
This contention is completely without substance in view of the decision of this Court in Balabhgas Hulaschands case, (supra) where it was pointed out that so far as s. 3(a) of the Central Sales Tax Act is concerned t here is no distinction between unascertained and future goods and goods which are already in existence, if at the time when the sale takes place these goods have come into actual physical existence. In the instant case also it was never disputed before the High Court or before us that the manganese ore was loaded into the wagons after being extracted from the mines and that the sales of these manganese ores despatched from Madhya Pradesh to various States actually took place and the goods were ultimately accepted by the buyers in other States. In these circumstances, therefore, it is quite clear in this case that the movement of the goods took place in pursuance of the contracts of sale which ultimately merged into actual s ales and it was only there after that the tax was sought to be levied by the State of Madhya Pradesh. It was also not disputed that the tax has been levied only on such sales of the manganese ore despatched from the State of Madhya Pradesh which came from the mines situated in the State of Madhya Pradesh. Thus all the incidents of ansale are pre sent in the instant case and the view taken by the High Court that the sales were covered by s. 3(a) of the Central Sales Tax Act is absolutely correct and we fully endorse the same.These were the main arguments advanced before us by counsel for the appellant. Apart from these, some small points were also argued by the learned for the appellant. In the first place it was submitted that the Sales Tax Authorities had no jurisdiction to impose a penalty of Rs. 1, 000/for the delay in filing the return under the Central Sales Tax Act, because there was no provision in the Central Act making a dealer liable to p ay penalty for filing belated returns and recourse could not be taken to the provisions of the State Act on the subject. The High Court negatived this plea following two Division Bench judgments of the Madhya Pradesh High Court. The view taken by the High Court on this point is legally erroneous be cause this Court in M/s. Khemka &Co. (Agencies) Pvt. Ltd. v. State of Maharashtra ([1975] 3 S.C.R. 753.) has pointed out that in the absence of any provision for penalty under the Central Sales Tax Act itself it is not open to the Sales Tax Authorities to press into service the provisions of the State Sales Taxview of this concession, learned counsel for the appellant did not press this matter. The finding of the High Court on this point is, therefore, affirmed.is also a matter which relates to the merits of the case which could be properly agitated before the Appellate or Revisional authorities under the State Sales Tax Act.