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Report No. 30

20. Ben Gorm case.- On the same principles, section 5(1) came to be construed in Ben Gorm Nilgiri Plantations v. Sales Tax Officer, [AIR 1964 SC 1752: (1964) 7 SCR 706]. In para. 8 on p. 1755 of the judgment, the Supreme Court observed.-

"to constitute a sale in the course of export it may be said there must be an intention on the part of both the buyer and the seller to export, there must be an obligation, and there must be an actual export. The obligation may arise by reason of statute, contract between the parties, or from mutual understanding or agreement between them or even from the nature of the transaction which links the sale to export
And to occasion export there must exist such a bond between the contract of sale and the actual exportation that each link is inextricably connected with the one immediately preceding it Where the export is the result of sale, the export being inextricably linked up with the sale so that the bond cannot be dissociated without a breach of the obligation arising between the parties arising from the nature of the transaction, the sale is in the course of export."

21. It would be seen that in construing sections 3(a) and 5 in the manner in which they were construed by the Supreme Court, the Supreme Court had necessarily to refer to and follow its own earlier decisions in which "the expressoins "in the course of the import of the goods into, or export of the goods out of, the territory of India" [(clause (1)(b)1 and "in the course of inter-State trade or commerce", occurring in Article 286 as it stood before the amendment of 1956, had come to be judicially interpreted.

In fact, what was the law expounded by the-Supreme Court in its previous decisions was codified and incorporated into sections 3 and 5 of the Central Sales Tax Act of 1956. In Cement Marketing Co. v. State of Mysore, [1963 SC 980 AIR: (1963) 3 SCR 777] in para. 11 on p. 984, the Supreme Court observed:-

"In section 3 of the Central Sales Tax Act, the legislature has accepted the principle governing inter-State sales as laid down in Mohanlal Hargovind's case, [(1955) 2 SCR 509: AIR 1955 SC 786]"



Section 5 of the Central Sales Tax Act, 1956 - Taxation by the States of Sales in the Course of Import Back




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