V.K.Mehrotra, J. - (1.) The applicant, Liberty Footwear Company, Agra, deals in footwears. His case is that during the year 1974-75 purchases of shoes of the value of Rs. 11,09,784.50 made by him were exempt from payment of purchase tax for they had been made in the course of export thereof outside India. His claim having been rejected by the authorities under the U. P. Sales Tax Act, necessity arose for him to approach this Court in the present revision under Section 11(1) of the Act.
(2.) The claim of the dealer has been rejected on account of the law laid down by the Supreme Court in Mod. Serajuddin v. State of Orissa AIR 1975 SC 1564. A Constitution Bench of the Supreme Court, by majority, ruled in that case that sale in the course of export out of the territory of India means sale taking place not only during the activities directed to the end of exportation of the goods out of the country but also as part of or connected with such activities. The appellant before the Supreme Court had entered into contract with State Trading Corporation which had entered into contracts with foreign buyers for sale of identical goods purchased by the Corporation from the appellant. The Supreme Court, amongst others, made the following observations : ...The various decisions to which reference has been made illustrate the ascertainment of the pre-eminent question as to which is the sale or purchase which occasions the export... The features which point with unerring accuracy to the contract between the appellant and the Corporation on the one hand and the contract between the Corporation and the foreign buyer on the other as two separate and independent contracts of sale...are these. The Corporation entered on the scene and entered into a direct contract with foreign buyer to export the goods. The Corporation alone agreed to sell the goods to the foreign buyer. The Corporation was the exporter of the goods. There was no privity of contract between the appellant and the foreign buyer. The privity of contract is between the Corporation and the foreign buyer. The immediate cause of the movement of goods and export was the contract between the foreign buyer who was the importer and the Corporation who was the exporter and shipper of the goods. All relevant documents were in the name of the Corporation on whose contract of sale was the occasion of the export. The expression 'occasions' in Section 5 of the Act (the Central Sales Tax Act, 1956) means the immediate and direct cause. But for the contract between the Corporation and the foreign buyer, there was no occasion for export. Therefore, the export was occasioned by the contract of sale between the Corporation and the foreign buyer and not by the contract of sale between the Corporation and the appellant. ...The Corporation in regard to its contract with the foreign buyer entered into a contract with the appellant to procure the goods. Such contracts for procurement of goods for export are described in commercial parlance as back to back contracts. In export trade it is not unnatural to find a string of contracts for export of goods. It is only the contract which occasions the export of goods which will be entitled to exemption.... ...The directions given by the Corporation to the appellant to place the goods on board the ship are pursuant to the contract of sale between the appellant and the Corporation. These directions are not in the course of export, because the export sale is an independent one between the Corporation and the foreign buyer.... The fact that the exports can be made only through the State Trading Corporation does not have the effect of making the appellants the exporters where there is direct contract between the Corporation and the foreign buyer. Restriction on export that export can be made only through the State Trading Corporation is a reasonable restriction and has been upheld by this Court in several decisions to which reference has been made earlier.
(3.) The case of the dealer is that, on facts, its case was different from that of Serajuddin [1975] 36 STC 136 (SC); AIR 1975 SC 1564 or of Nihal Shoe Factory [1976] 37 STC 154 ; 1976 UPTC 45 wherein, relying upon that decision, a Division Bench of this Court held that the transaction of sale of shoes by Nihal Shoe Factory to another firm Agra Charm Kala Kendra which, in turn, had entered into an agreement with the State Trading Corporation for supply of shoes to be exported by the Corporation to foreign buyers could not be said to be in the course of export. It was held to be a local sale attracting liability to tax under the U. P. Act.;