I.D Dua, J.:— This judgment will dispose of two writ petitions (Civil Writs Nos. 620 and 621 of 1964). They have both been filed by Messrs Mohan Lal Moti Lal and raise the same question of law, though they pertain, to two different years.
2. In Civil Writ No. 020 of 1904, it has been-pleaded that the petitioner Messrs Mohan Lal Moti Lal is a partnership firm with its head office at Bombay and branch at Bhatinda which is registered as a dealer under the Punjab General Sales Tax Act. The registered firm is really the main firm working at Bombay, although for registration purposes, it has given the location of its office in the State where it is registered under the local Sales Tax Act. This firm deals in cotton and as a part of its business exports cotton outside India. For the purposes of such export, the firm makes purchases from various parts of the whole of India but as the proper quality of cotton to be exported is available only in Punjab or in Rajasthan, the purchases are made from these two States for the purpose of exporting cotton out of the country, the modus operandi of the petitioner-firm being that it enters into contract with the foreign buyers to supply cotton on various future dates and in pursuance of those contracts, it purchases cotton from various places in India. This, according to the writ petition, establishes direct integration of the two activities of purchase and export.
3. Emphasis has been laid on the fact that the branch office at Bhatinda in reality represents the head office at Bombay, the former having no separate entity or existence. It is, therefore, the Bombay firm which makes purchase? of cotton in the State of Punjab through Us branch office at Bhatinda, with the result that the principal party making purchases is the Bombay firm. Assessment for the year 1962-1963 which is impugned in this writ petition was made by the Assessing Authority on 23-1-1964 vide Annexure ‘A’ to the writ petition. During this year, the petitioner-firm made purchases worth Rs. 11,77,676.18 and claimed before the Assessing Authority that the cotton which had been purchased, for about Rupees 10,78,283.40 had been purchased for the purpose of export from India to other countries. Evidence, it is averred in the petition, was led before the Assessing Authority that all this cotton had been exported out of India from Bombay which is the port for export. To repeat the actual words of the petition, “the petitioner submitted to the Assessing Authority that this purchase was actually made by the head office of Bombay through its branch office at Bhatinda for the purpose of export out of the territory of India. Irwas also proved to the satisfaction of the Assessing Authority that the cotton so purchased had actually been exported.” The averment proceeds on to state that the Assessing Authority in spite of the submissions made in this behalf, which were not oral but also given in writing, did not agree with these submissions and assessed the petitioner to purchase tax to the tune of Rs. 21,585.68. It is complained in the present proceedings that the Assessing Authority had not actually applied its independent mind to the facts of the case because there was a letter of the Excise and Taxation Com missioner directing that in cases like the present the dealer is liable to pay tax. It is mentioned in the writ petition that a copy of that letter was sent to a dealer known as Bailies India, Bhatinda, from where the petitioner has learnt of this letter. It has also been averred that the Assessing Authority has wrongly stated that the petitioner had furnished no proof of export of its cotton by Bhatinda office. It is unnecessary to refer to the other ground of challenge contained in paragraph 11 of the writ petition because that has not been urged by the learned counsel before us. The only question argued before us is that the transaction in question is exempt from tax by virtue of Article 286(1) of the Constitution and section 29 of the Punjab General Sales Tax Act.
4. The short question falling for determination relates to the scope of these two provisions of law. It is, therefore) helpful to reproduce these two provisions. Article 286(1) of the Constitution, so far as relevant for our purpose, is in the following terms:
‘286(1) No law of a State shall impose, or authorise the imposition of a tax on the sale or purchase of goods where such sale or purchase takes place—
(a) ***
(b) in the course of the import of the goods or export of the goods out of, the territory of India.
5. Section 29 of the Punjab Act so far as relevant reads as follows:
‘29(1) Notwithstanding anything contained in this Act,—
(i) ***
(ii) where such sale or purchase takes place in course of import of the goods into, or export of the goods out of, the territory of India.
6. The question raised is undoubtedly of constitutional importance, but it has been dealt with by the Supreme Court on more occasions than one and, therefore, the legal position appears to me to be fairly well-settled and is for all practical purposes beyond the pale of any serious controversy. The difficulty which sometimes arises is in the applicability of the law to the facts of an individual case.
7. Shri Sibal has placed his reliance, to begin with, on a decision of the Supreme Court in State of Tra-Co. v. S.V.C Factory, AIR 1953 S.C 333, where the majority “View has been summed up and it has been pointed out that sales by export and purchases by import fall within the exemption under Article 283(1)(b) as held in an earlier decision of the Supreme Court in State of Tra-Co. v. Bombay Co. Ltd. Alleppey, AIR 1952 S.C 366. A passing reference has also been made by Shri Sibal to a later decision of the Supreme Court in Burmah Shell Oil Storage & Distributing Co., of India Ltd. v. Commercial Tax Officer, AIR 1961 S.C 315. It may incidentally be pointed out that the respondents' learned counsel has also placed great reliance on this later decision of the Supreme Court. The counsel for the petitioner has also made a reference to the latest Supreme Court decision in B.G.N Plantations Co. v. Sales Tax Officer, Ernakulam, 1964-15 S.T.C 753 : (AIR 1964 S.C 1752). Reliance has further been placed on a Bench decision of this Court in Janki Das Bhagat Ram v. Excise and Taxation Officer, Ludhiana, 1965-67 Pun LR 69, head-note (ii) of which is in the following terms:
“(ii) Heidi that, Article 280 of the Constitution of India prohibits a State Government from levying any tax on the sale or purchase of “goods which are exported or imported. The idea apparently is that the goods, which are to be exported out of the country, should not be subjected to any additional burden of sale tax or purchase tax. Sales and purchases which themselves occasion the export or the import of the goods, as the case may be, out of or into the territory of India come within the exemption. This fully applies even if the contract of sale is entered into between the foreign buyer on the one hand and the assessee through its agent at Bombay or his place-of business. Such a sale would certainly be in the course of export if it occasions, or results in, the-export of goods outside the territory of India. And again it would be so, irrespective of the fact whether the goods are actually stocked at Bombay or at the place of business of the assessee, at the time of the contract. Therefore, in respect of the cotton sold through the Commission Agents of the assessee, at Bombay for and on behalf of the assessee, to a foreign buyer resulting in export of the cotton sold the assessee is entitled to deduct the purchase price thereof from the gross turnover under sub-clause (vi) of clause (a) of sub-section (2) of section 5 of the East Punjab General Sales Tax Act.”
8. It is emphasised that this decision completely supports the petitioner's contention. It has also been pointed out that this view is supported by the earlier decision of the Supreme Court in the case of Bombay Company Ltd., AIR 1952 S.C 369. An unreported decision by a learned Single Judge of this Court in New Rajasthan Mineral Syndicate v. State of Punjab, Civil Writ No. 915 of 1962, D/- 9-10-1964 (Punj.) has also been relied upon. The petitioner's counsel has while developing hi? argument laid a certain amount of stress on paras. 6 and 7 of the written statement filed on behalf of the respondents and has asserted that the averments made in para. 6 of the writ petition that evidence had been led before the Assessing Authority about the entire cotton having been exported out of India from Bombay have not been denied, with the result that on the existing pleadings before this Court it must be held that the goods in question were actually exported. The observations of the Assessing Authority in the impugned order that there is no evidence to prove that the goods purchased in Punjab have been exported outside India is wrong.
9. On behalf of the respondents, it has been forcefully asserted that there is no evidence on the-record that the goods purchased have been exported outside India. The only evidence on the record relates to the consignment of the goods to Bombay from where these along with some other goods may have been exported out of India. It is emphasised that the decision in Janki Das Bhagat Ram's case, 67 Pun LR 69 has proceeded on its own facts and the rule of law followed in that case is unexceptionable; As is obvious from the quotation reproduced from the observations of Patanjali Sastri, C.J, in the case of Bombay Co. Ltd., AIR 1952 S.C 366 the following observations, according to Harbans Singh, J. fully applied to the case before him:—
“We accordingly hold that whatever else may or may not fall within Article 286(1)(b), sales and purchases which themselves occasion the export or the import of the goods, as the case may be, out of or into the territory of India come within the exemption……….”
10. This, as rightly pointed out by the respondents' learned counsel, represents the view of law adopted by the Bench. Our attention has also been drawn to State of Madras v. Gurviah Naidu and Co. Ltd., (S) AIR 1956 S.C 158; State of Mysore v. Mysore Spinning and Manufacturing Co. Ltd., AIR 1958 SC 1002 and to the earlier decision of the Supreme Court? in the case of Bombay Co. Ltd., AIR 1952 S.C 366. The decision in the case of Burmah Shell Oil Storage and Distributing Co., AIR 1961 S.C 315 has been specifically relied upon by Shri Kaushal in support of his contention. Finally, the counsel has drawn our attention to the Commentaries by Basu on the Constitution of India where he has discussed the scope and effect of Article 286(1)(b).
11. In my opinion, the law has by now been well settled and there is no scope for any conflict on the construction of Article 280(1)(b). The sale in the course of export predicates an inextricable connection or bond between the sale and the export, leaving no option to the purchaser of not exporting without committing a breach of the contract in question. In order to attract the exemption there must also in addition be the resultant export. The sale, in other words, must itself occasion export, or what is the same thing, the export must be made under the sale. To occasion export, there must accordingly exist between the contract of sale and actual exportation a bond so that each link is inseparably connected with the one immediately preceding it. The two activities of the sale and the export must be so integrated as to leave no possibility of a voluntary interruption without entailing a breach of the contract or an obligation arising from the nature of the transaction. It would thus postulate common intention on the part of the contracting parties to export the goods which must be actually followed by export and this, in my view, appears to be essential in order to constitute a sale in the course of the export of the goods. There must necessarily come into existence an obligation to export and there must also be an actual export pursuant to such obligation. Merely because a sale has been followed by the export of the goods sold, does not by itself clothe the sale with the quality of its being in the course of their export.
12. As I understand the argument of the learned counsel for the petitioner, he wants us to grant exemption to his client merely because goods purchased have been later exported from Bombay. This as has been repeatedly explained by the Supreme Court, is not enough; nor is mere intention to export without an actual exportation, sufficient to constitute a sale in the course of export) because 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 for the purpose of export. Such a sale cannot be dissociated from the export without which it cannot be I effectuated because the sale and resultant export form but parts of a single transaction. This, as I construe the various Supreme Court decisions) is the true meaning of the expression “sale in the course of export”. The decisions of this Court to which reference has been made do not in my opinion, take a different view of law.
13. The difficulty which usually confronts the Assessing Authorities and the Courts arises when this rule is sought to be applied to the facts of a given case, for indeed it is essentially a question of fact whether or not in a particular case the sale in question is in the course of export. No single test can be laid down which can serve as a straight jacket to fit every transaction. Indeed, each case has to be construed on its own peculiar facts and circumstances. As observed by the Supreme Court in B.G.N Plantations Co.'s case, AIR 1964 S.C 1752 there are a variety of transactions in which the sale of a commodity is followed by export thereof and there two extreme illustrations are mentioned by Shah, J. who delivered the majority judgment:—
“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.
Such a transaction without more cannot be regarded as one in the course of export because atymologically ‘in the course of export’ contemplates an integral relation or bond between the sale and the export.”
14. The case as put on behalf of the petitioner before us in arguments appears to me prima facie to fall under this illustration, but I should not like to express any considered opinion on this aspect, leaving it to the departmental hierarchy to come to its own conclusion on the facts on the assessment record. At the other end, the Supreme Court noticed a transaction under a contract of sale with a foreign buyer under which goods may under the contract be delivered by the seller to a common carrier for transporting them to the purchaser. Such a transaction would indisputably he one for export. But there may be a variety of transactions lying in between these two extreme cases in which the Assessing Authority has to scrutinise the attending circumstances and facts to determine whether the sale in question has occasioned the export. On the material before us, it is not possible to treat this as a pure question of law on admitted or found facts which are final and binding on both parties.
15. It has frequently been laid down by the Supreme Court that in taxation matters, normally a party should be left to have his grievance redressed in accordance with the machinery provided by the taxing statutes. It is relevant in this connection to bear in mind that normally, the High Court is not an appellate authority on facts under the Punjab General Sales Tax Act and, therefore, challenge to questions of fact before this Court is not to be encouraged by too readily permitting resort to Article 220 which may have the effect of by-passing the machinery set up by the Legislature in its wisdom for enquiry and scrutiny into and decisions on questions of fact. Jurisdiction conferred by this Article is, in my view, not intended to supersede the jurisdiction and authority of the assessing hierarchy to deal with the merits of all the contentions that the assessee may raise before them. It would accordingly be inappropriate to permit an assessee to move the High Court under this Article and contend that on appraisal of the evidence on the record, the conclusion of the Assessing Authority is wrong.
16. This aspect has been emphasised more than once by the Supreme Court and merely because in a writ petition some questions of jurisdiction have been raised, it does not entitle the petitioner on failure to make out a case of jurisdictional or other serious legal infirmity to claim adjudication on questions of fact in writ proceedings on the basis of the allegations in the petition and the return as if it is a trial at law Normally, even questions of law can be brought to this Court in another jurisdiction under the statutory machinery and that machinery, it must not be forgotten, is to be utilised unless there are some special grounds for by-passing it and approaching this Court under Article 220 which only provides special constitutional remedy in grave cases. I do not by any means propose to lay down that in a clear-cut case of an illegal or unauthorised imposition, apparent on the face of the record, this Court would be justified in declining relief, but by and large, the assessee must in the first instance be required to proceed in accordance with the statutory machinery provided for relief, and more so when the question raised is one of pure fact to be determined on all the evidence and circumstances of the case. We have also been informed that the petitioner has already preferred an appeal and is in a position to claim adjudication of the points raised in the present proceedings.
17. There is one aspect which remains to be considered. It is contended by Shri Sibal that the Assessing Authority has not exercised its own judgment and that it has based the impugned order mainly, if not solely, on the command of its superior authority. Reference has in support of this submission been made to paragraph 7 of the writ petition. The submission, indeed, goes further and it is pressed upon us that even an appeal to the appellate authority would be an idle formality as all the departmental authorities have virtually made up their mind that this case is not covered by Article 280(1)(b) of the Constitution or section 29 of the Punjab Act.
18. I am wholly unimpressed by this contention. In the first instance, the petitioner has not cared to produce a copy of the alleged letter. He has not even cared to reproduce its substance. The letter as noticed earlier, is stated to have been written to some other assessee. From the plea, as contained in the writ petition, therefore, I am far from convinced that the said letter contains any direction which may be construed to be intended or purporting to exclude the application of an independent judicial mind sit her of the Assessing Authority or of the appellate authority. The impugned order clearly does not give me the impression that the Assessing Authority has not applied its own independent judicial mind and has merely obeyed an executive command of a superior authority. If in the letter to which reference has been made, the attention of the Assessing Authority has merely been drawn to the decisions of the Supreme Court or to the law laid down by the said Court, then I fail to see how any serious objection can be taken to that letter. Be that as it may, neither is the impugned order shown to be tainted with any such legal infirmity on its face as would attract this ‘Court's constitutional power under Article 220 for setting it aside, nor is it shown that the appellate authority would not look at the evidence of this case on its merits in accordance with the law and exercise its own independent judicial mind without letting the alleged letter interfere with the discharge of its judicial functions or unduly influence its judicial mind.
19. Shri Sibal has as a last resort suggested that we may observe in this order that the appellate authority may determine the controversy on its merits and not allow its independent judgment to be unduly influenced by any directions which may be contained in the letter mentioned above. I do not think any such specific direction is called for on the facts and circumstances of this case, for I have not the least doubt that the appellate authority would decide the matter strictly in accordance with law as laid down by the decisions mentioned above and in the light of the observations made in the present order.
20. It goes without saying that if the said letter contains any instructions contrary to the law as discussed in the present order, the appellate authority would not allow its judicial approach to be influenced by them.
21. For the foregoing reasons, this petition fails and is hereby dismissed but with no costs.
22. It is agreed that the connected petition stands or falls with it, with the result that Civil Writ No. 321 of 1904 is also dismissed but without costs.
23. S.B Capoor, J.:— I agree.
EI/SG/D.V.C
24. Petitions dismissed.
Sales Tax Act.