Judgement

SIKRI, J.: This appeal by certificate of fitness granted by the Rajasthan High Court is directed against its judgment, dated May 7, 1963, quashing the order of assessment, dated March 5, 1962, made by the Sales Tax Officer, Jodhpur City, in so far as it levied sales tax on the turnover of Rs.23,92,252.75 nP.

2. The respondent M/s. Shiv Ratan G. Mohatta, which is a partnership firm having its head office at Jodhpur, hereinafter referred to as the assessee, claimed before the Sales Tax Officer that they were not liable to be assessed to sales tax in respect of the above turnover because, firstly, the assessee was not a dealer within S. 2 (f) of the Rajasthan Sales Tax Act (Rajasthan Act XXIX of 1954) with respect to this turnover, and secondly, because the sales were in the course of import within Art. 286 (1) (b) of the Constitution. Although the Sales Tax Officer set out the facts of the case relating to the second ground, he deemed it sufficient to assess this turnover on the ground that the assessee was a dealer within S. 2 (f) of the Rajasthan Sales Tax Act, without adverting to the second ground. The facts on which the assessee had relied upon to substantiate his second ground were these. The Zeal-Pak Cement Factory, Hyderabad (Pakistan), hereinafter called the Pakistan Factory, manufactured cement in Pakistan. The Pakistan Industrial Development Corporation, hereinafter called the Pakistan Corporation, entered into an agreement with M/s. Mikhiram and Sons (P) Ltd., Bombay, for the export of cement manufactured in Pakistan to India. The State Trading Corporation of India entered into an agreement with the said M/s. Milkhiram and Sons for the purchase of, inter alia 35,000 long tons of cement to be delivered to it F. O. R. Khokhropar in Pakistan, on the border of Rajasthan. The State Trading Corporation appointed the assessee as its agent, broadly speaking to look after the import and the sale of the imported cement. The modus operandi adopted by the assessee for the sale of the cement was as follows. It would obtain from a buyer in Rajasthan an order under an agreement, a sample of which is on the record. The agreement fixed the price and the terms of supply. By one clause the assessee disclaimed any responsibility regarding delay in despatch and non-receipt of consignment or any loss, damage or shortage in transit due to any reason whatsoever. The agreement further provided that "all claims for loss, damage or shortage, etc., during transit will lie with the carriers and our payments are not to be delayed on any such account whatsoever." It was further provided in the agreement that the dues were payable in advance in full, or 90 per cent in advance and the balance within 15 days of billing plus sales tax and other local taxes. Clause 6 of the agreement is in the following terms:

"A post Card Loading Advice will be sent to you by the Factory as soon as the wagons are loaded in respect of your orders, and it will be your responsibility to arrange for unloading the consignment timely according to Railway Rules. Ourselves, and the supplies will not be responsible for demurrage, etc. on any account whatsoever. If the consignment reaches earlier than the Railway Receipt, it is the responsibility of buyer to arrange for and get the delivery timely against indemnity bond, etc. All the Railway Receipts, etc., will be sent by registered post by the Suppliers in Pakistan".

3. After this agreement had been entered into, the assessee would sent (sic) despatch instructions to the Pakistan Corporation. These instructions indicated the name of the buyer consignee and the destination, and provided that the railway receipt and D/A should be sent by registered post to the consignee. These instructions were sent with a covering letter to the Pakistan Corporation requesting that these instructions be passed on to the Pakistan Factory for necessary action. The Pakistan Corporation would then forward these despatch instructions to the Ze