- (1.) These appeals by special leave question the correctness of the judgment and order of a division bench of the High court of orissa dismissing writ petitions filed by the appellants. Until Assessment Year 1990-91, the respondents accepted the position that the sales made by the appellants were sales in the course of export and, therefore, exempt from the levy of sales tax. For Assessment Years 1990-91 and 1991-92, the respondents found that these sales were intra-State sales subject to the levy of tax under the orissa Sales Tax Act, 1947. The writ petitions filed by the appellants there against were dismissed.
(2.) The appellants are an export-oriented unit set up pursuant to the resolution of the government of India dated 31/12/1980. That resolution decided to give 100% export-oriented units certain concessions to enable them to meet the rigours of foreign demands in terms of pricing, quality, precision, etc. According to the resolution, " (a) 100% export-oriented unit would imply an industrial unit offering for exports its entire production, excluding permitted levels of rejects. " A unit approved by the Board set up under the resolution was required to undertake to manufacture in bond and export its entire production for a period of 10 years and the finished products were exempt from excise and other central levies. Only rejects, up to 5% or such other percentage as the Board might fix, were allowed to be sold in the domestic tariff area. The application of the appellants that its charge chrome project be approved as a 100% export-oriented unit was granted by the government of India on 24/10/1991.
(3.) On 15/9/1981, the appellants entered into an agreement, called the Off-Take Agreement, with M/s Marc Rich and Co. , AG, (now called "richco") , a corporation having its registered office at Zug, Switzerland. The agreement recited that the appellants intended to construct and were in the course of constructing a new charge chrome plant in the State of orissa, utilising chrome ore from mines in that State, as a 100% export-oriented unit offering for export its entire production. Richco was an internationalmarketing organisation that was specialised and experienced in the distribution and handling of ferro alloys, ferrous and non-ferrous ores and concentrate and steel-related commodities worldwide with associated companies and/or offices in over 30 countries, including associated representative offices in New Delhi, Calcutta and Bombay, with personnel experienced in the marketing of charge chrome. Richco had been a major exporter of Indian ferro alloys and maintained well-established connections with major consumers of charge chrome throughout the world and was well placed and highly experienced in the marketing and transportation of charge chrome and it sought additional material "for the purpose of resale to its major consumers". The recitals added that the appellant "desires to appoint Richco as its exclusive purchaser worldwide for the resale of charge chrome produced by the new orissa plant and Richco desires to accept such appointment". The Off-Take Agreement defined, for its purposes, the term "the agreed rate" to mean "5% on FOBST Indian port price" realised by the appellants. (ST stands for "stored and trimmed". ) Clause 2 of the Agreement stated that the appellants appointed "richco as the sole and exclusive purchaser worldwide for all the charge chrome produced at the plant during the run-up and throughout the contract period and Richco shall be entitled to resell the same for its own account". The appellants undertook with Richco that in each year the aggregate quantity of charge chrome available for sale to Richco would not be less than the export minimum. Richco in turn undertook "with Facor (the appellants) to purchase at regular intervals in each year the charge chrome. . equal to the export minimum at the prices agreed from time to time (as market conditions may require) by the parties hereto. . " It was acknowledged that the market for which the charge chrome was earmarked was primarily Japan and any balance would be earmarked for consumers in the rest of the world. For long-term contracts with major consumers, the appellants would have the right to participate in negotiations so as to enable them to plan their production programme and delivery schedule. Clause 3 stated: "the price for charge chrome to be sold and purchased hereunder shall be that agreed between Facor and Richco from time to time based on prevailing international prices as established by the major producer exporters of charge chrome (taking into account the quality of the charge chrome) for those areas to which the charge chrome shall be destined. . " It also stated: "the prices to be established shall be on a FOBST Indian port basis C+f or GIF discharge port basis as required by Richco from time to time and shall be expressed in dollars or if the parties so agree in any other currency. " The appellants were required to pay to Richco a discount at the agreed rate on all charge chrome purchased by Richco. It was to be allowed by the appellants on each shipment and be paid in dollars to the account of Richco "within thirty days from receipt of the final sale proceeds for the charge chrome in question provided that if the final sale proceeds for any charge chrome shall be withheld for quality and/or quantity reasons then Facor shall pay the discount on the provisional payment within ninety days of the date of arrival of the vessel at Richo's nominated portand the balance of such discount shall be paid when the final payment is settled". Clause 4 of the Agreement, dealing with payments, stated: "payment of the price by Richco in respect of each consignment shall be made by letters of credit for the full value providing for 90% provisional payment against shipping documents and the balance upon receipt of final certificates of assay and weight at load port/discharge port. " The appellants warranted that they would "be the sole and absolute owner (free from any adverse interests) of all charge chrome exported to Richco hereunder". Title and risk to each consignment of the charge chrome would pass to Richco as agreed from time to time. Clause 5 required the charge chrome to be sold thereunder to be shipped in bulk. Clause 13 recorded: "this Agreement. . have been entered into pursuant to the approval granted by the government of India. . ";