Report No. 61
3.17. Second Travancore case.-
In the second State of Travancore-Cochin v. S.V.C. Factory, AIR 1953 SC 333 (336, 331): 1954 SCR 53: 1953 Sg 471., these observations were sought to be taken advantage of, and it was argued that the last purchase of goods made by the exporter for the purpose of exporting them to implement orders already received from a foreign buyer (or expected to be received subsequently in the course of business) and the first sale by the importer to fulfil orders pursuant to which the goods were imported (or orders expected to be received after the import), would also fall within the scope of the exemption in Article 286(1)(b) of the Constitution. The majority of the judges of the Supreme Court, however, rejected this argument. Summing up the conclusions, and explaining the observations in the first case, the majority observed that:
"(1) Sales by export and purchase by import fall within the exemption under Article 286(1)(b).
(2) Purchase in the State by the exporter for the purpose of export as well as sales in the State by the importer after the goods have crossed the customs barriers1 are not within the expression.
(3) Sales in the State by the exporter or importer by transfer of snipping documents while the goods are beyond the customs barriers are within the exemption assuming that the State's power of taxation extends to such transactions.
(4) The word "course" and the expression "in the course of" not only imply a period of time during which movement is in progress, but postulate also the connected relation.
(5) Therefore, the sale in the course of export out of the country should be understood as meaning a sale taking place not only during the activities directed to the exportation of the goods out of the country, but also as part of it connected with such activities. The time factor alone was not determinative."
While this was the majority view, the minority-S.R. Das, J., as he then was-would regard the last purchase by, the exporter and the first sale by the importer to be within the exemption.
1. In the S.C.R. the expression is "barriers".
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