Judgment

A.N. RAY, C. J. (For himself and on behalf of K. K. Mathew, M. H. Beg and Y. V. Chandrachud, JJ.): These appeals by special leave raise the question whether the agreements between the appellants and the State Trading Corporation (hereinafter referred to as the corporation) were in course of export, and, therefore, immune from liability under the Central Sales Tax Act.

2. The appellant entered into four contracts for sale of mineral ore. Two of these contracts were with the foreign buyer M/s. Associated Metals and Minerals Corporation, New York. The other two contracts were with the State Trading Corporation. It is common ground that the Corporation entered into contracts with foreign buyers for sale of the identical goods purchased by the Corporation from the appellant.

3. The present appeal relates to the two contracts between the appellant and the Corporation. The High Court came to the conclusion that the appellant s two contracts with the Corporation are exigible to tax under the Central Seles Tax Act,1956.

4. Section 5 (1) of the Central Sales Tax Act, 1956 hereinafter referred to as the Act contains the following relevant provision:

"A sale or purchase of goods shall be deemed to take place in the course of the export of the goods out of the territory of India only if the sale or purchase either occasions such export or is effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India".

5. Counsel for the appellant contended as follows. The contract in each case between the appellant and the Corporation is inextricably bound up with the export. The sale between the appellant and the Corporation and the export by the Corporation to foreign buyer constituted one integrated transaction. Second the Corporation has been interposed by the statute for a limited purpose between the appellant and the foreign buyer. Export cannot be made except by the Corporation. The inextricable link is not broken by the Corporation. The Corporation could not have diverted the goods to a buyer in India without violating Export and Import Control Order. Therefore, the sale is in the course of export. Third, the contract between the appellant and the Corporation being on F.O.B, basis, the property in the goods passed only on shipment when the goods are in the stream of export. There is thus no sale in the taxable territory. Fourth, even if it is held that the appellant did not have any contract with the foreign buyer and that privaty is essential, the rigid rule of privity of contract should be relaxed in consideration of equity and justice and a realistic approach should be adopted. The nature of entering into contracts through the channel of the Corporation raises in reality a presumption of the Corporation being an agent of the appellant in the integrated transaction.

6. Counsel on behalf of the appellant relied on some terms of contract in support of the contention that the contract between the appellant and the Corporation and the contract between the Corporation with the foreign buyer formed one integrated transaction. The clauses in the contract between the appellant and the Corporation relied upon by the appellant are terms as to price, shipment, sampling, analysis, weighing, payment and a special clause. The price is expressed in U.S. dollars per long ton, F.O.B, Ocean liner vessel, Calcutta. The term for shipment is that the material will be ready in Calcutta harbour for shipment per steamer as Leneverett or Substitute scheduled to load during December, 1960. The clause as to sampling and analysis is final, sampling and moisture determination will be made at the time of unloading at the port of discharge by Far East Superintendence Company or U. S. Consultants and their certificate will be final and binding on both buyer and seller. The clause as to weighing says that the final weights as ascertained by Far East Superintendence Co. Ltd. or U. S.Consultants at the port of discharge