GULATI J. - (1.) THIS is a reference under section 11(1) of the U.P. Sales Tax Act, 1948 (hereinafter referred to as "the Act") soliciting the opinion of this Court on the following question of law :- "Whether in the facts and circumstances of the case, the applicant is entitled to claim benefit of Article 286(1)(b) for sales in the course of export outside India even though the actual delivery of the goods was taken by the purchasers inside India."
(2.) THIS reference came up for hearing before a Division Bench of this Court constituted by the Honourable Mr. Justice S.C. Manchanda and the Honourable Mr. Justice M. H. Beg. The Division Bench noticed that two cases involving somewhat similar question had already been decided by two different Benches of this Court and the decisions in the two cases were somewhat conflicting even though the facts in the two cases were different. It is for this reason that the instant case has been referred to the Full Bench. The facts of the case, as set out in the statement of the case accompanying the reference, are briefly these : M/s. National Carbon Company Limited (India) (hereinafter referred to as "the assessee") manufactures and sells bulbs, torches, flashlights and radio batteries etc., and has its factory and head office at Calcutta and some branches in U.P. In respect of the assessment year 1958-59, the assessee claimed exemption from tax in respect of its turnover amounting to Rs. 2,14,153 being the sale proceeds of articles supplied to dealers in Nepal. The exemption was claimed under Article 286(1)(b) of the Constitution. The modus operandi of the sales to Nepal dealers and the manner in which the relevant goods were transported to Nepal are set out in two short paragraphs of the statement of the case which are reproduced below :- "The head office at Calcutta received some orders from Nepal dealers for the supply of the above articles. The goods were packed at Calcutta and despatched to its godowns within U.P. from where they were sent by sail to the last railway station for Nepal The documents of title were sent to the purchasers in Nepal through banks some situated in Nepal and the others situated in India. The above articles were subject to the levy of Central excise duty. So they were sent out from Calcutta under a Form (AR-1) prescribed in the Central Excise Manual which was filled up in Calcutta. The purchaser took delivery of the documents of title from the bank after making necessary payments. The actual delivery of the goods was taken by the purchasers from the railway station within India. The purchasers then transported the goods to Nepal While crossing the Indian border, they presented the documents of title to the Excise authorities at the border who informed the Excise authorities at Calcutta that the goods had passed outside India." The assessee-company's claim is that in the circumstances of the case, its sales to its Nepal dealers were sales in the course of export outside India within the meaning of Article 286(1)(b) and as such were exempt from sales tax. This claim of the assessee has not been accepted by the Sales Tax Authorities on the ground mainly that the goods were taken delivery of by the purchasers at the railway terminus within the Indian territory and were thereafter transported by the purchasers into the Nepal territory. This fact has been interpreted by the Sales Tax Authorities to mean that the purchasers after taking physical delivery of the goods within the Indian territory were free to resell the goods in the Indian territory itself.
(3.) ONE more fact which is not in dispute may be mentioned here. It is common ground that there is no rail link between India and Nepal The assessee-company consigned the goods to the railway terminus near Nepal border from where the goods were transported into Nepal territory by other means of transport. Yet another fact which has been mentioned in the statement of the case but to which due importance doe; not appear to have been given is the fact that the goods which were the subject-matter of sales to Nepal dealers were excisable goods liable to excise duty under the Central Excise Act. These goods were despatched under Form AR-4 (wrongly mentioned in the statement of the case as AR-I) as prescribed in the Central Excise Manual Form AR-4 has been prescribed for the purpose of rule 12 of the Central Excise Rules to enable the manufacturers of excisable goods to claim rebate of or exemption from the excise duty in respect of the excisable goods which are exported outside India. Form AR-I prescribes an application for payment of excise duty before the removal of the goods from the factory in accordance with rule 9 of the Excise Rules. From the entries in the form annexed to the statement of the case it appears that the excise duty on the goods in question was paid by the assessee-company on 10th February, 1960, against Form AR-1 1222. When the goods upon which excise duty has been paid are exported outside India, they are despatched against Form AR-4 to enable the exporter to claim refund of the excise duty. Article 286(1)(b) of the Constitution reads thus : "286. (1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place - (a) ............; or (b) in the course of the import of the goods into, or export of the goods out of, the territory of India." ;