COFFEE BOARD BANGALORE Vs. JOINT COMMERCIAL TAX OFFICER MADRAS

JUDGEMENT

(1.) These are petitions under Article 32 of the Constitution by the Coffee Board, Bangalore directed against the Joint Commercial Tax Officer, Madras and the State of Tamil Nadu questioning the demand of Sales Tax on certain transactions of sales which the Board claims are sales in the course of export of Coffee out of India and thus not liable to Sales Tax. A preliminary objection was taken at the hearing that the petitions do not lie since no question of a fundamental right is involved. We shall deal with the preliminary objection later as the main petition and the preliminary objection are inter-linked. But before we mention the points in controversy it is necessary to state the facts more fully.

(2.) The petitioner is a statutorily constituted body and functions under the Coffee Act, 1942 (VII of l942) . This Act was passed to provide for the development under the Control of the Union of the Coffee Industry. Its main function is to constitute a Coffee Board. Previously there was an Ordinance intituled the Indian Coffee Market Expansion Ordinance, 1940 (13 of 1940) . A Board called the Indian Coffee Market Expansion Board was constituted under the Ordinance. The same Board now continues under the name 'Coffee Board'. On this Board, all interests are represented and some members of Parliament and Officers of Government have also places Sections 4 to 10 of the Act are concerned with the setting up of the Board. As nothing turns upon the constitution of the Board, it is not necessary to give the gist of those sections here. The Act imposes duties of Customs and Excise - the former on all coffee produced in India and exported from India and the latter on coffee released by the Board for sale in India from its surplus pool. The Act compels the registration of all owners of coffee Estates and licensing of curers and dealers. The Act next imposes a control on the sale, export and re-import of coffee into India. In respect of sale, it fixes prices for sale of coffee either wholesale or retail by registered owners and licensed curers for the purpose of sale in the Indian Market. The Board fixes internal sale quota for each Estate owner and the owner has to observe this quota and also the price fixed. The registered owner may not sell coffee unless it has been cured by a licensed establishment or it is sold uncured under a special licence. The Act next prohibits the export of coffee from India otherwise than by the Board or under the authorization granted by the Board. To this restriction, there are a few minor exceptions such as coffee in specified quantities may be exported by taking on board ships or aircrafts intended for consumption of the crew and the passengers or carried by a passenger for his own use or exported for special purposes specified by the Central Government. The Government is authorised to specify the total quantity of coffee to be exported during any year. Coffee once exported cannot be re-imported into India except under a permit. The registered owners are required to furnish periodical returns and to furnish such information as may be prescribed. Every registered owner after dealing with the coffee for sale in Indian markets up to the internal quota fixed for him must hand over to the Board all surplus coffee to be included in the Board's Surplus Pool. Similarly, curing establishments are required to surrender to the Board all surplus coffee. Small producers may, however, be exempted from the operation of this condition. After the coffee is delivered to the Board, the control of the Board begins. The Board classifies the coffee and assesses its value based on its quantity, kind and quality. Once the coffee is delivered to the Board, the registered owner or the licensed curer has no rights over the coffee except to receive its price in accordance with Section 34 of the Act.

(3.) We are not concerned in this petition with any internal sales. The Board has elected to make monthly returns and in these petitions taxes on sales made in March and April, 1969 are challenged. Provisional assessments have been made and demand for taxes held due after allowing credit for taxes already paid, has been made by the respondents under the Madras General Sales Tax Act. 1959. Of these certain sales are claimed to be exempted from Sales Tax under the Madras Act by reason of those being in the course of export of coffee out of India. The Taxing authorities held that those sales took mace within Tamil Nadu State and were thus liable to sales tax under the Tamil Nadu Act. The point of difference arises thus: