Report No. 61
3.38. The ratio in Ben Gorm case.-
Mr. Justice Shah, who delivered the majority judgment, laid down the principles applicable in such cases as follows1:-
(1) Before the Constitution Amendment of 1956 there was no legislative guidance, but such cases were governed by the interpretation put on the constitutional provisions in the two Travancore cases2-3.
(2) After the amendment of 1956, guidance was provided in section 5 of the Central Sales Tax Act, which was "legislative recognition" of what was said by the Supreme Court in the two Travancore cases.
(3) There is a distinction between a sale "for export" and a sale "in the course of export"-
(a) In general, where the sale is effected by the seller and he is not connected with the export which actually takes place, it is a sale "for export". As an example, where a foreign purchaser or his agent purchases goods within India and they or one of them export or exports the goods out of India, the sale would be sale "for export", but such a transaction is not "in the course of export even though the Indian seller had the knowledge of intended export.
(b) Where the export is the result of a sale and the export is inextricably linked up with the sale, so that the bond cannot be dissociated without a breach of contract, the sale is in the course of export.
1. Ben Gorm Nilgiri Plantation Co. v. Sales Tax Officer, (1964) 7 SCR 706 (711, 712): AIR 1964 SC 1752.
2. 1952 SCR 1112 (First Travancore case).
3. 1954 SCR 53 (Second Travancore case).