Consolidated Coffee & ANR Vs. Coffee Board, Bangalore [1980] INSC 82 (15 April 1980)
TULZAPURKAR, V.D.
TULZAPURKAR, V.D.
DESAI, D.A.
SEN, A.P. (J)
CITATION: 1980 AIR 1468 1980 SCR (3) 625 1980 SCC (3) 358
CITATOR INFO :
F 1987 SC1343 (1) R 1988 SC1487 (47)
ACT:
Central Sales Tax Act, 1956, as amended by Amending Act 103 of 1966, Section 5(3) read with section 5(1) and 6(1), interpretation of-Whether Section 5(3) is beyond the power of authority of Article 286(2) of the Constitution and therefore ultra vires.
Words and Phrases-"the agreement or order for or in relation to such export," in Section 5(3) of the Central Sales Tax Act, meaning and interpretation of-Whether the agreement referred to means only the agreement with a foreign buyer or would include any binding or enforceable agreement to export even with a local party to implement which penultimate sale should have taken place.
Sale-Whether the word 'sale' in the phrase "if such last sale or purchase takes place after" in section 5(3) of Central Sales Tax Act 1956, includes "agreement to sell" as defined in Section 4 of the sale of Goods Act 1930.
Sale of Goods Act, 1930 sections 25, 64(2) scope of- Auction sales-When does the property in the Coffee sold at the export auctions conducted by the Coffee Board pass- Clauses 19, 26 and 31 of the Auction conditions.
HEADNOTE:
The Coffee Board, Bangalore is a statutory Corporation incorporated under section 5 of the Coffee Act, 1942, an enactment passed to provide for the development of the Coffee industry under the Control of the Union. The Coffee Board under various sections of the Coffee Act, exercises complete control-almost monopolistic-over the coffee trade in exercises of its statutory powers.
Export of coffee outside India is particularly controlled under the Act and the Rules by the Coffee Board.
Coffee can be exported either by the Coffee Board directly to parties outside India or the Coffee Board authorises other exporters to effect such exports. For effecting exports through other exporters the Coffee Board periodically conducts auctions known as 'export auctions' and it follows a procedure in that behalf. To be able to bid at these auctions, exporters have to get themselves registered with the Board. The Board maintains a list of Registered Exporters and grants to each one of them a permit, which authorises him to take part in the 'export auction', The conditions which are imposed by the permit require, inter alia, a security deposit and a standing deposit (which may be in cash or in the form of bank guarantee) from the Registered Exporters; such permit is liable to be withdrawn or cancelled by the Chief Coffee Marketing Officer, an executive appointed by the Central Government on the Board, at any time if it is found that a permit-holder has sold or has attempted to sell coffee bought by him at the 'export auction' within the internal market without his written permission or if any of the other permit conditions are contravened. The actual 'export auctions' are conducted on the basis of the "the Terms and Conditions of Sale of Coffee in the course of Export" framed by it and the Registered Exporters participate in such auctions on those terms and conditions. Clause 3 of the "Auction 626 Conditions" declares that all auctions and sales made thereat are subject to (i) the Auction conditions, (ii) the Permit conditions and (iii) such other rules or conditions as may be prescribed by the Chief Coffee Marketing Officer.
Under Cl. 4 only dealers who have registered themselves as Exporters of coffee with the Coffee Board and who hold a permit from the Chief Coffee Marketing Officer in that behalf are permitted to participate in the auctions. Under Cl. 11 no one is allowed to retract his bid when once the same has been entered in the Register of Bids. The highest bid is ordinarily accepted but the Sale Conducting Officer may not accept such bid if he has reason to believe that the name is not bona fide or genuine or the same is the outcome of concerted action on the part of the dealers or a section of them for the purpose of controlling or manipulating prices. etc. subject to his recording the reasons for such rejection in the Register of Bids. Clause 19 deals with weighment, delivery and payment of price and contains an over-riding provisions to the effect that the "property in the coffee sold shall not pass to the buyer until after he has paid the full price and the coffee sold to him is weighed and set apart for delivery to him." Clause 26 declares that it is an essential condition of the auction that the coffee sold thereat shall be exported to the destination stipulated in the catalogue of lots or to any other foreign country outside India as may be approved by the Chief Coffee Marketing Officer within three months or within such extended period as shall not exceed one year from the Notice of Tender issued to the auction buyer (Registered Exporter) and that under no circumstances the coffee purchased at such auction shall be diverted to other destinations or sold or be disposed of or otherwise released in India. Clauses 30 and 31 provide for the consequences of default on the part of the buyer to export the coffee or to produce evidence thereof; he is liable to pay penalty at the rates specified in Cl. 30 and under Cl. 31 Chief Coffee Marketing Officer is entitled to seize and take possession of the unexported coffee and deal with it as if were part and parcel of the Board's coffee in its surplus pool. Under Cl. 32 it is provided that in the event of the buyer committing any default in respect of any of the terms and conditions of the 'export auction" he shall be liable; (i) to be removed from the list of the Registered Exporters, the permit granted to him being cancelled; (ii) to forfeit the deposit made by him at the time of obtaining the permit and (iii) to forfeit the deposit of any covered by the conditions contained in Cl. 14 (ii).
Prior to the enactment of sub section (3) of section 5 of the Central Sales Tax Act, 1956, which has inserted on September, 7, 1976 with retrospective effect from April 1, 1976 by the Amending Act (103 of 1976), the exemption from liability to tax under the Act in regard to a sale in the course of the export was and continues to be governed by s. 5(1) of the Act. The said provision was examined by the Supreme Court in two leading cases, namely, Coffee Board Bangalore v. Joint Commercial Tax Officer, Madras and Anr. and Mohd. Serajuddin etc. v. State of Orissa, and a certain interpretation had been accorded by this Court to the expression "in the course of export", and, according to these decisions the last sale, immediately preceding the sale occasioning the export of goods out of India, (the penultimate sale), however closely related to the final export, was held not to be in the course of export but only for export and hence liable to tax, it was with a view to remove the difficulties caused by these and other similar decisions that the Parliament enacted the new sub-s. (3) of s. 5 and added a proviso to s. 6(1) by the Amending Act (103 of 1976).
The Coffee Board issued a circular dated February 7, 1977 to the Registered Exporters of Coffee, by which it took the view that in order to avail of the benefit 627 of section 5(3) of the Central Sales Tax as amended by Amendment Act 103 of 1976, in respect of the coffee sold by it at the export auctions the Registered Exporters (bidders) should satisfy three conditions; (a) he must have an export contract (i.e. either agreement or order) from a foreign buyer, (b) he must have it on hand at the time when he participates in the export auction and (c) he should give proof of the export of the coffee purchased at the auction.
By way of compliance with the conditions (a) and (b) above the said Circular requires the Registered Exporters to deposit with the Board before the commencement of each auction copies of the export orders or agreements from their foreign buyers. As the Coffee Board could not be certain as to how the Sales Tax Authorities would treat the penultimate sales in the matter of granting exemption the said Circular requires the bidders to make a contingency deposit in cash equivalent to the sale tax liability or furnish bank guarantee in lieu thereof, each of such deposit or guarantee being required to be kept in force for a period of four years. In other words, even in cases where the Registered Exporters (auction bidders) shall have satisfied all the aforesaid conditions, the Coffee Board has insisted upon such Exporters making contingency deposits or furnish bank guarantees for amount equivalent to the sales tax chargeable on such sales inspite of the enactment of s. 5(3) and this has been done ostensibly for the protection of the Coffee Board in the event of Sale Tax Authorities holding that even in such cases the benefit of s. 5(3) would not be available.
Since retrospective effect was given to the amendments introduced by Act 103 of 1976 the Coffee Board collected and the Petitioners paid sales tax on these export auctions during the period of the retrospectivity and for few months more and thereafter the Coffee Board has, in terms of the said Circular, obtained from the petitioners bank guarantees to secure payment of sales tax which but for the enactment of sub-s. (3) of s. 5 might have been payable on each such sale.
The petitioners, who are Registered Exporters of Coffee, therefore have filed under Art.32 of the Constitution raising an important question of proper construction of section 5(3), of the Central Sales Tax Act as amended by Amending Act (103 of 1976) and also challenging the constitutional validity of the circular dated February 7, 1977, issued by the Coffee Board, whereby it required the petitioners and other Registered Exporters of Coffee to furnish contingency deposits or bank guarantees equal to the amount of sales tax in respect of the exempted sales under the said section 5(3) of the Central Sales Tax and praying for its cancellation or withdrawal and consequential reliefs.
Allowing the petitions in part, the Court
HELD 1. Section 5(3) of the Central Sales Tax Act as amended by the Amendment Act 103 of 1976 is not ultra vires Article 286(2) of the Constitution and the said provision neither creates any legal fiction nor is it beyond the power or authority conferred on Parliament by Article 286(2) of the Constitution. [645A-D] It is true that the word "deemed" has been used in Section 5(3) but the same word has been used not merely in s. 5(1) but also in the other two sections 3 and 4 of Chapter II of the Central Sales Tax Act which has the heading "Formulations of Principles for determining when a sale or purchase of goods takes place in the course of inter-state trade or commerce or outside a State or in the course of export or import", the heading of Chapter II on the face of it suggests that what is done under ss. 3, 4 and 5 including sub-s. (3) is formulation of principles.
Secondly 628 the word "deemed" is used a great deal in modern legislation in different senses and it is not that a deeming provision is every time made for the purpose of creating a fiction. A deeming provision might be made to include for the purpose of a statute an artificial construction of a word or phrase that would not otherwise prevail but in each case it would be a question as to with what object the Legislature has made such a deeming provision. When sub-section (3) of the section 5 used the word "deemed" and says that the penultimate sale "shall also be deemed to be in the course of export" what is intended to be conveyed is that the penultimate sale shall also be regarded as being in the course of such export. In other words, no legal fiction is created. Moreover, it was conceded by counsel that the word "deemed" in sections 3, 4 and 5(1) laid down general principles and did not create any fiction; if that be so, it is difficult to accept the contention that in sub-s. (3) the same word should be construed as creating a fiction.
Thirdly, sub-section (3) of section 5 formulates a principle in as much as it lays down a general guiding rule applicable to all penultimate sales that satisfy the two conditions specified therein and not any specific direction governing any particular or specific transaction of a penultimate sale. In other words the content of the provision shows that it lays down a principle. [645 EH, 646C-E, G-H] On a proper construction of section 5(3), it cannot be said that the said provision is applicable only to the export auctions conducted by the Coffee Board and the terms and conditions governing them because it applies to variety of parties including the small manufacturers who seek a foreign market for their goods through private export houses or canalised agencies like State Trading Corporation. [646H, 647A] St. Aubyn and Ors. v. Attorney General,[1952] A. C. 15 at p. 53; referred to.
2. Section 5(3) of the Central Sales Tax Act has been enacted to extend the exemption from tax liability under the Act not to any kind of penultimate sale but only to such penultimate sale as satisfies the two conditions specified therein, namely, (a) that such penultimate sale must take place (i. e. become complete) after the agreement or order under which the goods are to be exported and (b) it must be for the purpose of complying with such agreement or order and it is only then that such penultimate sale is deemed to be a sale in the course of export. [647DE] It is true that the language employed in section 5(3) is a little ambiguous or equivocal and there is no indication in express terms whether the "agreement" mentioned therein necessarily refers to the agreement with a foreign buyer or would include any biding or enforceable agreement to export with a local party. The material words which prescribe the two conditions on satisfying which the penultimate sale is to be regarded as a sale in the course of export are: "If such last sale or purchase (meaning the penultimate sale or purchase) took place after, and was for the purpose of complying with, the agreement or order for or in relation to such export". It is true that Parliament has not said "the agreement or order for or in relation to such sale occasioning the export", but has used the phrase "the agreement or order for or in relation to such export". But, two aspects emerge very clearly on a close scrutiny of this phrase which by implication show that the "agreement" spoken of their refers to the agreement with a foreign buyer and not an agreement with a local party containing a covenant to export. [649G, 650B-D] In the first place, the concerned phrase speaks of two things in disjunctive: "agreement" or order. The word "order" which appears in a statute dealing with sales tax must be understood in a commercial sense, that is, in the sense in 629 which traders and commercial men will understand it. In commercial sense an order means a firm request for supply of definite goods emanating from a buyer an indent placed by a purchaser and, therefore, an order for or in relation to export would mean an indent from a foreign buyer. The word "order" in section 5(3) cannot mean or refer to an order or direction, mandate, command or authorisation to export that may be issued by a statutory body like the Coffee Board for two reasons: first, occurring in a sales tax statute the word must be given its commercial meaning and secondly, while enacting the provision Parliament could not be said to have only statutory bodies, like Coffee board or S.T.C. in mind. If, therefore, an order for export in the concerned phrase means an indent from a foreign buyer, the preceding word "agreement" in the phrase would take colour from the word "order" and would on the principle of noscitur a sociie mean an agreement with a foreign buyer and not the agreement with a local party containing the covenant to export; and (ii) Secondly and more importantly, the user of the definite article "the" before the word "agreement", is very significant. Parliament has not said "an agreement" or "any agreement" for or in relation to such export and in the context the expression "the agreement" would refer to that agreement which is implicit in the sale occasioning the export. Between the two sales (the penultimate and the final) spoken of in the earlier part of the sub section ordinarily it is the final sale that would be connected with the export, and, therefore, the expression "the agreement" for export must refer to that agreement which is implicit in the sale that occasions the export. The user of the definite article, "the", therefore, clearly suggests that the agreement spoken of must be the agreement with a foreign buyer. As a matter of pure construction, by necessary implication the expression "the agreement occurring in the relevant phrase means or refers to the agreement with a foreign buyer and not an agreement with a local party containing the covenant to export. [650E-H, 651 A-E]
3. Prior to the enactment of Section 5 (1) there was no legislative guidance as to what transactions of sale or purchase could be said to be "in the course of export" and the said expression occurring in Art. 286 (1) (b) of the Constitution was construed by this Court in what have come to be known as the first and the second Travancore-Cochin cases, namely, The State of Travancore-Cochin and Ors. v. The Bombay Company Ltd.,(1952) 3 S.T.C. 434, and The State of Travancore-Cochin and Ors. v. The Shanmugha Vilas Cashew Nut Factory and Ors., (1953) 4 STC 205; to include two types of sales or purchases (a) a sale or purchase which itself occasions, the export and (b) a sale or purchase affected by a transfer of documents of title to the goods after the goods are put in the export stream (i. e. after they have crossed the customs frontiers of India). Then came the Constitution (Sixth Amendment) Act, 1956 introducing a new clause being cl. (2) in Art. 286 whereby Parliament was empowered by law to formulate principles for determining when a sale or purchase took 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 affected by a transfer of documents of title to the goods if the goods have crossed the customs frontiers of India". In other words, this was legislative recognition of what was said by this Court in the two Travancore cases about the true meaning of the expression "in the course of export" occurring in Art. 286 (1) (b). [651G-H, 652A, D-F] Section 5 (1) was construed by this Court in the context of two sales (though both were closely connected with the ultimate exportation of the goods out of India) rather very strictly in the two case, Coffee Board, Bangalore, v. Joint Com- 630 mercial Tax Officer, Madras and Ors., [1970] 3 SCR 147; and Mohd. Serajuddin etc. v. State of Orissa, [1975] Supp S.C.R.
169. In the former case, this Court laid down the test that there must be a single sale which itself caused the export and there was no room for two or more sales being "in the course of export". In other words, notwithstanding the compulsion to export arising from clauses 26, 30 and 31 of the Auction Conditions, the penultimate sale was held to be not in the cause of exports. In the latter case, this court took the view that the crucial words in Section 5 (1) showed that only if a sale occasioned the export, it would be in the course of export and that the two sets of contracts were separate and independent and Mohd. Serajuddin was under no contractual obligation to the foreign buyer either directly or indirectly and that his rights and obligations were only against the S.T.C. Even when the S.T.C. had with it foreign buyers contracts and Mohd. Serajuddin's contracts with S.T.C. had been entered into for the purpose of implementing such foreign buyer's contracts, this Court held that the sales between Mohd. Serajuddin and S.T.C. were not sales in the course of export. It was at this stage i.e. when s. 5 (1) was interpreted so by this Court that the Parliament felt the necessity of enacting s. 5 (3) for the purpose of giving relief in respect of penultimate sales that immediately precede the final (export) sales provided the former satisfy the conditions specified therein. [652F-H, 653A-B, E-G]
4. Two things become clear from the Statement of Objects and Reasons in the Amendment Act 103 of 1966; first Mohd. Serajuddin's decision is specifically referred to as necessitating the amendment and secondly penultimate sales made by small and medium scale manufacturers to an export, canalising agency or private export house to enable the latter to export these goods in compliance with existing contracts or orders are regarded as inextricably connected with the export of the goods and hence earmarked for conferral of the benefit of exemption. But the existing contract with whom is not clarified. The Statement being silent on this crucial point whether the existing contract should be with a foreign buyer or will include an agreement with a local party containing a covenant to export, by necessary implication "the agreement" spoken of by section 5 (3) refers to the agreement with a foreign buyer. [654F-H] It is true that the benefit of the exemption was intended to be extended to small and medium scale manufacturers desirous of exporting their goods but the requirement of the new provision is not that they must procure or have with them a foreign buyer's contract but the requirement is that before they complete the sale of their goods to the canalising agency or the private export house there must be in existence a foreign buyer's contract to implement which they should have sold their goods to such agency or export house. In the nature of things such manufacturers who have no expertise of export trade are not expected to have a foreign buyer's contract with them and it would be sufficient compliance of the provision of the canalising agency or the export house has with it the foreign buyer's contract. It would, therefore, be incorrect to say that the benefit of the exemption depends upon the fortuitous circumstance of a foreign buyer's contract being available with such manufacturer when he sells his product to the agency or the export house. Neither any hardship is involved nor would the small or medium scale manufacturers be deprived of the benefit of the exemption, by the construction of the expression as "the agreement" in Section 5 (3), namely, that it means an agreement with a foreign buyer and not with a local party containing a covenant to export. In fact it is in consonance with the trade practice obtaining in export trade, namely, that normally the export activity commences with securing or 631 obtaining an export contract or a firm order from a foreign buyer as the first step towards the ultimate export. [655A- F] State of Mysore v. The Mysore Spinning and Manufacturing Co. Ltd. 9 S.T.C. 188@ 189 SC; followed.- It is difficult to say that the Parliament intended to prefer one and sacrifice the other, among the two public interests involved, namely, promotion of the exports of the country and augmentation of the States' revenues through sales tax, while enacting section 5 (3). In fact the granting of exemption to penultimate sales was obviously with a view to promote the exports but limiting the exemption to certain types of penultimate sales that satisfy the two specified conditions display an anxiety not to diminish the States' revenues beyond a certain limit. The section in any case not giving any indication that one public interest is to be preferred to the other, by necessary implication "the agreement" occurring in section 5(3) refers to the agreement with a foreign buyer. [656A-C]
5. In Ben Gorm Nilgiri Plantations Company, Coonoor and Ors. v. Sales Tax Officer, Special Circle Ernakulam. [1964] 7 S.C.R. 706 at p. 711-12, this Court held that, even in the case of a single sale which ultimately resulted in the export, the sale was not in the course of export, because there was no obligation to export which afforded the inextricably link between the sale and the export. [657A-B] It is true that if the obligation to export affording the inextricable link between the sale and the export is necessary in the case of a single sale even though it results in export" then all the more such obligation will be necessary in the case of a penultimate sale if such penultimate sale is to constitute a sale "in the course of export" but even if Ben Gorm Nilgiri Plantations Company's case is regarded as laying down a general proposition that what is required is an obligation which inextricably connects the sale with the export and that such obligation may, in the absence of legislative guidance, arise by reason of statute, contract, mutual understanding or the nature of transaction which links the sale to export, still the question would be what type of obligation and arising from what circumstances would be necessary or enough in the case of a penultimate sale must depend upon the language of the statute concerned and, therefore, the question will again be what type of obligation and arising from what circumstances has been prescribed by the Parliament by enacting s. 5 (3) and that would depend upon the proper construction of the phrase "the agreement or order for or in relation to such export" occurring therein. Since on proper construction the expression "the agreement or order" means the agreement with or an order from a foreign buyer, it is clear that the Parliament intended to prescribe that the obligation to export arising only from such agreement or order that would afford the inextricable link so as to constitute the penultimate sale a sale in the course of export. [657B-F]
6. The word 'sale' occurring in the phrase "if such last sale or purchase takes place after" in section 5(3) of the Central Sale Tax Act 1956 does not mean the "agreement to sell" but only sale in the sense of a transfer of property in the goods by one person to another. Section 5(3) cannot be construed otherwise for more than one reason. In the first place the definitions of 'sale' and "agreement to sell" in the sale of Goods Act 1930 would not apply to the expression 'sale' occurring in the Central Sales Tax Act, 1956 wherein the expression 'sale' has been defined in s. 2 (g) for the purpose of that Act and under s. 2 (g) of the Central Sales Tax Act 'sale' means "any transfer of property in goods by one 632 person to another for cash or for deferred payment or for any other valuable consideration, and includes a transfer of goods on the hire-purchase or other system of payment by instalments, but does not include a mortgage or hypothecation of or a charge or pledge on goods". In other words, wherever the word 'sale' occurs in the Central Sales Tax Act, 1956 it is this definition given in s. 2 (g) that will be applicable and therefore the word 'sale' in s. 5(3) must mean transfer of the goods by one person to another for cash or for deferred payment or for any other valuable considerations; it cannot mean "agreement to sell".
Moreover, there is nothing in the context of s. 5 (3) to suggest that the word 'sale' occurring therein should be understood differently. On the contrary, the context suggests that the word 'sale' in the phrase "if such last sale or purchase takes place after "refer to a completed sale i.e. a sale as defined in section 2(g) of the Act.
[658E-H, 659A-C] Balabhagas Hulaschand v. State of Orissa, [1976] 2 SCR 939; distinguished.
7. Section 64(2) of the Sale of Goods Act, 1930, being in pari materia with Section 58(2) of the English sale of Goods Act, 1893 does not deal with the question of passing of the property at auction sale but merely deals with completion of the contract of sale which takes place at the fall of the hammer or at the announcement of the close of the sale in other customary manner by the auctioneer. If the auction sale of chattels is unconditional and is in respect of specific ascertained goods and nothing remains to be done to the goods for putting them in a condition ready for delivery, the property in the good would pass to the purchaser upon the acceptance of the bid but that would not be because of s. 64 (2) but because of s. 20 and such would not be the case if the goods sold there at are non-specific or unascertained goods or the auction sale is conditional.
And, Section 64(2) has nothing to do with the aspect of the passing of the property at an auction sale and it is by virtue of goods being specific and in a deliverable state that under section 20 the property in such good passes to the buyer at the completion of the contract at the fall of the hammer at such sale. [667F-H, 669C-D] Mc Entire & Anr. v. Crossley Bros Ltd., [1895-99] All.
E.R. (Reprint) 829 @ 832, Dennant v. Skinner and Collom, [1948] 2 All. E.R. 29; quoted with approval.
A. V. Thomas & Co. Ltd. v. Deputy Commissioner of Agricultural Income Tax, [1963] Supp. 3 SCR, 608; followed.
8. Section 64 of the Sale of Goods Act could be subject to a contract to the contrary and would be subject to section 62. In the first place section 64 occurs in Chapter VII which contains "Miscellaneous" provisions and s. 62 which occurs in the same Chapter clearly provides that where any right, duty or liability would arise under a contract of sale by implication of law, it may be negatived or varied by express agreement or by the course of dealing between the parties or by usage. If the usage is such as to bind both the parties to the contract. Ordinarily, the rights, duties and liabilities arising under a contract of sale by implication of law spoken of in s. 62 refer to the rights, duties and obligations referred to in Chapter III containing provisions which lay down rules as to transfer of property as between seller and buyer and transfer of title but there is no reason by s. 62 should not apply to rights, duties and obligations arising under s. 64 in regard to auction sale.
Sub section (1) of section 64 provides that where goods are put up for sale in lots then each lot is prima facie deemed to be the subject of a separate contract for sale, which means terms between the parties may provide to the contrary or circumstances may indicate to the contrary. Again sub s. 633 provides that the sale may be notified to be subject to a reserved or up set price which means that the auctioneer may not fix a reserved price; further, it is well settled that if such a reserved price has been fixed then notwithstanding the fact the highest bid has been accepted by the auctioneer and the sale relates to specific or identifiable goods no concluded contract comes into existence if the highest bid so accepted falls short of the reserved price and the property in the goods will not pass. Sub-ss (3) and (4) if carefully scrutinised also indicate that there could be a contract to the contrary. Moreover, once it is accepted that auction sales to which s. 64 applies could be unconditional or conditional and that the auctioneer can prescribe his own terms and conditions on the basis of which the property is exposed to sale by auction it must be held that the acceptance of any bid as well as the passing of the property in the goods sold thereat would be governed by those terms and conditions. [669D-H, 670A-C] 9. In the instant case:
(a) The export auctions of Coffee conducted by the Coffee Board are admittedly conducted on terms and conditions prescribed by it called "Auction Conditions". In the absence of a suggestion in the case that a statutory body like the Coffee Board while prescribing the auction conditions has acted not in good faith or that the said terms and conditions do not truly govern the rights and obligations of the parties, thereto it is clear that the question at what point of time the property in the Coffee sold thereat passes to the auction purchaser (Registered Exporter) must depend upon the intention of the parties to be derived from the aforesaid terms and conditions. The property in coffee sold thereat does not pass to the buyer at the fall of the hammer under section 64 (2) of the Indian Sale of Goods Act, 1930. All that happens it the fall of the hammer is that a completed contract of sale comes into existence creating a relationship of promisor and promisee between the parties in an executory contract, which is very clear from clause 13 (a) of the Auction conditions. [670C-F] (b) Clause 19 principally deals with aspects of delivery, weighment and payment of price an d towards the end it contains an over-riding provision to the effect that notwithstanding anything contained in these conditions, the property in the Coffee sold shall not pass to the buyer until after he has paid the full price and the coffee sold to him is weighed and set apart for delivery to him. In other words. it is clear that parties intended that the passing of the property shall not take place till the full price is paid and the coffee sold is weighed and set apart for delivery. Now there is nothing in any of the other provisions of these Auction Conditions which indicates that the property in coffee sold should pass either at the fall of the hammer or at any point of time prior to the payment of price and weighment and setting apart of coffee for delivery to the buyer. [670H, 671A-B] Mc Entire and Anr. v. Crossley Bros. Ltd., [1895-99] All. E.R. (Reprint) 829 @ 832; distinguished.
(c)It is true that the over-riding provision contained in clause 19 is negative in character, that is to say, the parties are agreed that the property shall not pass to the buyer until after the payment of the price, weighment and setting a part of the coffee for delivery to the buyer. But there are two provisions contained in clause 20 (d) and (f) which show that positively upon payment of price and weighment and setting apart the coffee sold for delivery to the buyer, the property in the coffee sold passes to the buyer at that point of time. Under clause 19, after the payment of full price the buyer has to apply for and take delivery within 634 a certain time but in case he fails to take delivery, as provided in clause 20, the coffee is first stored by the Pool Agent in the Pool Warehouse pending its exportation by the buyer by the 15th May and if it is not exported by that date the Curer or Depot Manager removes it from the West Coast to inland countries for safe storage during the monsoon season but at the risk and cost of the buyer. Having regard to clauses 19 and 20 of the Auction conditions, therefore, it is clear that in these penultimate sales i. e. sales of coffee at the export auctions conducted by the Coffee Board, to property in coffee sold thereat passes to the buyer upon payments of price, weigh ment and setting a part of the coffee sold for delivery to the buyer. [671C-F, 672C-D] (d) Passing of the property in such coffee cannot be said to be further postponed till actual shipment by reason of clause 31 of the Auction conditions, for, if the title has already passed under clauses 19 and 20 of the Auction Conditions immediately upon payment of price, weighment and setting a part of the coffee for delivery to the buyer, it cannot pass again. [672D-F] (e)It is not correct to say that in view of clause 31 a reservation of the right of disposal over the goods in favour of the Coffee Board within the meaning of section 25 of the Sale of Goods Act is made. Section 25 (1) provides that where there is a contract for sale of specific goods or where goods are subsequently appropriated to the contract, the seller may by terms of the contract or appropriation, reserve the right of disposal of the goods until certain conditions are fulfilled and if he does so, the legal consequence mentioned in the section flows, namely, that in such case notwithstanding the delivery of goods to a buyer or to a carrier or bailee for transaction to the buyer, the property in the goods does not pass to the buyer until the conditions imposed by the seller are fulfilled. It is true that Cl. 26 declares that it is an essential condition of the auction that coffee sold thereat shall be exported to stipulated destinations or to any other foreign country outside India as may be approved by the Chief Coffee Marketing Officer within 3 months or within the extended period but such essential condition is applied to the coffee which has already become the property of the buyer under Cls. 19 and 20 of the Auction Conditions and all that Cl. 34 provides is that if default is made by buyer in exporting coffee within the prescribed time or extended time it shall be lawful for the Coffee Board without reference to the buyer to seize the unexported coffee and take possession thereof and deal with it as if it were the part and parcel of the Board's Coffee held by them in their Pool Stock. Far from amounting to a reservation of the right of disposal over the unexported coffee to the Coffee Board, Cl. 31 is in the nature of a defeasance clause in the sense that what is vested in the buyer under the earlier conditions, the same shall revert back to the Coffee Board if the buyer commits a default in fulfilling the essential condition. Such a reading of Cl. 31 would be consistent with a further provision which is to be found in the latter portion of that clause. The latter part of Cl. 31 provides that after the coffee is seized and it becomes part and parcel of Board's Coffee held by it in its pool stock, the Board shall re-sell the same but after such re-sale the Chief Coffee Marketing Officer shall pay to the defaulting buyer only the balance of the sale proceeds after deducting godown charges, insurance premium, selling commission payable to agents and all other expenses of sale together with the penalty due under Cl. 30. In other words the proviso clearly suggests that the seized coffee becomes Coffee Board's property and is resold as such, otherwise the surplus should go to the buyer (Registered Exporter). The fact that the payment to the defaulting buyer is limited to the actual sale 635 price paid by him and that the surplus if any reverts to the Coffee Board clearly shows that under Cl. 31 upon seizure the property reverts back to the Coffee Board. Clause 31 properly read amounts to a defeasance clause and nothing more, especially when it is clear that property in the coffee sold at auction passes to the buyer under Cls. 19 and 20 immediately upon payment of price, weighment and setting apart of the coffee for delivery to the buyer. Once the property has passed there would be no question of reserving any right of disposal over the same to the Coffee Board within the meaning of s. 25 (1) of the Sale of Goods Act.
[662F-H, 673A-H] (g) In the penultimate sales (sales of coffee effected to Registered Exporters at export auctions conducted by the Coffee Board) the property in the Coffee sold thereat passes to the buyer immediately upon payment of full price, weighment and setting apart of coffee for delivery to the buyer under Cls. 19 and 20 of the Auction Conditions and it would be at this stage i.e. just before this stage is reached that the agreement with or order from a foreign buyer must be available or produced in order to attract s. 5 (3) of the Central Sales Tax Act, 1956. [674C-D]
ORIGINAL JURISDICTION : Writ Petition Nos. 3130/78, 4238-4239/78, 8/79 and 1458/79.
(Under Article 32 of the Constitution) Mr. F. S. Nariman, C. N. Murthy, K P. Kumar, H. K Dutt, T. Subba Rao and D. N. Gupta for the petitioners in WP No.
3130/78.
A.K Sen, Dr. Y.S. Chitale, K P. Kumar, R. Vasudevan, C.
N. Murthy, Ajay Mehta and T. Subba Rao for the petitioners in W. P. Nos. 4238-4239/78.
F.S. Nariman, K. P. Kumar, R. Vasudevan, C. N. Murthy, Ajay Mehta and T. Subba Rao for the petitioner in WP 8/79.
Dr. Y.S. Chitale, K. P. Kumar, R. Vasudevan, C.N.
Murthy, Ajay Mehta and T. Subba Rao for the petitioner in WP No. 1458/79.
L. M. Sinha, Att. Genl. K J. Chandran, J.B. Dadachanji, K. J. John and Sri Narain for the Respondent in WP No.
3130/78.
P. G. Nair, K. J. Chandran, J. B. Dadachanji, K J. John and Sri Narain for RR. 1 in WP Nos. 4238-4239/78.
N. Nettar, for RR. 2 in WP 4238-39/78.
S.T. Desai and A.V. Rangam for RR 3 in WP 4238-39/78.
P. A. Francis, & V. J. Francis for RR 4 in WPs 4238- 39/78.
K. K Venugopal. Addl. Sol. Genl. and N. Nettar for RR.
1 in WP No. 8/79.
S.T. Desai and A. V. Rangam for the RR 2 in WP 8/79.
636 V.J. Francis for RR 3 in WP No. 8/79.
K J. Chandran, J. B. Dadachanji, K. J. John and Sri Narain for RR 4 in WP No. 8/79.
N.Nettar for RR in WP No. 1458/79.
V.J. Francis for the RR in WP No. 1458/79.
K.J. Chandran, J. B. Dadachanji K. J. John, Sri Narain for the RR in WP No. 1458/79.
The Judgment of the Court was delivered by TULZAPURKAR, J. These writ petitions filed by Registered Exporters of coffee under Art. 32 of the Constitution raise an important question of proper construction of s. 5(3), a provision newly inserted in the Central Sales Tax Act 1956 by an Amending Act (103 of 1976) and the petitioners also seek to challenge the constitutional validity of a Circular dated February 7, 1977 issued by the Coffee Board, whereby it requires the Registered Exporters of coffee to furnish contingency deposits or bank guarantees equal to the amount of sales tax in respect of the exempted sales under the said s. 5(3) and pray for its cancellation or withdrawal and consequential reliefs.
The facts giving rise to the writ petitions being common and almost identical may be stated. The Coffee Board, Bangalore is a statutory corporation incorporated under s. 5 of the Coffee Act, 1942, an enactment passed to provide for the development of the Coffee Industry under the control of the Union. Sections 4 to 10 of the Act deal with the setting up of the coffee Board on which all interests are represented and some Members of Parliament and Government officers are nominated. The Board exercises powers and discharges functions assigned to it under the Act and the Coffee Rules framed thereunder. The Act compels the registration of all owners of coffee estates and licensing of curers and dealers and it also imposes control on the sale, export and re-import of coffee into India. In regard to sale it fixes prices for sale of coffee either wholesale or retail by registered owners and licensed curers for the purpose of sale in the Indian Market and the Coffee Board fixes internal sale quota for each estate owner and the owner has to observe this quota and also the price fixed under s. 25 all coffee produced by a registered estate in excess of the quantities specified in the internal sale quota allotted to that estate, or when no internal sale quotas have been allotted to the estates, all the coffee produced by the estate has to be delivered to the Board for inclusion in the surplus pool by the owner of the estate or by the curing 637 establishment receiving the coffee from the estate and under subs. (6) in respect of coffee so delivered for inclusion in the surplus pool the registered owner retains no right except his right to receive payments referred to in s. 34.
Section 26(1) enjoins upon the Coffee Board to take all practical measures to market the coffee included in the surplus pool and all sales thereof have to be conducted by or through the Board. These sales include internal sales in India and outside India. We are concerned in these petitions with sales outside India. Under s. 20 of the Act no coffee (barring certain exceptions specified in the proviso) can be exported from India otherwise than by the Board or otherwise than under an authorisation granted by the Board in the prescribed manner and in the prescribed cases, while under s. 21 no coffee which has been exported from India shall be re-imported into India except under and in accordance with a permit granted by the Board. Section 47 provides that all contracts for the sale of coffee in so far as they are at variance with the provisions of this Act shall be void. It will thus appear clear that the Coffee Board exercises complete control-almost monopolistic-over the coffee trade in exercise of its statutory powers.
Export of coffee outside India is particularly controlled under the Act and the Rules by the Coffee Board.
As stated earlier coffee can be exported either by the Coffee Board directly to parties outside India or the Coffee Board authorises other exporters to effect such exports. For effecting exports through other exporters the Coffee Board periodically conducts auctions known as "export auctions" and it follows a procedure in that behalf. To be able to bid at these auctions, exporters have to get themselves registered with the Board. The Board maintains a list of Registered Exporters and grants to each one of them a permit, which authorises him to take part in the "export auction". The conditions which are imposed by the permit (hereinafter called the permit conditions') require, inter alia, a security deposit and a standing deposit (which may be in cash or in the form of bank guarantee) from the Registered Exporters; such permit is liable to be withdrawn or cancelled by the Chief Coffee Marketing Officer, an executive appointed by the Central Government on the Board, at any time if it is found that a permit-holder has sold or has attempted to sell coffee bought by him at the "export auction" within the internal market without his written permission or if any of the other permit conditions are contravened). A specimen of the permit together with the conditions attaching to it has been annexed to each petition. (The actual "export auctions" are conducted on the basis of "the Term and Conditions of Sale 638 of Coffee in the course of Export" framed by it and the Registered Exporters participate in such auctions on those terms and conditions.) A specimen copy of these Auction Conditions has been annexed to each petition. Clause 3 thereof declares that all auctions and sales made thereat are subject to (i) the Auction conditions, (ii) the Permit conditions and (iii) such other rules or conditions as may be prescribed by the Chief Coffee Marketing Officer. Under Cl. 4 only dealers who have registered themselves as Exporters of coffee with the Coffee Board and who hold a permit from the Chief Coffee Marketing Officer in that behalf are permitted to participate in the auctions. Under Cl. 11 no one is allowed to retract his bid when once the same has been entered in the Register of Bids. The highest bid is ordinarily accepted but the sale Conducting Officer may not accept such bid if he has reason to believe that the same is not bona fide or genuine or the same is that outcome of concerted action on the part of the dealers or a section of them for the purpose of controlling or manipulating prices, etc. subject to his recording the reasons for such rejection in the Register of Bids. Clause 19 deals with weighment, delivery and payment of price and contains an over-riding provision the effect that the "property in the coffee sold shall not pass to the buyer until after he has paid the full price and the coffee sold to him is weighed and set apart for delivery to him". Clause 26 declares that it is an essential condition of the auction that the coffee sold thereat shall be exported to the destination stipulated in the catalogue of lots or to any other foreign country outside India as may be approved by the Chief Coffee Marketing Officer within three months or within such extended period as shall not exceed one year from the Notice of Tender issued to the auction buyer (Registered Exporter) and that under no circumstances the coffee purchased at such auction shall be diverted to other destinations or sold or be disposed of or otherwise released in India. Clauses 30 and 31 provide for the consequences of default on the part of the buyer to export the coffee or to produce evidence thereof; he is liable to pay a penalty at the rate specified in Cl. 30 and what is more under Cl. 31 Chief Coffee Marketing Officer is entitled to seize and take possession of the un-exported coffee and deal with it as it were part and parcel of the Board's coffee in it surplus pool. Under Cl. 32 it is provided that in the event of the buyer committing any default in respect of any of the terms and conditions of the "export auction" he shall be liable (i) to be removed from the list of the Registered Exporters, the permit granted to him being cancelled; (ii) to forfeit the deposit made by him at the time of obtaining the permit and (iii) to forfeit the deposit if any covered by the conditions contained in Cl. 14(ii).
639 According to the petitioners prior to the enactment of sub-s(3) of s. 5 of the Central Sales Tax Act, 1956, which was inserted on September 7, 1976 with retrospective effect from April 1, 1976 by the Amending Act (103 of 1976), the exemption from liability to tax under the Act in regard to a sale in the course of the export was and continues to be governed by s. 5(1) of the Act which runs thus "5(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".
The aforesaid provision was examined by this Court in two leading cases, namely, Coffee Board Bangalore v. Joint Commercial Tax Officer, Madras & Anr. and Mohd. Serajuddin etc. v. State of Orissa and a certain interpretation had been accorded by this Court to the expression "in the course of export" and according to these decisions the last sale, immediately preceding the sale occasioning the export of goods out of India (hereinafter called the "penultimate sale"), however closely related to the final export, was held not to be the course of export but only for export and hence liable to tax and according to the petitioners it was with a view to remove the difficulties caused by these and other similar decisions that the Parliament enacted the new sub-s. (3) of s.5 and added a proviso to s.6(1) by the Amending Act (103 of 1976). The newly enacted provisions run thus "5(3) Notwithstanding anything contained in sub- section (1), the last sale or purchase of any goods preceding the sale or purchase occasioning the export of those goods out of the territory of India shall also be deemed to be in the course of such export, if such last sale or purchase took place after, and was for the purpose of complying with, the agreement or order for or in relation to such export." 6"(1)......................................
Provided that a dealer shall not be liable to pay tax under this Act on any sale of goods which, in accordance with the provisions of sub-section (3) of section 5, is a sale in the course of export of these goods out of the territory of India." The petitioners have strongly relied upon the Statement of Objects and Reasons appended to the relevant Bill in this behalf. In other words, according to the petitioners under sub-section (3) of s.5 even the 'penultimate sale' is to be regarded as a sale 'in the course of ex- 640 port' and will under the proviso to s.6(1) be entitled to claim exemption from the liability to tax under the Act provided such penultimate sale-(i) took place after, and (ii) was for the purpose of complying with, the agreement or order for or in relation to such export. According to the petitioners the sales of coffee made to the Registered Exporters at the export auctions conducted by the Coffee Board constitute 'penultimate sales' falling within s.5(3) and qualify for the exemption from the tax liability under the Act in as much as both the conditions mentioned above are satisfied.
The petitioners' case is that notwithstanding the aforesaid position the Coffee Board by its Circular dated February 7, 1977 issued to the Registered Exporters of coffee has taken the view that in order to avail of the benefit of sec. 5(3) (in respect of the coffee sold by it at the export auctions the Registered Exporters (bidders) should satisfy three conditions (a) he must have an export contract (i. e. either agreement or order) from a foreign buyer, (b) he must have it on hand at the time when he participates in the export auction and (c) he should give proof of the export of the coffee purchased at the auction.
By way of compliance with the conditions (a) and (b) above the said Circular requires the Registered Exporters to deposit with the Board before the commencement of each auction copies of the export orders or agreements from their foreign buyers). Obviously the Coffee Board proceeds on the basis that s. 5(3) requires an agreement with or an order from a foreign buyer and that too it must exist at the time of participation in the auction inasmuch as in its view the property in the coffee sold at such auction passes and the penultimate sale takes place at the fall of the hammer under s.64(2) of the Sale of Goods Act. Further as the Coffee Board could not be certain as to how the Sales Tax Authorities would treat the penultimate sales in the matter of granting exemption the said Circular requires the bidders to make a contingency deposit in cash equivalent to the sales tax liability or furnish bank guarantee in lieu thereof, each of such deposit or guarantee being required to be kept in force for a period of four years. In other words, according to the petitioners even in cases where the Registered Exporters (auction bidders) shall have satisfied all the aforesaid conditions, the Coffee Board has insisted upon such Exporters making contingency deposits or furnish bank guarantees for amounts equivalent to the sales tax chargeable on such sales inspite of the enactment of s.5(3) and this has been done ostensibly for the protection of the Coffee Board in the event of Sales Tax Authorities holding that even in such cases the benefit of s. 5(3) would not be available.
The petitioners contend that the words "the agreement" for or "in relation to such export" in s. 5(3) do not necessarily refer to the agreement with a foreign buyer but would include any binding or enforceable agreement to export even with a local party to implement which the penultimate sale must have taken place and since here the penultimate sales (sales of coffee to Registered Exporters by the Coffee Board) take place on the express and essential condition that the said coffee shall be exported and the same shall not be diverted to any other destination or sold or disposed of or released in India (vide Clause 26) and which condition is enforced on pain of imposition of penalty and seizure of the un-exported coffee (vide: Clauses 30 and 31) these must be regarded as having been made for the purpose of complying with agreement for or in relation to export and secondly, these penultimate sales invariably take place (i.e. become complete after the agreement to export is entered into inasmuch as the latter comes into existence invariably before the property in the coffee passes to the Registered Exporters (auction purchasers). Alternatively the petitioners contend that even if the words "the agreement for or in relation to such export" mean only the agreement with a foreign buyer all that is required is that such agreement with the foreign buyer must exist before the penultimate sale becomes complete, i.e. before the property in the coffee sold thereat passes to the auction purchaser and according to the petitioners the property in the coffee sold at such penultimate sales passes to the auction purchaser after the same is shipped or sent to the custom station for shipment because till then the Coffee Board has a right of disposal over the same within the meaning of s.25 of the Sale of Goods Act under Cl. 31 and in any event not until the same is weighed and set apart and price paid therefor under Cl. 19 and hence if the agreement with the foreign buyer is available before that it would be sufficient compliance of s.5(3). The Board's view that the property in the coffee sold at the auctions passes to the bidders at the fall of hammer is clearly unsustainable. The petitioners thus contend that the aforesaid action on the part of the Coffee Board in forcing the Registered Exporters of coffee, including the petitioners, to make contingency deposits or to furnish bank guarantees to secure payment of sales tax on transactions which have been specifically exempted from sales tax by s. 5(3) and the proviso to s. 6(1) of the Central Sales Tax Act, 1956 read with Art. 286(1) of the Constitution of India is without authority of law and the Board's Circular dated February 7, 1977 is unreasonable, arbitrary, illegal, without authority of law and violative of their fundamental rights under Arts. 14, 19 and 31 of the Constitution.
The petitioners, therefore, seek issuance of writs of certiorari and prohibition quashing the said circular and restraining further action there under in future. It seems that since retrospective effect was given 642 to the amendments introduced by Act 103 of 1976 the Coffee Board collected and the petitioners paid sales tax on these export auctions during the period of the retrospectivity and for few months more and thereafter the Coffee Board has, in terms of the said Circular, obtained from the petitioners bank guarantees to secure payment of sales tax which but for the enactment of sub-s. (3) of s. 5 might have been payable on each such sale. To obtain appropriate reliefs in this behalf in two of the three writ petitions, the petitioners therein have also impleaded the concerned States, namely, State of Karnataka, State of Tamil Nadu and the State of Kerala as party respondents to their petitions. The petitioners have sought appropriate orders or directions against these State Governments directing them to make refunds to the Coffee Board of the amounts collected by them from the Coffee Board as and by way of sales tax and further restraining them from collecting or threatening to collect from the Coffee Board any amount as and by way of sales tax on the transactions in question or subjecting such transactions to sales tax. The petitioners have also sought the consequential reliefs of directing the Coffee Board to pay over to the petitioners the refunds which it may receive from the State Governments pursuant to the Court's order and further directing the Coffee Board to release the bank guarantees or contingency deposits obtained by it under the impugned Circular.
In the returns filed on behalf of the Coffee Board by way of reply to the writ petitions two or three contentions have been raised. First, by way of preliminary objection it is contended that no writ would lie against it challenging its Circular dated February 7, 1977 inasmuch as though the Coffee Board is constituted under a Central enactment and has monopolistic control over the coffee trade, when it exposes coffee in export auctions it is merely engaged in a commercial activity in exercise of its power to make contracts and while so engaged it cannot be denied its legitimate right, like any other trader to lay down the terms and conditions for such sales and the Circular dated February 7, 1977 is one such communication addressed to the Registered Exporters containing additional terms or conditions concerning sales tax in the matter of such auctions and neither the auction conditions nor the Circular stem from any statute but are matters falling within the realm of contract and therefore no writ petition challenging the Circular is maintainable. Secondly, the Coffee Board is entitled to protect its interest and since it has an apprehension that exemption provided for by s.5(3) of the Central Sales Tax Act, 1956 may not be made available by the Assessing Authorities under the sales Tax Law, the Coffee Board decided to safeguard its interest by taking contingency deposits or bank guarantees equivalent to the 643 amount of sales tax that would be payable in respect of the export auctions. It is pointed out in this behalf that all kinds of penultimate sales or purchases are not exempt under s.5(3) but the exemption is hedged in with conditions specified therein and only when those conditions are proved to the satisfaction of the Assessing Authority the exemption will arise and until then there is a risk of the Coffee Board being visited with the sales tax and so to protect itself against any possible levy of sales tax it is obliged to insist upon furnishing of contingency deposits or bank guarantees. By doing it the Coffee Board is not exacting any sales tax as such and, there for, a protective measure of the type adopted by it cannot be said to be illegal or unconstitutional or violative of any of the Petitioners' fundamental rights. Thirdly, on merits it is contended that its interpretation of section 5(3) that what is required there under is an agreement with or an order from a foreign buyer is correct as also its conclusion that in the export auctions conducted by it property in the coffee sold thereat passes to the Registered Exporter (bidder) at the fall of hammer and, therefore, the conditions imposed by the Circular on the Registered Exporters before they can claim exemption from the tax liability are justified. The States of Karnataka, Tamil Nadu and Kerala in their respective counter-affidavits have supported the stand taken by the Coffee Board on both the points. It may, however, be stated that all the three States are desirous of having an authoritative pronouncement from this Court on the question of proper construction of the words "the agreement or order for or in relation to such export" occurring in s. 5(3) of the Central Sales Tax Act 1956 but on the second point counsel for States of Karnataka and Tamil Nadu have urged that since the question of passing of property does not depend merely upon proper construction of the auction conditions read in the context of the relevant provisions of the Sale of Goods Act but will need investigation into all the relevant facts and circumstances of each auction sale including the conduct of the parties as also the correctness and true nature of the dealings between them any expression of opinion by this Court on that question would not be proper and may bar such investigation into all the relevant facts at the hands of their Sales Tax Authorities as and when exemption is claimed in assessment proceedings. Counsel for the State of Kerala was, however, not in agreement with this submission and stated that even that question was a pure question of law depending upon the proper construction of the auction conditions read with the relevant provisions of the Sale of Goods Act on the basis that the auction conditions truly govern the rights and obligations of th
