ORDER Prakash Krishna, J.
1. These revisions are at the instance of Commissioner of Trade Tax in respect of the same assessee involving similar question of law and fact for the assessment year's 1986-87 and 1987-88. The opposite party deals in kirana spices, oil-seed and dry fruits, etc. In the assessment year 1986-87 the dealer-opposite party claimed exemption from payment of tax on the sale of spices and haldi of Rs. 2,90,079.50 on the basis of export to Nepal. Similarly it claimed exemption from payment of tax for the subsequent assessment year on sale of haldi worth Rs. 2,24,579 on the basis of export to Nepal. The assessing authority accepted the books of account of the dealer but rejected the claim of exemption in respect of the aforesaid turnover. However, the first appellate authority and the Tribunal allowed the claim of the dealer-opposite party. Challenging the orders of the Tribunal present revisions have been filed by the Commissioner of Trade Tax under Section 11 of the U.P. Trade Tax Act, 1948.
2. Heard learned Counsel for the parties and perused the record.
Learned Standing Counsel submitted that the Tribunal has committed an illegality in treating the sales in the course of export. The traders from Nepal came to Varanasi and purchased the goods from the establishment of the dealer and took delivery of the goods and thereafter exported the goods to Nepal at their own convenience and the dealer-opposite party had no control over the goods after the sale and, as such the sale was not effected in the course of export. On the other hand it was claimed by the dealer that these sales were in the course of export. Therefore no sale tax was leviable. The appellate authority of Varanasi accepted these contentions. The Tribunal has also approved the said contentions.
3. In order to appreciate the view taken by the Tribunal it is necessary to refer to Section 5 of the Central Sales Tax Act, 1956 which reads as under:
5. When is a sale or purchase of goods said to take place in the course of import or export.--(1) A sale or purchase of goods shall be deemed to take place in the course of the export of the goods out of the territory of India only if the sale or purchase either occasions such export or is effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India.
(2) A sale or purchase of goods shall be deemed to take place in the course of the import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India.
4. The phrase "(in the course of export)" infact has been borrowed from Article 286 of the Constitution. The Supreme Court has considered this matter in number of cases including in Ben Gorm Nilgiri Plantations Co. v. Sales Tax Officer [1964] 15 STC 753. It has laid down following principles of law on page 759:
A sale in the course of export predicates a connection between the sale and export, the two activities being so integrated that the connection between the two cannot be voluntarily interrupted, without a breach of the contract or the compulsion arising from the nature of the transaction. In this sense to constitute a sale in the course of export it may be said that there must be an intention on the part of both the buyer and the seller to export, there must be an obligation to export, 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. A transaction of sale which is a preliminary to export of the commodity sold may be regarded as a sale for export, but is not necessarily to be regarded as one in the course of export, unless the sale occasions 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. Without such a bond, a transaction of sale cannot be called a sale in the course of export of goods out of the territory of India. There are a variety of transactions in which the sale of a commodity is followed by export thereof. At one end are transactions in which there is a sale of goods in India and the purchaser, immediate or remote, exports the goods out of India for foreign consumption. For instance, the foreign purchaser either by himself or through his agent purchases goods within the territory of India and exports the goods and even if the seller has the knowledge that the goods are intended by the purchaser to be exported, such a transaction is not in the course of export for the seller does not export the goods, and it is not his concern as to how the purchaser deals with the goods. Such a transaction without more cannot be regarded as one in the course of export because etymologically 'in the course of export' contemplates an integral relation or bond between the sale and the export.
5. Both the learned Counsel for the parties have placed reliance upon the aforesaid paragraph of the judgment. Learned Counsel for the dealer-opposite party has placed further reliance upon the Full Bench judgment of this Court given in the case of National Carbon Co. v. Commissioner of Sales Tax, U.P. [1969] 23 STC 388. Relevant paragraph See at page 256 of [1982] 49 STC is quoted below:
This passage has been relied by learned Counsel for both parties. The learned Counsel for assessee emphasised on the observation, 'such a transaction without more cannot be regarded as one in the course of export' and urged the ratio of this case did not apply as there was 'more' in this case which resulted in making the sale 'in course of export'. The learned Counsel argued that in National Carbon Co. v. Commissioner of Sales Tax, U.P. [1969] 23 STC 388 it was held by a Full Bench of this court:
From what has been stated above, it is clear that the destination of the goods shown in form AR-4 was a place in Nepal and the route by which the goods were intended to be exported was also indicated. The name of the buyers mentioned in that form also is that of the dealer of Nepal. These facts show very clearly not only the intention of the parties to export, but also an obligation on their part to do so. As the assessee-company was to claim rebate of the excise duty and that rebate was admissible only if goods were actually exported outside India in accordance with the declaration contained in form AR-4, an understanding between the assessee-company and the buyers to export the goods outside the Indian territory can safely be assumed.
...Reliance was also placed on the following observation in State of Bihar v. Tata Engineering & Locomotive Co. Ltd. :
The expression "in the course of" appearing in Article 286(1)(b) came up for consideration in State of Travancore-Cochin v. Bombay Co. Ltd. [1952] 3 STC 434 (SC) : [1952] SCR 1112. Therein this Court held that whatever else may or may not fall within Article 286(1)(b) of the Constitution, 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 come within the exemption. In that case this Court further observed that a sale by export involves a series of integrated activities commencing from the agreement of sale with a foreign buyer and ending with the delivery of the goods to a common carrier for transport out of the country by land or sea. Such a sale cannot be dissociated from the export without which it cannot be effectuated and the sale and the resultant export form parts of a single transaction. Of these two integrated activities which together constitute an export sale, whichever first occurs can well be regarded as taking place in the course of the other. Even in cases where the property in the goods passed to the foreign buyers and the sales were thus completed within the State before the goods commenced their journey from the State, the sales must be regarded as having taken place in the course of the export and therefore exempt under Article 286(1)(b). The same exposition of the law is true of Clause (2) of Article 286 as it stood prior to its amendment on September 11, 1956.
It was also urged that passing of title in Indian Territory was immaterial. Whether the title passed in the Indian Territory or foreign territory, according to the learned counsel, did not make any difference as for deciding whether the sale was in course of export, what had to be seen was whether the sale had occasioned the export. Attention was drawn to Commissioner, Sales Tax, Uttar Pradesh v. Dhampur Sugar Mills Ltd. where the sale was held to be in course of export although the delivery of goods was made to foreign buyers within Indian territory. In this connection learned Counsel relied on the following observation in Union of India v. K.G. Khosk and Co. Ltd. 'that a sale which occasions movement of goods from one State to another is a sale in the course of inter-State trade, no matter in which State the property in the goods passes'.
6. The aforesaid decisions along with other decisions have been considered by the learned Single judge of this Court in the case of Commissioner of Sales Tax v. Ganeshi Lal and Sons [1982] 49 STC 253 : [1981] UPTC 128 and has held that from the language of Section 5 of the Central Sales Tax Act, 1956, it is clear that it is a sale in the course of export only which is exempt, and not sale for export. When can a sale be said to be in the course of export or for export depends on the variety of circumstances. The export means taking out something out of the country across the customs barrier. The word "course" means "sequence", "process" or "a pattern in which anything moves". The sequence or movement should be preceded by sale and must result in export to attract Section 5. The sale, the movement and the export must result in crossing of goods outside the country and must run in a channel. They must be connected with each other and interlinked, then only it can be said to be in the course of export.
7. In the instant case it is true that the buyer is foreigner and delivery of the goods was taken in Varanasi. The Nepali buyer have produced the Custom certificate to show that the goods actually crossed the customs barrier, the transactions were settled through the commission agent and no sales tax was charged from the Nepali buyer. On these facts the Tribunal held the transaction in the course of export sale. Can it be said these facts are sufficient to occasion the export. The assessing authority has recorded a finding that the delivery of the goods was effected at Varanasi and the Nepali buyer took delivery at Varanasi and carried the goods to Nepal. In view of these facts sale is complete in all respects at Varanasi and purchaser was free to carry the goods to Nepal. The selling dealer retained no control over the goods. There is no link between the agreement to sale and export. They do not form part of the same transaction. There is no bond between the contract and sale and actual transportation. Sale by the assessee, therefore, cannot be considered to be in the course of export. There is no evidence to show that the buyer was under an obligation to take away the goods outside India and the goods were purchased in pursuance of the agreement to export the goods. In the result I find sufficient force in the argument of learned Standing Counsel that the goods were not purchased in the course of export.
8. In the result both the revisions are allowed. The orders of the first appellate authority and the Tribunal for both the assessment years are set aside. The assessment orders are restored back.