Judgement

P. B. GAJENDRAGADKAR, J. : Civil Appeal No. 300 of 1956. The appellant Gordhandas Lalji had filed a petition in the High Court at Calcutta under Art. 226 of the Constitution for quashing an order of assessment made by the respondents against him for Rs. 23, 905-11-0 for the year 1949-50 under the Bengal Finance (Sales Tax) Act, 1941 (Act VI of 1941), hereinafter called the Act. Mr. Justice D. N. Sinha who heard the petition rejected all the contentions raised by the appellant and dismissed the petition. An appeal preferred against the order passed by Sinha, J., was dismissed by Chakravartti, C. J., and Lahiri, J. It is against this judgment that the appellant has come to this Court by special leave.

2. The appellant is a registered dealer under the Act. As required by the Act, the appellant submitted his return for the year 1949-50 which showed that his turnover was Rs. 24,21,023-3-3. The appellant s case, however, was that the taxable turnover for the relevant period was `nil . He claimed that goods sold worth Rs. 1,79,733-0-0 were sold to registered dealers and were thus exempt from tax under S. 5(2)(a)(ii) of the Act. In regard to the balance of goods worth Rs. 22,41,490-3-3, they had been despatched by the appellant or on his behalf to an address outside West Bengal and were thus exempt from tax under S. 5(2)(a)(v) of the Act.

3. In regard to the latter claim for exemption made by the appellant he alleged that, in his usual course of business and on the advices of Shah Narottamdas Harjivandas and Co., and two other well known tea exporters and tea merchants of Bombay, he had purchased at the tea auctions in Calcutta various quantities of teas as their agent and on their behalf and for the purpose of direct export to foreign countries. All the said teas carried export quota rights. After different kinds of teas were thus purchased they were mixed and re-packed in accordance with the instructions of the principals. The appellant then on similar advice applied for and obtained requisite licences for the export of the said teas from the Joint Controller, Indian Tea Licensing Committee and the said licences were all in the names of the said principals. Thereafter, in the usual course of business, the appellant put the said teas into ships through clearing or shipping agents and the teas were bound for export overseas. Thus the goods were shipped from Calcutta to destinations outside the territories of India in the course of foreign or international trade. Under instructions of the said principals, bills of lading for the said teas worth Rs. 5,74,422-7-3 were made out in the names of the said principals as the consignors & the consignees were sometimes the principals themselves and sometimes foreign parties. The appellant alleged that all the said acts and services were done by him in the usual course of business as an agent for the said principals in respect of the said teas. According to the appellant the total cost of the teas thus purchased came to Rs. 4,37,656-0-9 whereas the expenses incurred for handling the goods and dealing with them from the stage of purchase to shipment including the appellant s commission at 11/2 per cent. came to Rs. 1,36,766-6-6. That is how the total value of the goods were shown as Rs. 5,74,422-7-3. It was in respect of this amount that the appellant claimed exemption under S. 5(2)(a)(v) of the Act.

4. The Commercial Tax Officer allowed the claim for exemption under S. 5(2)(a) (ii) of the Act in full, but in regard to the exemption claimed by the appellant under S. 5(2)(a)(v) he disallowed it to the extent of Rs. 5,74,422-7-3 on the ground that the relevant bills of lading showed the consignor to be not the appellant but the aforesaid three Bombay parties. In the result, the appellant s taxable turnover was held to amount to Rs. 5,09,988-0-0 and on that basis he was assessed to pay the tax at Rs. 23,905-11-0 and a demand in that behalf was issued.

5. Against this order an appeal was preferre