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HIGH COURT OF CALCUTTA
A. N. Ray, D. Basu
S. K. ROY - Appellant
Versus
ADDL. MEMBER, BOARD OF REVENUE - Respondent
Sales Tax Ref. 391 Of 1961
Decided On : APRIL 25, 1966
BENGAL FINANCE (SALES TAX) ACT, 1941 - S. 2(g) - SALE - MEANING - SALE OF COAL TO SHIPPING AGENTS FOR EXPORT - WHETHER SALE OCCASIONED EXPORT - WHETHER EXEMPT FROM TAX - CONSTITUTION OF INDIA, ART. 286(1)(B) - INTERPRETATION - SALE IN THE COURSE OF EXPORT - MEANING - SALE TO GOVERNMENT OF INDIA FOR EXPORT - WHETHER SALE IN THE COURSE OF EXPORT - WHETHER EXEMPT FROM TAX - CENTRAL SALES TAX ACT, 1956, S. 5 - RELEVANCE - EXPLANATION 2 TO S. 2(g) OF THE BENGAL FINANCE (SALES TAX) ACT, 1941 - INTERPRETATION - SALE DEEMED TO HAVE TAKEN PLACE IN WEST BENGAL - CONDITIONS.
Fact of the Case:
The assessee, a registered dealer under the Bengal Finance (Sales Tax) Act, 1941, claimed exemption from tax on two categories of transactions: (i) sales of coal made to certain shipping agents for shipment of coal to countries outside India and (ii) sales of coal made to B.N. Railway. The assessee's claim for exemption was disallowed by all the authorities up to the Board of Revenue, and the assessee made an application under Section 21(1) of the Act to have the question of law stated therein referred to the High Court. The Board, however, refused to refer and the assessee was obliged to apply to the High Court under Section 21(2). The High Court allowed the application and directed the Board to refer to itself the five questions, which have, accordingly, been referred by the Board.
Finding of the Court:
1. The sale of coal to shipping agents for export was a sale which occasioned the export and was, therefore, exempt from tax under Article 286(1)(b) of the Constitution. 2. The sale to the Government of India for export was also a sale in the course of export and was, therefore, exempt from tax under Article 286(1)(b) of the Constitution. 3. The sale to the B.N. Railway took place within West Bengal and was, therefore, liable to tax under the Bengal Finance (Sales Tax) Act, 1941.
Issues: 1. Whether the sale of coal to shipping agents for export was a sale which occasioned the export and was, therefore, exempt from tax under Article 286(1)(b) of the Constitution. 2. Whether the sale to the Government of India for export was also a sale in the course of export and was, therefore, exempt from tax under Article 286(1)(b) of the Constitution. 3. Whether the sale to the B.N. Railway took place within West Bengal and was, therefore, liable to tax under the Bengal Finance (Sales Tax) Act, 1941.
Ratio Decidendi: 1. A sale in the course of export means a sale which occasions the export or a sale effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India. 2. A sale by the exporter by the transfer of shipping documents while the goods are beyond the customs barrier or in transit is also a sale in the course of export. 3. 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 transaction provided it is established that the contract between the seller and a third party 'occasions' the export. 4. A sale is deemed to have taken place in West Bengal if the goods are actually delivered in West Bengal as a direct result of such sale for the purpose of consumption in West Bengal notwithstanding the fact that under the general law relating to the sale of goods the property in the goods has by reason of such sale passed in another State.
Final Decision: Question (a): Answered in the affirmative and in favour of the assessee. Question (b): Answered in the affirmative and in favour of the assessee. Question (c): Answered in the negative and against the assessee. Question (d): Answered in the negative and against the assessee. Question (e): Answered in the affirmative, and against the assessee.
( 1 ) THE facts, as stated in the Statement of Case in this Reference, are as follows :
( 2 ) THE assessment year is the year ending March, 1952, and the Assessee is the Bhowrah Coal Co. , a registered dealer under the Bengal Finance (Sales Tax) Act, 1941 (hereinafter referred to as 'the Act' ). The Assessee's claim for exemption from being taxed under the Act, on two categories of transactions have been disallowed and this disallowance has led to this reference. These two transactions are (i) "sales of coal made to certain shipping agents for shipment of coal to countries outside India and (ii) Sales of coal made to B. N. R. " (i) As regards the first item, the facts are that at the relevant period, under the provisions of the Colliery Control Order, 1945 coal could not he exported out of India without the sanction of the Government. The latter placed orders for export through dealers selected by it and such dealers delivered the good to the shipping agents as directed in the orders. The assessee executed such orders and the coal was in fact exported in pursuance thereof, though the names of the foreign buyers were unknown to the Assessee. (ii) As regards the second item, the coal was supplied by the Assessee to the B. N. Railway, inter alia, in compliance with the directions of the Government of India, by loading the coal into wagons at the Assessee's colliery sheds in Bihar. In the Railway receipts, the Assessee was named as the consignor and the B. N. Railway as the consignee and some place in West Bengal was shown as the destination.
( 3 ) THE Assessee's claim for exemption having been disallowed by all the authorities up to the Board of Revenue, the Assessee made an application under Section 21 (1) of the Act (Ann, H, p. 60 of the paper BOOK) to have the question of law stated therein referred to the High Court. The Board, however, refused to refer and the Assessee was obliged to apply to the High Court under Section 21 (2 ). This Court (Ann. K, p. 77, Paper Book) allowed the application and directed the Board to refer to itself the five questions, which have, accordingly, been referred by the Board. These questions are:" (a) Whether on the facts and in the circumstances of the case the sales in question made under sanction and direction of me Deputy Coal Controller (Distribution) for the purpose of export were assessable under the Bengal Finance (Sales Tax) Act, 1941; (b) Whether on the facts and in the circumstances of the case the sales in question by delivery to the Shipping agents can be said to have taken place in the course of export of the goods out of the territory of India within the meaning of Section 27 of the Bengal Finance (Sales Tax) Act, 1941 and Article 286 (1) (b) of the Constitution of India and as such exempt from taxes under the Bengal Finance (Sales Tax) Act, 1941; (c) Whether on the facts and in the circumstances of the case the sales in question to the Shipping Agents who are (within the meaning of the Bengal Finance (Sales Tax) Act, 1941) registered dealers of coke are exempted from taxes under Section 5 (2) (a) (ii) of the Bengal Finance (Sales Tax) Act; (d) Whether on the facts and in the circumstances of the case the Hon'ble Member, Board of Revenue was legally justified in not allowing the stand taken by the petitioner that the sales in question having been made to registered dealers are exempt from taxes on the ground that the stand is a new one; (e) Whether on the facts and in the circumstances of the case the sales in question of goods to the Bengal Nagpur Railway can be said to have taken place in West Bengal within the meaning of explanation 2 of the Section 3 (g) of the Bengal Finance (Sales Tax) Act and as such liable to be taxed under the said Act. "we shall deal with these questions seriatim: Question (a) :
( 4 ) THERE is little substantial difference between this question and the next one except that while Question (a) uses the expression "purpose of export", Question
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