Case: Lord Krishna Sugar Mills Limited Vs. Commissioner of Sales Tax, U.P., Lucknow

2. The High Court has given the following facts taken from the statement of case submitted by the Judge (Revisions), Sales Tax, U.P., Lucknow : "The assessee is a manufacturer of, and dealer in, sugar in Uttar Pradesh. It entered into contracts of sale of sugar with certain persons residing in Uttar Pradesh, who may be called the purchasers. The purchasers had previously entered into contracts of sale of sugar with their own customers residing outside Uttar Pradesh and it was to fulfil these contracts that they entered into contracts with the assessee for purchase of the required sugar from it. The terms of the contracts between the assessee and the purchasers are not stated in the statement of the case and the contracts have not been produced by the assessee in these proceedings. The assessee under dispatch instructions received from the purchasers booked the sugar by rail to destinations outside Uttar Pradesh and the railway receipts were prepared in the name of the assessee as consignor and consignee both. The assessee prepared the bills in the names of the purchasers and on their paying them it endorsed the railway receipts in their names and gave them to them. The purchasers sent the railway receipt to their customers at the destinations. There was no contract between the assessee and the customers of the purchasers. For the assessment year9 the assessee was assessed to sales tax on the sale of sugar on the basis of its turnover for the previous yearh the contracts are not produced, it is manifest from the said facts that the sales were only for actual delivery to customers residing outside the State of Uttar Pradesh under despatch instructions received from purchasers in Uttar Pradesh. The facts also disclose that it must have been one of the terms of the contracts that the goods should be delivered to customers outside Uttar Pradesh, for the railway receipts were invariably prepared in the name of the assessee both as consignor and consignee and endorsed over in the names of purchasers against payment.

Court's reasoning:
This Court in M/s. Amristar Sugar Mills Co., Ltd. v. The Commissioner of Sales Tax, Uttar Pradesh (Civil Appeals Nos. 86 to 89 of 1965 decided on December 13, 1965; [1966] 17 S.T.C. 405), considered the scope of the said provision. Sikri, J., delivering the judgment of the Court, observed :"It seems to us that the object underlying section 5 is to encourage export of goods manufactured in Uttar Pradesh and notified under section 5 ...................... As long as the contract evinces an intention to export and actual delivery is given to effectuate that intention the object of the Legislature to ensure that only real export sales enjoy the rebate would be fulfilled. It seems to us that in the context of section 5 the word delivery occurring in section 5 means actual delivery."The learned Judge further held that communication of the place where actual delivery was to be given did not relate to the mode of performance but formation of the contract. In that view it was held that the revising authority was not right in holding that the sales in dispute were not for delivery outside Uttar Pradesh3. The only material difference between that case and the present one is that in the former the contracts were produced but in the latter they were not produced. But the pattern of the transactions disclosed by the aforesaid facts leaves no room for doubt that the contracts either provided for delivery of the goods to customers outside Uttar Pradesh or at any rate for such delivery pursuant to directions given by the purchasers. If so, the present appeal is directly governed by the aforesaid judgment of this Court. Following that judgment we hold that the appellant is entitled to rebate in respect of the said transactions under section 5 of the Act.