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1966 Supreme(Cal) 16
HIGH COURT OF CALCUTTA
R. K. Bose, B. C. Mitra
NORTH ADJAI COAL CO. (P) LTD. - Appellant
Versus
COMMERCIAL TAX OFFICER - Respondent
A. F. O. O. 402 Of 1961
Decided On : JANUARY 14, 1966
AJIT BAKSHI, B.C.Dutt, MANJUSRI DUTT, NONI COOMAR CHAKRAVARTI
A sale in the course of export of goods out of the territory of India is exempt from sales tax under Section 5(2)(a)(v) of the Bengal Finance (Sales Tax) Act, 1941, and Article 286(1)(b) of the Constitution of India, as the export is an integral part of the transaction. Additionally, a transaction under the direction of the Coal Controller cannot be considered a sale as defined in Section 2(g) of the Bengal Finance (Sales Tax) Act, 1941, due to the applicability of Clause 12-E of the Colliery Control Order, 1945.
Headnote:
SALES TAX - Exemption - Sale of goods for export - Whether sale of coal to Government of India for export to East Pakistan was exempt from sales tax - Whether transaction was a sale - Whether export of coal was an integral part of the transaction - Interpretation of Section 5(2)(a)(v) of the Bengal Finance (Sales Tax) Act, 1941 and Article 286(1)(b) of the Constitution of India - Applicability of Clause 12-E of the Colliery Control Order, 1945.
Fact of the Case:
The appellant, a private company and owner of a coal mine in Burdwan, supplied coal to the Fuel Inspector, Eastern Bengal Railway, East Pakistan, of the total value of Rs. 88,929-10-0. The appellant claimed exemption from sales tax under Section 5(2)(a)(v) of the Bengal Finance (Sales Tax) Act, 1941, and Article 286(1)(b) of the Constitution of India, arguing that the sale was meant for export and was in fact exported out of the Union of India. The sales tax authorities rejected the appellant's contentions, and the appellant challenged the orders in a writ petition under Article 226 of the Constitution.
Finding of the Court:
The court held that the sale of coal to the Government of India for export to East Pakistan was exempt from sales tax under Section 5(2)(a)(v) of the Bengal Finance (Sales Tax) Act, 1941, and Article 286(1)(b) of the Constitution of India. The court found that the export of coal was an integral part of the transaction and that the transaction could not be regarded as a sale as defined in Section 2(g) of the Act, due to the applicability of Clause 12-E of the Colliery Control Order, 1945.
Issues: 1. Whether the sale of coal to the Government of India for export to East Pakistan was exempt from sales tax under Section 5(2)(a)(v) of the Bengal Finance (Sales Tax) Act, 1941, and Article 286(1)(b) of the Constitution of India? 2. Whether the export of coal was an integral part of the transaction? 3. Whether the transaction could be regarded as a sale as defined in Section 2(g) of the Act, considering the applicability of Clause 12-E of the Colliery Control Order, 1945?
Ratio Decidendi: 1. The court interpreted Section 5(2)(a)(v) of the Bengal Finance (Sales Tax) Act, 1941, and Article 286(1)(b) of the Constitution of India, and held that a sale in the course of export of goods out of the territory of India was exempt from sales tax. The court relied on the Supreme Court decision in State of Travancore-Cochin v. Bombay Company Ltd., which held that sales and purchases that occasioned export or import of goods were exempt under Article 286(1)(b). 2. The court found that the export of coal to East Pakistan was an integral part of the transaction, as the coal was meant for the Government of East Pakistan and the export could not be regarded as an independent transaction. The court relied on the decision of the Punjab High Court in Mohan Lal Moti Lal v. Assessing Authority, Bhatinda, which held that a sale in the course of export involved an inextricable connection between the sale and the export. 3. The court interpreted Clause 12-E of the Colliery Control Order, 1945, and held that the transaction could not be regarded as a sale as defined in Section 2(g) of the Bengal Finance (Sales Tax) Act, 1941. The court relied on the Supreme Court decision in New India Sugar Mills Ltd. v. Commr. of Sales Tax, Bihar, which held that a transaction under the direction of the Sugar Controller could not be considered a sale within the meaning of the Bihar Sales Tax Act.
Final Decision: The court allowed the appeal, set aside the judgment and order of the lower court, and made the rule absolute. The appellant was entitled to costs of the appeal and the trial court.
( 1 ) THIS appeal is directed against a judgment and order of J. P, Mitter, J. dated August 11, 1961. By this judgment a rule nisi obtained by the appellant on a petition under Article 226 of the Constitution was discharged.
( 2 ) THE appellant is a private company, and is the owner of a coal mine in the district of Burdwan. Pursuant to an agreement between the Government of India and the Government of Pakistan, the former agreed to release large quantities of coal for consumption in East Pakistan. The appellant, as one of the colliery owners, delivered coal to the Fuel Inspector, Eastern Bengal Railway, East Pakistan, of the total value of Rs. 88,929-10-0. In respect of this supply of coal bills were drawn by the appellant in the name of the Deputy Coal Commissioner (Production), Ministry of Steel and Mines, Government of India, Calcutta, who was to realise the price of coal supplied to Pakistan. With regard to this supply of coal to Pakistan, the appellant has been made liable for sales tax under the Bengal Finance (Sales Tax) Act, 1941, (hereinafter referred to as the Act ). The appellant contended before the sales tax authorities, that it was not liable to pay sales tax on the coal supplied to East Pakistan, as it was entitled to exemption under Section 5 (2) (a) (v) of the Act and also under Article 286 (1) (b) of the Constitution, as the coal was meant for export, and was in fact exported out of Union of India. These contentions of the appellant were overruled and rejected, firstly by the Commercial Tax Officer, and secondly by the appellate authority before whom an appeal was preferred against the order of the Commercial Tax Officer, and finally by the Additional Commissioner, Commercial Taxes, 'who disposed of a revision application made by the appellant under Section 20 (3) of the Act. Being aggrieved by the orders passed by the sales tax authorities, the appellant moved an application under Article 226 of the Constitution and obtained a rule which was discharged by the judgment and order hereinbefore mentioned.
( 3 ) MR. Noni Coomar Chakravarty, learned Advocate for the appellant, contended that sales could not be charged with regard to the supply of coal to the Government of East Pakistan as the coal in question was exported out of the country. He argued that the transaction was covered by the provision in Section 5 (2) (a) (v) of the Act, which provides that a dealer is entitled to deduct from his taxable turn-over:"sales of goods which are shown to the satisfaction of the Commissioner not to have taken place in West Bengal or to have taken place in the course of inter-State trade or commerce within the meaning of Section 3 of the Central Sales Tax Act, 1956 or in the course of import of the goods into or export of the goods out of the territory of India within the meaning of Section 5 of that Act". It was argued that the transaction must be regarded as a sale which did not take place in West Bengal, or in any event a sale in the course of export of the goods out of the territory of India. There was no sale of coal in West Bengal. It was next argued that the sale in any event was not liable to be taxed as it was a sale in the course of export of coal out of the territory of India as provided in Article 286 (1) (b) of the Constitution. The third contention of Mr. Chakpawarty was that under Clause 12-E of the Colliery Control Order, 1945, the transaction could not be regarded as a sale which was liable to tax. It was argued that under Clause 12-E of the Colliery Control Order, 1945, no person could acquire, purchase or agree to acquire or purchase any coal from a colliery, and no colliery owner or his agent could despatch or agree to despatch or transport any coal from the colliery, except under the authority and in accordance with the conditions contained in a general or special authority of the Central Government. It was argued that coal could not be sold, despatched or transported without the pe
