1. Challenging the legality and validity of the order dated 17th of September, 2000 passed by the Trade Tax Tribunal, Meerut in second appeal No.354 of 2000 relevant to the assessment year 19961997 (Central) whereby the tribunal has allowed the appeal of the dealer and has accepted the dealer''s claim that the turnover of Gur amounting to Rs.11,66,250/ is not liable to be taxed as interState sale as the said goods were exported to Nepal dealers, the present revision has been filed. The only point mooted in the present revision is as to whether the dealer opposite party has been able to prove that the said transaction amounted to sale in the course of export or not.
2. The dealer opposite party carries on the business of purchase and sale of Gur and Khandsari. It declared the total purchases at Rs.3,70,57,809.72 and taxable purchases at Rs.2,93,76,352.88. No interState sales were declared. However, the dealer declared the purchases of Rs. 11,83,744/ for the dealers of Nepal in commission agency. It was stated by him that the goods were sent to Nepal by 26 trucks. The assessing authority rejected the claim of exemption on export sales by holding that the sale in question is liable to be taxed under section 9(2) of the Central Sales Tax Act on a turnover of Rs.14 lakhs. The said order was confirmed in appeal by the Deputy Commissioner, Trade Tax but has been set aside by the tribunal by the order under revision.
3. In support of its case, the dealer filed certain documents to show that the goods were sent through transport companies namely M/s. S.P. Agrawal Transport Co., M/s. Agrawal Transport Co. and M/s. Shri Krishna Transport Company. These transport companies in their turn have certified that the goods were delivered at Nepal. The assessing authority was of the view that in absence of any purchase order on behalf of the Nepali dealer and also in absence of any document either of India or Nepal Customs Department to show that the goods in question actually crossed the customs barrier, rejected the theory of purchases on behalf of Nepali dealers in commission agency as was propounded and taxed the said turnover treating them as interState sale. It may be noted here that the case of the dealer was that all the goods were sent, to Veerganj, Nepal through the State of Bihar. The Assessing Authority by adding the commission (Dami), profit, transportation charges and other charges assessed the central sales at Rs. 14 Lakhs in respect of the disclosed purchases of Rs.11,83,74422.
4. The tribunal was of the view that production of customs certificate or of any document like this, is not the requirement of law. It proceeded to hold the said transaction as sales in the course of export on the ground that the photostat copies of 26 receipts of goods and the certificate furnished by the transport companies certifying that they transported the goods through their transport companies and delivered the same at Veerganj, Nepal is sufficient to establish that the sales were made in the course of export sales.
5. In the memo of revision the following question of law has been sought to be raised:Whether on the facts and in the circumstances of the case, the Trade Tax Tribunal is legally justified to set aside the central sales tax and to hold that the sale of 26 trucks of Gur is export sale to Nopal despite the dealer has failed to present any documentary evidence in support to claim of exemption?
6. The contention of the learned standing counsel in support of the revision is that the said evidence in the form of certificate of transporters is not sufficient to hold that the sales were made in the course of export. In contra, Shri Piyush Agrawal the learned counsel appearing for the dealer submits that production of custom certificate is not at all required to prove a sale in the course of export.
7. Considered the respective submissions of the learned counsel for the parties and perused the record. To appreciate the controversy involved it is, necessary to refer section 5 of the Central Sales Tax Act which reads as under:
"5. When is a sale or purchase of goods said to take place in the course of import or export. (1) 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.
(2) A sale or purchase of goods shall be deemed to take place in the course of the import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India.
(3) Notwithstanding anything contained in subsection (1), the last sale or purchase of any goods preceding the sale or purchase occasioning the export of those goods out of the territory of India shall also be deemed to be in the course of such export, if such last sale or purchase took place after, and was for the purpose of complying with, the agreement or order for or in relation to such export."
8. The phrase "in the course of export" in fact has been borrowed from Article 286 of the Constitution. Supreme Court has considered this matter in number of cases including in Ban Gorm Nilgiri Plantation Company v. Sales Tax Officer, 15 STC 753 : (AIR 1964 SC 1752). It has laid down following "principles of law on page 759 : (Para 8 of AIR),
"A sale in the course of export predicates a connection between the sale and export, the two activities being so integrated that the connection between the two cannot be voluntarily interrupted without breach of the contract or the compulsion arising from the nature of the transaction. In this sense to constitute a sale in the course of export it may be said that there must be an intention on the part of both the buyer and the seller to export, there must be an obligation to export and there must be an actual export. The obligation may arise by reason of statute; contract between the parties or from mutual understanding or agreement between them or even from the nature of transaction which links the sale to export. A transaction of sale which is a preliminary to export of the commodity sold may be regarded as a sale for export, but is not necessarily to be regarded as one in the course of export unless the sale occasions export. And to occasion export there must, exist such a bond between the contract of sale and the actual exportation, that each link is inextricably connected with the one immediately preceding it. Without such a bond, a transaction of sale cannot be called a sale in the course of export of goods out of the territory of India. There are a variety of transactions in which a sale of a commodity is followed by export thereof. At one end are transactions in which there is a sale of goods in India for foreign consumption. For instance the foreign purchaser either by himself or through the agent purchases goods within the territory of India and exports the goods and even if the seller has the knowledge that the goods are intended by the purchaser to be exported, such a transaction is not in the course of export for the seller does not export the goods, and it is not his concern as to how the purchaser deals with the goods. Such transaction without more cannot be regarded as one in the course of export because etymologically ''in the course of export'' contemplates an integral relation or bond between the sale and the export."
9. Reliance was also placed on the following observation in State of Bihar and others v. Tata Engineering and Locomotive Co. Ltd., 27 STC 127: (AIR SC 477):
"The expression in the course of appearing in Article 286(1) (b) came up for consideration in State of Travancore Cochin v. Bombay Company Limited. Therein this Court held that whatever else may or not fall within Article 286(1) (6) of the Constitution, sales or purchases which themselves occasion in export or import of the goods as the case may be out of or into the territory of India come within the exemption. In that case this Court further observed that a sale by export involves a series of integrated activities commencing from the agreement of sale with a foreign buyer and ending with the delivery of the goods to a common carrier for transport out of the country by land or sea. Such a sale cannot be dissociated from the export without which it cannot be effectuated and the sale and the resultant export form parts of a single transaction. Of these two integrated activities, which together constitute an export sale, whichever first occurs can well be regarded as taking place in the course of the other. Even in cases where the property in the goods passed to the foreign buyers and the sales were thus completed within the State before the goods commenced their journey from the State, the sales must be regarded as having taken place in the course of the export and therefore exempt under Article 286 (1) (b). The same exposition of law is true of Clause (2) of Article 286 as it stood prior to its amendment on 11th September, 1956."
10. It was also urged that passing of title in Indian Territory was immaterial. Whether the title passed in Indian Territory or foreign territory, according to the learned Counsel, did not make any difference as for deciding whether the sale was in course of export, what had to be seen was whether the sale had occasioned the export. Attention was drawn to Commissioner of Sales Tax v. Dhampur Sugar Mills Limited and another, (1970) 26 STC 65 where the sale was held to be in course of export although the delivery of goods was made to foreign buyers within Indian territory. In this connection learned Counsel relied on following observation in Union of India v. K.G. Khosla C. Ltd., 1979 UPTC, 751, that a sale which occasions movement of goods from one State to another is a sale in course of interState trade, no matter in which State the property in the goods passes.
11. The aforesaid decisions along with other decisions have been considered by a learned Single Judge of this Court in the case of Commissioner of Sales Tax v. Ganeshilal and Sons, 1981 UPTC 128 and has held that from the language of Section 5 of the Central Sales Tax Act it is clear that a sale in the course of export only which is exempt and not "sale or export". When can a sale said to be in the course of export or for export depends on the variety of circumstances. The export means taking out something out of the country across the customs barriers. The word "course" means "sequence, process, a patch" in which anything moves. The sequence of movement should be preceded by sale and must result in export to attract Section 5. The sale, movement and export must result in crossing of goods outside the country and must run in a channel. They must be connected with each other and interlinked then only it can be said to be in the course of export."
12. A plain reading of section 5(1) of the Central Sales Tax Act would show that a sale or purchase of goods shall be deemed to take place in the course of export of goods out of the territory of India in the case of either of the following two conditions:
"(a) when sale or purchase either occasions such export, or (b) is effected by a transfer of documents of title to the goods..........."
13. In the present case, according to the dealer; the export sale has not been affected by transfer of document of title. This being so, the question arises as to whether the transaction in question occasions such export sale or not. In Ban Gorm Nilgiri Plantation Co. v. S.T.O. (supra) the Apex Court while interpreting the phrase "in the course of export" has laid down the fulfillment of the following three conditions to treat a transaction as export sale:
1. There must be an intention to export.
2. There should be an obligation to export.
3. There must be an actual export.
14. Now the question which falls for consideration is whether all the aforesaid three conditions cumulatively are fulfilled in the facts of the case on hand. Indisputably, the dealer has not filed any agreement in writing entered into in between himself and the Nepali dealer. Rather, his case is that, he received the purchase order orally, but how, nobody knows it. There is no material on record to show the terms and conditions, if any, settled in between the dealer and the Nepali dealer with regard to the transaction in question. What is interesting to note is that the dealer has claimed that it received the sale consideration directly in cash. In the assessment order it is mentioned that there is no evidence on the record to show that the goods were actually delivered to Nepali dealer specifically. In the absence of original bilties evidencing the arrival of goods at the destination (Nepal) and non production of customs certificate either of India or Nepal, the Assessing Authority conceded that the goods were not delivered at Veerganj, Nepal. Without adverting to these aspects of the case, the tribunal simply on the basis of the photostat copies of the goods receipts (no reason for non production of the original goods receipts has been assigned before any of the authorities below) and the affidavits of the transporters reached to the conclusion that production of customs certificate was not essential and there was no justification for treating the said transaction as interState sales. Thereafter, it proceeded to examine the various judicial pronouncements relating to the interState sales, which in my opinion are not germane to the controversy involved presently.
15. As noticed herein before, the dealer has not filed copy of agreement with the Nepali dealer, nor there is anything to show that the dealer was under obligation to affect the export sales. Nor there is any document to show that the goods were actually exported outside the country. The reliance placed by the tribunal on the affidavits of the transporters without adverting to the relevant statutory provisions dealing export, is misplaced one. Under the Customs Act (section 50 in particular), exporter of any goods is under legal obligation to make entry of such export in the prescribed form by presenting it to proper officer even if it is a case of goods to be exported by land, which is the case here. Section 51 of the Customs Act provides for clearance of goods for exportation after being satisfied that any goods entered for export are not prohibited goods and the exporter has paid the duty, if any, assessed thereon and any charge payable under the Customs Act in respect of the same. The officer concerned may make an order permitting clearance and noting of goods for exportation. Without compliance of these provisions, it is not possible to export any goods outside the country. There being no iota of evidence in this regard, the reliance placed on the affidavits given by transporters which have practically no evidentiary value to come to the conclusion that the goods were actually exported, has no legal basis. On the affidavits of transporters without there being any ground for non production of the documents referred to in sections 50 and 51 of the Customs Act, it is not possible to infer that the goods were actually exported or crossed custom barrier of the Indian territory. Withholding of primary evidence or the best evidence without giving any explanation for their absence, the other evidence cannot be validly relied upon. The affidavits may be used as a corroborative evidence but they cannot take place of primary or the best evidence. Therefore, there being no cogent and reliable evidence to show that the goods actually were exported, the tribunal has erred in law in holding that the dealer acted as a commission agent for the purchases of Gur on behalf of Nepali dealer. The case of the dealer is still on the worst footing as it has not been able to file any evidence, except a bald statement, to show that it received the alleged orders from Nepali dealer, orally. The payment of sale consideration in cash is also a relevant fact to disapprove the claim of export sales.
16. In nutshell, there must be some cogent evidence to show that all the three ingredients which constitute export sale exist in a given case to hold it as export sales. In absence of customs document, it is not possible to conclude that the goods were exported outside the country.
17. The Tribunal has misdirected itself while holding that the authorities below to it were not justified in treating the sale in question as interState sale, and it has placed reliance upon certain decisions which are not applicable to the facts of the case on hand.
On the admitted facts in the present case, the goods were transported outside the State of U.P. to State of Bihar wherefrom they were carried to Veerganj. In absence of any evidence of actual exportation of goods outside the country, on the own showing of the dealer the goods reached to State of Bihar and as such it is a case of interState sale unless proved otherwise.
18. Viewed as above, I find sufficient force in the revision. The tribunal was not justified on the facts of the present case to hold that the transaction in question is export sale and is exempt under section 5(1) of the Central Sales Tax Act. The revision, therefore, succeeds and is allowed with cost of Rs.5,000/(Rupees Five Thousand only) and the order of the tribunal is hereby set aside and that of the First Appellate Authority is restored back.
Revision allowed.
