Report No. 61

My disagreement with the view taken by the majority on Khosla's case.- In view of the detailed discussion of Khosla's case and the comments I have offered on that case, I regret to say that I find it difficult to persuade myself to accept the view of my colleagues in relation to that case in their report in the present case. I have already shown that the words "occasions such export" in sub-section (1), and the words "occasions such import" in sub-section (2), of section 5 are not free from ambiguity. We should, therefore, try as clearly as possible to define the exact scope and content of these words.

We should not hesitate even to recast section in new language by dropping the word "occasions" if that helps in defining and delimiting with sufficient clarity the limits of "the course" of import or export. The difficulty with the word "occasion" both as a verb and as a noun is that its connotation is very wide. This is why the Supreme Court in the first Travancore case used the words "sales and purchases which themselves occasion the export or import of the goods, as the case may be, out of or into the territory of India"-the emphasis being laid upon the pronoun "themselves" to indicate that such sales or purchases alone (no other sales or purchases) are the direct, proximate and immediate cause of the import or export. Other sales or purchases may be only indirectly or remotely connected with the import or export, but they are not the direct, proximate or immediate cause.

And Law Commission in making their recommendations in the Second Report borrowed the words used by the Supreme Court with this difference that instead of the words "sales or purchases which themselves occasion etc." the Law Commission used the words "only if the sale or purchase occasions etc." In section 5 also the words "only if' have been used. But even then it seems that the Supreme Court was not sure whether the language used in the first Travancore case (as cited above) would fully carry out its intention and objective.

Therefore even in the first case, the Supreme Court, while expressing its clear opinion in para. 10 of die judgment as reported in the AIR, used the expression "A sale by export" to mean a sale which itself occasions the export. In the second of the three views pressed from the Bar before the Court, the expressions "export sale" or "import purchase" were used. These two expressions were also used in the very same second view as reiterated by the Court in the second Travancore case. But while stating its final conclusion in para. 14 of the judgment in the first Travancore case, the Court mentioned only the expression "sales and purchases which themselves occasion the export or the import".

While however this expression was also quoted in the judgment in the second Travancore case, in expressing its final conclusion in para 16 of the judgment as reported in the AIR, the Court used the expression "sales by export" and the expression "purchase by import" in conclusion (1). The Court said-

"Our conclusions may be summed up as follows:-

(1) Sales by export and purchases by import fall within the exemption under Article 286(1)(b). This was held in the previous decision.

(2).....

(3)....."