TMI Blog1955 (11) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... as a dealer within the meaning of the Act that we shall consider the several heads of assessment, to the inclusion of which in the turnover the petitioner objected unsuccessfully before the Appellate Tribunal. Despite the contention, that the petitioner was not a dealer at all as defined by the Act, the petitioner obtained registration as a dealer under the provisions of the Act. (1) [1954] 5 S.T.C. 292. Three items, to the inclusion of which in its taxable turnover the petitioner Board objected, can be considered together. Rs. 6,14,510-13-0 represented the total of the amounts the petitioner Board collected by way of tax under the authority of section 8-B of the Act on the sales effected by it. A further sum of Rs. 9,598-3-3 was collected by the Board from its purchasers to cover any claim that might be made by the department on the basis that the amounts collected by the Board by way of tax were themselves liable to be included in the petitioner's taxable turnover. Rs. 1,63,259-12-3 represented the total of the collec- tions made by the Board from its purchasers, which the Board showed in its books as a "contingency deposit." The nature of these collections was correctly explaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board. The Appellate Tribunal negatived the claim of the petitioner based on Article 286(1)(b) of the Constitution, that a sum of Rs. 85,03,048-11-0 was exempt from liability to sales tax. That was the total of the amount paid to the petitioner during the assessment year by persons, who held certificates of registration issued by the petitioner Board, against delivery of coffee from out of the pool under the control of the Board to enable those persons to export that coffee outside India. It should be convenient to refer to these purchasers as "registered exporters". The Tribunal found that under the provisions of Act VII of 1942 the ownership of the coffee in the pool vested in the Board. The correctness of that finding, which was accepted, was not challenged by the learned counsel for the petitioner. Section 20 of Act VII of 1942 directed that no coffee shall be exported from India except by the Board or under an authorisation granted by the Board. It was not disputed that the Board itself did not export the coffee. It was the registered exporters who obtained the coffee from the Board that exported that coffee. The first question is, was the transaction between the Board and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er was a purchase for export. Conversely, the sale by the Board was a sale for export. The distinction between a sale for export and a sale in the course of export within the meaning of Article 286(1) (b) of the Constitution was pointed out in The State of Travancore-Cochin v. S.V.C. Factory(1). At page 217 were summed up the conclusions, and the second of the propositions laid down there ran: "Purchases in the State by the exporter for the purpose of export as well as sales in the State by the importer after the goods have crossed the customs frontier are not within the exemption [of Article 286(1)(b)]." It was this principle that was applied by a Division Bench of this Court in Mahalakshmi Textile Mills v. State of Madras(2). Satyanarayana Rao, J., pointed out: "........the sale and the export which are treated as integrated activities are alone exempt if the sale is the occasion for the export and it commences from the time when the agreement of sale was entered into with the foreign buyer. A purchase anterior to it by the exporter and a sale to the exporter by another person would not be within the limits of integrated activity as defined by the Supreme Court. Both the purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within this State." The Appellate Tribunal held that such sales did not come within the scope of Article 286 (2) of the Constitution. In The Bengal Immunity Co., Ltd. v. State of Bihar(1), the learned Acting Chief justice, who delivered the judgment of the majority of the Court, left open for determination, when the need should arise, the question what constituted inter-State trade or commerce within the meaning of Article 286(2). The question we have to answer in this case is a limited one, whether the sale by the petitioner Board, completed by delivery within the State of Madras to the purchaser or his agent, comes within the scope of Article 286(2), because the purchaser bought the goods with (1) [1955] 6 S.T.C. 446. the intention of transporting them outside the State and did transport them outside the State. The residence of the purchaser himself is not a relevant factor. Willoughby in his Constitution of the United States, 2nd Edn., Vol. II, at page 753 pointed out: "A mere making of contracts between persons in different States does not constitute inter-State commerce." In the present case it should be remembered the contract to sell and the sale itself If took place at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same illustration, if X after transporting the goods into State A sells them, then also there is no sale in the course of inter-State trade. It is true that there is a sale, and there is also a movement of goods from one State to another. But that movement has not been under the sale, there having been no sale at the time of transportation." The learned judge then quoted with approval the passage from Rottschaeffer, to which we have referred above. The learned judge also quoted with approval a passage from William T. Wagner v. City of Covington(1): "Of course the transportation of plaintiffs' goods across the State line is of itself inter-State commerce; but it is not this that is taxed by the City of Covington, nor is such commerce a part of the business that is taxed, or anything more than a preparation for it. So far as the itinerant vending is concerned the goods might just as well have been manufactured within the State of Kentucky; to the extent that plaintiffs dispose of their goods in that kind of sales, they make them the subject of local commerce; and this being so, they can claim no immunity from local regulation, whether the goods remain in original packages or not." E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the employment of firms doing business as commission agents outside the State, and the deliveries were made through normal commercial channels, the transac- tions would partake of an inter-State character and fall under clause (2) (of Article 286)." But such is not the claim in this case. The sale was effected and the delivery was completed at Batlagundu, and the purchaser's agent took delivery of the goods within the State of Madras. The sale was completed within the State before the goods were transported, and in the transport of the goods themselves, which was subsequent to the sale, there was no element of sale. Subsequent transport does not therefore entitle the purchaser to the benefit of Article 286(2) of the Constitution. The Appellate Tribunal was right in rejecting the claim of the peti- tioner Board that this item should be excluded from its taxable turnover. The last item to be considered is Rs. 4,681-7-3, which was the excess collection made by the petitioner Board and was therefore claimed by the Government under Section 8-B(2) of the Act. The decision of the Tribunal was right. The assessee did not press his claim even before the Tribunal because the learned Chai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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