Report No. 30
78. Gandhi sons case.- In Gandhi Sons v. State of Madras (AIR 1955 Mad 722), the facts were that some Bombay merchants had entered into certain contracts of purchase with the merchants in Madras who were dealers in pepper. The Bombay merchants made the purchases either on their own behalf or on behalf of undisclosed foreign principals. Between the undisclosed principals and the Madras merchants there was no privity. The Bombay merchants then exported the goods. The Madras sellers contended, that their sales to Bombay merchants were in the course of export. In dealing with this question, the High Court observed (p. 724, para. 15):-
"What was characterised by the Supreme Court (I Travancore case) as an "export sale" was one in which the assessees (here, the Madras sellers) figured as exporters, privity having been established between them and the foreign buyer, either through direct negotiation or dealing or through the local representatives of the latter Undoubtedly an export took place here. But in that transaction the assessees (the Madras sellers) were not the sellers who exported or whose sales occasioned the export.
A sale will occasion an export or there will be an export sale as understood by the Supreme Court only where the sale is to a foreign buyer with whom the local seller has privity and when as a direct result of such sale the goods are transported across the frontier."