Summarize the following court judgment. Appeal No.2402 of 1966. 1 2 L694SupCI/71 850 Appeal by special leave from the judgment and order dated May 4	 1966 of the Patna High Court in Misc. Judicial Case No. 284 of 1962. A. K. Sen and U. P. Singh	 for the appellants. N. A. Palkhivala	 section B. Mehta	 B. Datta	 for the respondent. Hegde	 J. This is an appeal by special leave. It arises from the judgment of the High Court of Patna in a Reference under section 25(3) of the Bihar Sales Tax Act	 1947. That reference was called for by the High Court at the instance of the assessee company (the respondent herein. The questions referred for the opinion of the High Court by the Board of Revenue were : "(1) With regard to the sales which took place in the period from 1st of April	 1955 to the 6th September 1955	 whether the assessee is entitled	 upon the facts found by the Board of Revenue with regard to these categories of sales	 to exemption from liability under the Bihar Sales Tax Act because of the provision of Article 286(1) (a) of the Constitution as it stood at the relevant date read with the explanation to that article. (2) With regard to the sales which took place in the period from 7th September	 1955	 to 31st March	 1956 whether the assessee is entitled	 upon the facts found by the Board of Revenue with regard to these categories of sales	 to exemption from liability under the Bihar Sales tax Act on the ground that the sales took place in the course of inter State trade or commerce under article 286(2) of the Constitution as it stood at the relevant period. " The High Court answered the first question in the negative and against the assessee. It answered the second question in the affirmative and in favour of the assessee. The assessee has not come up in appeal. This appeal has been brought by the State of Bihar contesting the correctness of the opinion given by the High Court on the second of the two questions referred to earlier. The assessee is	 a Public Limited Co.	 incorporated under the Indian Companies Act	 1913. It carries on business of manufacturing and selling inter alia trucks and bus chassis and spare parts thereof to their appointed dealers	 State Transport Organizations and individual buyers throughout India. The registered office of 851 the assessee is at Bombay but its factory where manufacturing proCess. is being carried on is at Jamshedpur in Bihar. The assessee has appointed several dealers all over India for the sale of its trucks	 bus chassis and spare parts. Those dealers are appointed under agreements entered into between the in and the assessee. The turnover in dispute relates to the sales made by the assessee to its dealers of trucks	 bus chassis and spare parts for being sold in the territories assigned to them under the dealership agreements. The agreements between the assessee and its dealers appear to be similar. Under the agreements	 each dealer is assigned a territory .in	 which alone he can sell the trucks	 bus chassis and other spare parts purchased by him from the assessee company. He is forbidden from selling anyone of those articles to any purchaser outside his territory. As per the agreements	 dealers will have to place their indents	 pay the price of the goods to be purchased and obtain delivery orders from the Bombay office of the assessee. In pursuance of those delivery orders	 trucks	 bus chassis and other spare parts were delivered in Bihar to be taken over to the territories assigned to them. Under the contracts of sale	 the dealers	 were required to remove the trucks	 bus chassis and the spare parts	 delivered to them. in the State of Bihar to place outside Bihar. These are facts found by the Board of Revenue and affirmed by the High Court. On the basis of these facts	 we have whether the sales with which we are concerned in this appeal are sales that took place in the course of inter State trade and commerce as contemplated by article 286(2) of the Constitution as it stood at	 the relevant time. In other words the question for decision is	 whether the sales in question were sales for the purpose of inter State trade or commerce or whether they were sales in the course of inter State trade or commerce. As seen earlier	 the High Court has held that	 those sales took place in the course of interState trade or commerce. The expression "in the course of" appearing in article 286(1)(b) came up for consideration in State of Travancore Cochin and Ors. vs The Bombay Co. Ltd. (1) Therein in this Court held that whether else may or may not fall within article 1286(1)(b) of the Constitution	. sales and purchases which themselves occasion the export or import of the goods as the case may be out of or into	 the territory of India come within the exemption. In that case this Court further observed that a sale by export involves	 a series of integrated activities commencing from the agreement of sale with a foreign buyer and ending with the delivery of the goods to a common carrier for transport out of the country by land or sea. Such a sale cannot be dissociated from	the export without which it cannot be effectuated and the sale and the resultant export form parts of a single transaction. Of these two integrated activities which to (1) ; 852 gather constitute an export sale	 whichever first occurs can well be regarded as taking place in the course of the other. Even in cases where the property in the goods passed to the foreign buyers and the sales were thus completed	 within the State before the goods commenced their journey from the State	 the sales must be regarded as having taken place in the course of the export and therefore exempt under article 286(1)(b). The same exposition of the law is true of cl. (2) of article 286 as it stood prior to its amendment on September 11	 1956. The next decision in which article 286(1)(a)	 1(b) and (2) came to be considered by this Court is State of Travancore Cochin and Ors. vs Shanmugha Vilas Cashew Nut Factory and Ors. (1) Therein this Court observed that the word "course ' etymologically denoties movement from one point to another and the expression "in the course of" in article 286(1)(b) not only implies a period of time during which the movement is in progress but postulates also a connected relation. Consequently	 a sale in the course of export out of the country should be understood in the context of article 286(1) (b) as meaning a sale taking place not only during the activities directed to the end of exportation of the goods out of the country	 but also as part of or connected with such activities. But a purchase of goods for the purpose of export is only an act preparatory :to their export and. not an act done in the course of the export of 	the goods. In The Bangal Immunity Company Ltd. vs The State of Bihar and Ors. (2) Venkatarama Ayyar	 J. observed that a sale could be a sale in the course of inter State trade only if two conditions concur : (1) a sale of goods and (2) a transport of those goods from one State to another under the contract of sale. In Endupuri Narasimham and son vs The State of Orissa and Ors. (3)	 this Court held that in order that a sale or purchase might be inter State	 it is essential that there must be a transport of goods from one State to another under the contract of sale or purchase. IA purchase made inside a State for sale outside the State cannot itself be	 held to be in the course of inter State and the imposition of tax thereon is not repugnant to article 286(2) of the Constitution. In Tata Iron and Steel Co. Ltd. vs section R. Sarkar and ors. (4) this Court held that within cl. (b) of section 3 of the 	 are included sales in which property in the goods passes during the movement of the goods from one State to another by transfer of documents of title thereto and also covers sales in which movement of goods from one State to another is the result of a covenant or incident of the contract of sale and property in (1) ; (2) [1955] 2 S.C.R.603. (3) ; (4) ; 853 the goods passes in either State. Clause (b) of section 3 of the says : "That no law of a State shall impose or authorise the imposition of	. a tax on the sale or purchase of goods where such sale or purchase takes place in the course of the import of goods into	 or export of the goods out of	. the territory of India. " In The Cement Marketing Co. of India (private Ltd. and anr. vs The State of Mysore and anr.(1)	 this Court held that where the goods were transported outside the State as required by the contract of sale	 they are inter State sales and hence exempt from sales tax. On the facts of that case it was held that the sales transactions themselves involved movement of goods across the border. In Ben Gorm Nilgiri Plantations Co. Coonoor and ors. vs Sales Tax Officer	 Special Circle	 Ernakulam and ors.(2) this Court had to consider what sales are sales in the course of export and what sales are for the purpose of export. In the course of the judgment Shah	 J. (one of us) observed : "A sale in the course of export predicates a connection between the sale and export	 the two activities being so integrated that the connection between the two cannot be voluntarily interrupted	 without a breach of the contract or the compulsion arising from the nature of the transaction. In this sense to constitute a sale in the course of export it may be said that there must be an intention on the part of both the buyer and the seller to export	 there must be obligation to export	. and there must be an actual export. The obligation may arise by reason of statute	 contract between the parties	 or from mutual understanding or agreement between them. 	 or even from the nature of the transaction which links the sale to export. A transaction of sale which is a preliminary to export of the commodity sold may be regarded as a sale for export	 but is not necessarily to be regarded as one in the course of export	 unless the sale occasions export." In K. G. Khosla and Co. (P) Ltd. vs Deputy Commissioner of Commercial Taxes	 Madras(3 ) this Court held that before a sale could be said to have occasioned the import	 the movement of goods must have incidental to the contract or in pursuance of the conditions of the contract and there should be no possibility (1) 14	 S.T.C. 175 (S.C.) (2) 117 S.T.C. 473. (S.C.) (3) 854 the goods being diverted by the assessee for any other purpose. meaning thereby that there should be no possibility of diversion according to law or contract and not in breach of them. ' In Tata Engineering and Locomotive Co. Ltd. vs The Asstt. Commissioner of Commercial Taxes and anr.(1)	 this Court after referring to the earlier decisions observed : "It has been laid down that the sale in the course of export	 predicated connection between the sale and export	 the two activities being so integrated that the connection between the two cannot be voluntarily interrupted without a breach of the contract or the compulsion arising from the nature of the transaction. To occasion export there must exist such a bond between the contract of sale and the actual exportation that each link is inextricably connected with the one immediately preceding it. The principle thus admits of no doubt. according to the decisions of this Court	 that the sales to be exigible to tax under the Act (Central Sales Tax Act	 1956) must be shown to have occasioned the movement of the goods or articles from one State to another. The movement must be the result of a covenant or incident of the contract of sale. " If we apply the principles enunciated by this Court in the decisions referred to above to the facts of this case	 it is obvious that the sales with which we are concerned in this case are sales in the course of inter State trade. The dealers were required to move the trucks	 buses	 chassis and other spare parts purchased by them from the State of Bihar to places outside Bihar. They are so required by the terms of the contracts entered into by them with the assessee. They would have committed breach of their contracts and incurred the penalty prescribed in their dealership agreements	 if they had failed to abide by the term requiring them to move the goods outside the State of Bihar. The decided cases establish that sales will be considered as sales in the course of export or import or sales in the course of inter State trade and commerce under the following circumstances: (1) When goods which are in export or import stream are sold; (2) When the contract of sale or law under which goods are sold require those goods to be exported or imported to a foreign country or from a foreign country as the case may be or are required to be transported to a State other (1) [1970] 1 S.C.C.622. 855 than the State in which the delivery of goods takes place and (3) Where as a necessary incident of the contract of sale goods sold are required to be exported or imported. or transported out of the State in which the delivery of goods takes place. But Mr. A. K. Sen	 learned Counsel for the State of Bihar contended that this Court has taken a different view of the law in Coffee Board	 Bangalore vs Joint Commercial Tax Officer	 Madras and anr.(1). According to him the ratio of that decision is that whenever goods are delivered in a State in pursuance of a contract of sale	 the sale in question becomes exigible to tax in the State in which the goods are delivered unless they are taken out of the State for purposes of consumption and not resale	 or the same is taken out of the State in pursuance of an already existing agreement to resell in the State to which it is taken. The decision in Coffee Board case (supra) does not	 in our opinion	 afford any basis for these contentions. We have earlier noticed that this Court in a series of decisions has pronounced in unambiguous terms that where under the terms of a contract of sale	 the buyer is required to remove the goods from the State in which he purchased those goods to another State and when the goods are so moved	 the sale in question must be considered as a sale in the course of inter State trade or commerce. This is a well established position in law. In the Coffee Board case this Court did not deviate from this position nor could it deviate as the earlier decisions were binding on it. Fur ther in the course of his judgment	 the learned Chief Justice who spoke for the Court referred with approval to the earlier decisions of this Court where distinction between the sales in the course of inter State trade or commerce and sales for the purpose of interState trade and commerce were explained. On the basis of the facts in that case	 his Lordship came to the conclusion that the export of the coffee in question was	 not integrated with the sales with which the Court was concerned and that there was no direct bond between the export and the sales. In the course of his judgment his Lordship observed : "Here there are two independent sales involved in the export programme. The first is a sale between the Coffee Board as seller to the export promoter. Men there is the sale by the export promoter to a foreign buyer. Of the latter sale	 the Coffee Board does not have any inkling when the first sale takes place. The Coffee Board 's sale is not in any way related to the second sale. Therefore	 the first sale has no connec (1) 25 S.T.C. 528 (S.C.) 856 tion with the second sale which is in the course of export	 that is to say	 movement of goods between an exporter and an importer. " This finding clearly brings out the distinction between the facts of the Coffee Board 's case (supra) and the facts of the cases wherein this Court held that the sales in question were sales in the course of export or import. In the Coffee Board 's case this Court found that what was insisted on by the Coffee Board was that the coffee set apart for the purpose of the export must be exported; it was not incumbent for the purchasers at the auction to export that coffee themselves; they may do it themselves or they may sell it to somebody who may export it outside India. On that basis	 this Court came to the conclusion that the sales effected by the Coffee Board are not sales in the course of export; they are only sales for	 the purpose of export. The ratio of that decision does not bear on the facts before us. Herein	 under the terms of the contracts of sale	 the purchasers were required to remove the goods from the State of Bihar to other States. Hence the sales with which we are concerned in this case must be held to be sales in the course of inter State trade or commerce. For the reasons mentioned above	 we agree with the findings of the High Court. In the result this appeal fails and the same is dismissed with costs.

The assessee	 having its registered office in Bombay and its factory in Bihar	 was carrying on the business of manufacturing and selling trucks	 bus chassis and spare parts to their appointed dealers and others. Agreements were entered into between the assessee and the appointed dealers	 under which	 each dealer was assigned a territory in which alone the dealer could shell. The dealers had to place the indents	 pay the price of goods to be purchased and obtain delivery orders from the Bombay office. In pursuance of the delivery orders the trucks etc. were delivered in Bihar to be taken to the territories assigned to them for sale there. If the dealers failed to abide by the term requiring them to move the goods outside the State of Bihar they would have committed breach of their contracts	 On the question whether the turnover relating to the sales made by the assessee to its dealers for sale by them in their respective territories outside the State of Bihar	 during the period 7th September 1955 to 31st March 1956	 was exempt from liability to pay sales tax under the Bihar Sales Tax Act	 on the ground that the sales took place in the course of inter State trade or commerce	 under article 286(2) as it	 then stood	 HELD : Where under the terms of a contract of sale	 the buyer is required	 as a necessary incident of the contracts to remove the goods from the State in which he purchased the goods to another State and when the goods are so removed	 the sale must be considered as a sale in the course of inter State trade or commerce. [854 G H; 858 A 13] State of Travancore Cochin vs The Bombay Co. Ltd. ; 	 State of Travancore Cochin vs Shanmugha Visal Cashew Nut Factory	 ; 	 Bengal Immunity Co. Ltd. vs State of Bihar	 	 Endupuri Narasimham & Son vs State of Orissa	 ; 	 Tata Iron & Steel Co. Ltd. vs section R. Sarkar	 [1961] ] S.C.R. 379	 The Cement Marketing Co. of India (P) Ltd. vs State of Mysore	 14 S.T.C. 175	 Ben Gorm Nilgiri Plantations Co. vs Sales Tax	 Officer	 Special Circle	 Ernakulam; 	 	 K. G. Khosla & Co. (P) Ltd. vs Dy. Commissioner of Commercial Taxes	 Madras	 17 S.T.C. 473 and Tata Engineering & Locomotive Co. Ltd. vs Asstt. Commissioner of Commercial Taxes & Anr. ; 	 applied. Coffee Board	 Bangalore vs Joint Commercial Tax Officer	 Madras	 25 S.T.C. 528	 explained.