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

Shambhu Prasad Singh and Shiveshwar Prasad Sinha JJ.

1. By its order dated the 6th April, 1967, this court under Sec.25 (3) of the Bihar Sales Tax Act, 1947, read with Sec.9 of the Central Sales Tax Act, 1956, called upon the Tribunal to state in two cases the following question for the opinion of this court: whether on the facts and circumstances of this case the Tribunal was right in holding that the sales of iron ores were in the course of export out of the territory of India"and as such not liable to pay sales tax by virtue of Sub-clause (b) of Clause (1) of Article 286 of the Constitution. In obedience to that order, the Commercial Taxes Tribunal, Bihar, has submitted the references. Tax Case No.29 of 1966 relates to the assessment year 1957-58 and Tax Case No.30 of 1966 relates to the assessment year 1958-59.

2. The assessee M/s. Thakur Prasad Sao are a firm dealing in iron ore, manganese ore and asbestos at Ranchi in Bihar. In their return for the assessment years 1957-58 and 1958-59 they showed sales worth Rs.4,60,905.45 and Rs.7,18,687.90 respectively of iron ore to the State Trading Corporation of India. Out of Rs.4,60,905.45, sales worth Rs.4,29,306.88 were on f. a. s. (free alongside ship) price basis and the rest on f. o. r. (free on rail) price basis. Out of Rs.7,18,687.90 sales worth Rs.6,94,806.77 were on f. a. s. price basis and the rest on f. o. r. price basis. The case of the assessee was that the sales of iron ores were in the course of export out of the country and, therefore, not liable to sales tax either under the Bihar Sales Tax Act or the Central Sales Tax Act in view of the provisions of Article 286 (1) (b) of the Constitution. The assessing officer held that the nature of the transaction between the applicant and the buyer envisaged that the sales had been completed between the assessee and the buyer at K. P. Docks at Calcutta and, therefore, the sales were in the course of inter-State trade and commerce and the assessees were liable to pay a tax under the Central Sales Tax Act. The assessee appealed to the Appellate Assistant Commissioner of Sales Tax, Chotanagpur, who agreed with the assessing officer that the assessees were liable to pay sales tax under the Central Sales Tax Act. However, he gave some direction for checking up certain calculations. The assessee then moved the Deputy Commissioner of Sales Tax, Ranchi, in revision who also agreed with the assessing officer and the Appellate Assistant Commissioner and dismissed the revision. Thereafter, the assessee filed applications for revision before the Board of Revenue. On account of the change in law, these applications were transferred to the State Commercial Taxes Tribunal for disposal. The Tribunal held that the sales of iron ores worth Rs.4,29,306.88 in the return for the assessment year 1957-58 and Rs.6,64,806.77 in the return for the assessment year 1958-59 were in the course of export and, as such, should be exempted from taxation. The Tribunal, however, held that sales of iron ores worth Rs.31,598.57 and Rs.23,881.13 on f. o. r. price basis were liable to tax. The department then made applications before the Tribunal for references to this court. The applications were rejected. Thereafter, the department moved this court for calling for references and on those applications, the order dated 6th April, 1967, already referred to above, was passed.

3. The only question which arises for decision in these two references is, whether the sales of iron ores on f. a. s. price basis have rightly been held to be export out of the territory of India by the Tribunal and thus exempted from payment of sales tax. The Tribunal has considered in detail the terms of the contract between the parties and has held that according to them, the sales of iron ores on f. a. s. basis which has the same effect as sales on f. o. b. (free on board) basis were sales in export out of the territory of India. In support of its finding, the Tribunal has mainly re