A sale is in the course of export if it is made "for the purpose of export" or as "preparatory to export", and if the export or the movement of the goods out of the territory of India takes place as a result of the covenant or contract between the seller and the purchaser.

( 1 ) BY the assessment order at annexure N to the petition, respondent 1 has disallowed the claim of the petitioner for deduction from its gross turnover for taxation under the Bengal (Finance) Sales Tax Act, 1941 (hereinafter referred to as "the Act"), on the ground that the three items at page 95 of the petition do not constitute sales in the course of export within the meaning of Article 286 (1) (b) of the Constitution, as contended by the petitioner. Though the petition comprised relief against all the three items amounting to Rs. 26,23,067. 15, at the hearing, Dr. Debi Pal on behalf of the petitioner has confined his case to two items only, namely, item 1 amounting to Rs. 9,47,940. 62 and item 3 relating to Rs. 12,04,097. 20.

( 2 ) THE question of law involved in this case has been fully examined, with reference to all authorities then available, in the Division Bench case of S. K. Roy v. Board of Revenue A. I. R. 1967 Cal. 338, to which I was a party. The two propositions formulated therein may be reiterated : (a) Where a local or internal sale is made "for the purpose of export" or as "preparatory to export", it cannot come within the exemption under Article 286 (1) (b ). (b) But it would be exempted if the export or the movement of the goods out of the territory of India takes place as a result of the covenant or contract between the seller and the purchaser, so that the sale and the resultant export are parts of the same transaction and they cannot be dissociated from each other. (c) The mere fact that there is no contract between the seller and the foreign buyer does not conclusively establish that a transaction cannot be one "in the course of export". It may still be held to be such a transaction provided that the contract between the seller and a third party occasions the export.

( 3 ) THE learned Government Pleader seeks to distinguish the Division Bench decision on the facts of the instant case. We are, therefore, led to examine the facts relating to items 1 and 3 at page 95 of the petition relating to the impugned order. (a) The first item relates to contract No. 21403/13-4-60. It may be pointed out that on the face of the very recitals of the order relating to this item it is evident that it is a sale in the course of export as explained in the cited decision. The order says : the dealer made a contract 21403 with the foreign buyer, Messrs Associated Metals Corpn. of New York for supply of the minerals. But according to arrangement with S. T. C. the goods were despatched by S. T. C. In the bill of lading S. T. C. was the shipper. As such it is clear that these are sales of the dealer to the S. T. C. who exported them outside.

( 4 ) THE contract upon which the sale to the foreign buyer took place was between the petitioner and the foreign buyer himself. It is only by an arrangement for the shipping of the goods to the foreign buyer that the petitioner delivered the goods through the State Trading Corporation. There was thus no separate or independent sale by the petitioner to the State Trading Corporation. The contract and arrangement referred to in the order, form one integrated transaction of a sale to a foreign buyer and the movement of the goods outside the customs frontiers of India also took place in pursuance of the contract No. 21403. On the face of the order, therefore, it was a sale in the course of export which the Sales Tax Officer had no jurisdiction to tax in view of Article 286 (1 ) (b) of the Constitution. How the State Trading Corporation came in between the petitioner-company and their foreign buyer will be evident from the Government orders etc. at annexures A-G. To control the export business, the sole exporting and shipping authority was given to the State Trading Corporation, so that all exporters were obliged to ship the goods through the State Trading Corporation (vide page 24 of the petition ).

( 5 ) BY such Governmental control, the Corporation could by no means become