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Report No. 61

3.30. Distinction between domestic sales and export sales.-

A distinction between domestic sales and export sales was made in the second Travancore case, where the Supreme Court, in the majority judgment, said:1

"As pointed out by a recent writer, from the legal point of view it is essential to distinguish the contract of sale which has as its object the exportation of goods from this country from other contracts of sale relating to the same goods, but not being the direct and immediate cause for the shipment of the goods When a merchant shipper in the United Kingdom buys for the purpose of export goods from a manufacturer in the same country the contract of sale is a home transaction; but when he resells these goods to a buyer abroad that contract of sale has to be classified as an export transaction: Schmittoff-Export Trade, 2nd Edn., page 3."

"This passage shows that, in view of the distinct character and quality of the two transactions, it is not correct to speak of purchase for export as a purchase in the course of import. The same reasoning applies to the first sale after import which is a distinct local transaction effected after the importation of the goods into the country has been completed, and having no integral relation with it."

1. State of Travancore-Cochin v. S. V.C. Factory, AIR 1953 SC 333 (336).

3.31. Perhaps, the words "distinct local transaction" used in the second Travancore-Cochin case1 have been constructed as suggesting an antithetical situation, where the local transaction and the international transaction are not distinct from each other, but integral parts of the same transaction. But, as already stated2 according to the majority judgment, the intention was to exempt only the import-purchase and export-sale.

1. Para. 3.30, supra.

2. Para. 3.29, supra.

Certain Problems connected with Powers of the States to Levy a Tax on the Sale of Goods and with the Central Sales Tax Act, 1956 Back

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