Judgment KULDIP SINGH, J.- The Sales Tax Tribunal, Orissa referred the following questions under Section 24(1) of the Orissa Sales Tax Act, 1947 (the Act) for the opinion of the High Court of Orissa, Cuttack: "(1) Whether on the facts and in the circumstances of the case, the Tribunal is correct in holding that there has been no contravention of the declaration given under Rule 27(2) of the Orissa Sales Tax Rules thus attracting the proviso to Section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act? (2) Whether in the facts and circumstances of the case, the learned Tribunal having held that there was no contravention of Section 5(2)(A)(a)(ii) of the Act acted within its jurisdiction in remanding the appeal? (3) Whether in the facts and circumstances of the case, the sale by the petitioner-company to the Japanese buyer comes within the ambit and scope of Article 286(1)(b) of the Constitution of India read with Section 5 of the Central Sales Tax Act?" A three Judge-Bench of the High Court by its judgment dated 11-5-1976 answered the questions as under: "(1) On the facts and in the circumstances of the case, the Tribunal was correct in holding that there was no contravention of the declarations given under Rule 27(2) of the Orissa Sales Tax Rules and, therefore, the proviso to Section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act was not attracted. (2) In the facts and circumstances of the case, the sales by the assessee to the Japanese buyer are covered by the embargo under Article 286(1)(b) of the Constitution of India read with Section 5 of the Central Sales Tax Act and, therefore, are not exigible to sales tax under the Orissa Act. The remaining question, in view of what we have already stated, does not survive for answer." These appeals by the State of Orissa are against the Full Bench judgment of the High Court. 2. The Minerals and Metals Trading Corporation of India Limited, respondent in the appeals herein, is a government company within the meaning of Section 617 of the Companies Act, 1956. The respondent-assessee is registered as a dealer under the Act. During the years 1966-67, 1967-68 and the quarters ending June, September and December 1968, the respondent purchased mineral ores from the mine-owners, who were registered dealers under the Act. The respondent-assessee is registered as a dealer under the Act. During the years 1966-67, 1967-68 and the quarters ending June, September and December 1968, the respondent purchased mineral ores from the mine-owners, who were registered dealers under the Act. While purchasing mineral ores from the mine-owners the respondent gave declarations in terms of Rule 27 of the Orissa Sales Tax Rules, 1947 (the Rules) to the effect that the said mineral ores would be resold within the State of Orissa. The Sales Tax Officer while examining the accounts relating to the relevant period found that the respondent had sold the mineral ores in the course of export to the Japanese buyers with whom the assessee had pre-existing export contracts. The Sales Tax Officer came to the conclusion that the mineral ores were sold in violation of the declarations furnished by the respondent and, as such, contravened the provisions of Section 5(2)(A)(a)(ii) of the Act. The Sales Tax Officer added the amount of the relevant sales to the taxable turnover of the respondent and issued a demand for payment of the tax. The respondent filed an appeal before the first appellate authority which was dismissed. Aggrieved by the order of the first appellate authority, the respondent filed a second appeal before the Sales Tax Tribunal. It was contended before the Tribunal that the goods were resold in Orissa and the transaction with the Japanese buyers being sale in the course of export, it was not liable to tax by virtue of Article 286(1)(b) of the Constitution of India. The Tribunal came to the conclusion that the sale by the respondent in favour of the Japanese buyers, was within the State of Orissa and, as such there was no violation of the terms of the declarations. The Tribunal, however, did not agree with the other contention that the transactions were in the course of export and, therefore, not exigible to sales tax. The Tribunal rejected the second contention. The net result was that the assessee was not found liable on account of violation of the undertaking in the declarations but the assessees sale in favour of the Japanese buyers was found liable to tax. As the accounts had to be re-verified to ascertain the correct figures, the Tribunal remanded the matter. The Tribunal rejected the second contention. The net result was that the assessee was not found liable on account of violation of the undertaking in the declarations but the assessees sale in favour of the Japanese buyers was found liable to tax. As the accounts had to be re-verified to ascertain the correct figures, the Tribunal remanded the matter. The Tribunal stated the cases and referred the questions at the instance of both the Revenue as also the assessee for the opinion of the High Court. We have already set out the answers given by the High Court. Sections 2(g) and 5(2)(A)(a)(ii) of the Act and Rule 27(2) of the Rules are reproduced hereunder: "2. (g) sale means, with all its grammatical variations and cognate expressions, any transfer of property in goods for cash or deferred payment or other valuable consideration, including a transfer of property in goods involved in the execution of contract but does not include a mortgage, hypothecation, charge or pledge and the words buy and purchase shall be construed accordingly. Explanation.- (a) A sale or purchase of goods shall be deemed to take place inside the State if the goods are within the State- (i) in the case of specific or ascertained goods at the time the contract of sale is made; and (ii) in the case of unascertained or future goods at the time of their appropriation to the contract of sale by the seller or by the buyer, whether assent of the other party is prior or subsequent to such appropriation; (iii) where there is a single contract or sale or purchase of goods situated at more places than one, the provisions of this Explanation shall apply as if there were contracts in respect of the goods at each of such places. 5. 5. (2)(A) In this Act the expression taxable turnover means that part of a dealers gross turnover during any period which remains after deducting therefrom- (a) his turnover during that period on- (ii) sales to a registered dealer of goods specified in the purchasing dealers certificate of registration as being intended for resale by him in Orissa or for use by him in the execution of any contract in Orissa, and on sales to a registered dealer of containers and other materials for the packing of such goods : Provided that when such goods are used by the registered dealer for purposes other than those specified in his certificate of registration, the price of goods so utilised shall be included in his taxable turnover." "Rule 27. (2)(i) Claim for deduction of turnover under item (ii) of sub-clause (a) of clause (A) of sub-section (2) of Section 5: A dealer who wishes to deduct from his gross turnover the amount of a sale on the ground that he is entitled to make such deduction under item (ii) of sub-clause (a) of clause (A) of sub-section (2) of Section 5 of the Act, shall, on demand, produce a copy of the relevant cash receipt or bill according as the sale is a cash sale, or a sale on credit, and a declaration in Form XXXIV duly filled up and signed by the purchasing dealer or by such responsible persons as may be authorised in writing in this behalf by the purchasing dealer." 3. It would be useful to have before us Article 286(1)(b) of the Constitution of India and Section 5(1) of the Central Sales Tax Act, 1956 which are as under: "286. Restrictions as to imposition of tax on the sale or purchase of goods.- (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 into, or export of the goods out of, the territory of India. (2) .... (3)... ." "5. (2) .... (3)... ." "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." 4. The undisputed scheme of the Act is that a dealer becomes liable to pay tax at the time of purchase but being a registered dealer under the Act a facility is given to him and the liability to pay the tax is deferred to a later stage, when he resells the goods. To ensure that the sale does not escape tax altogether a declaration is taken from the dealer to the effect that the goods are meant for resale within the State. In other words, the Act has adopted a single point tax. Under the scheme, the taxable event is postponed until a registered dealer sells the goods to an unregistered dealer, a consumer or in breach of the undertaking diverts the goods for other purposes. The proviso to Section 5(2) of the Act operates when the purchasing dealer violates his undertaking and he becomes liable to pay the tax which he had avoided on the basis of the declaration. 5. It is not disputed that the assessee purchased mineral ores from the mine-owners - who were registered dealers under the Act - upon furnishing declaration as provided in Rule 27(2) of the Rules. The assessee had not paid sales tax on those purchases. The declaration makes it obligatory for the assessee to resell the mineral ores, so purchased, within the State of Orissa. 6. The learned counsel for the appellant has not challenged before us the finding of the High Court that the sale by the assessee to the Japanese buyers is covered by the embargo under Article 286(1)(b) of the Constitution of India read with Section 5 of the Central Sales Tax Act and, therefore, is not exigible to sales tax under the Act. The learned counsel very fairly concedes that the sale by the assessee to the Japanese buyers is in the course of the export of the goods out of the territory of India. The learned counsel very fairly concedes that the sale by the assessee to the Japanese buyers is in the course of the export of the goods out of the territory of India. The contention of the learned counsel for the appellant, however, is that what is sought to be taxed is the purchase by the assessee from the mine-owners and not the sale by it to the Japanese buyers. It is contended that the assessee deliberately gave incorrect declaration to the effect that the goods were meant for resale in Orissa fully knowing that the goods were not meant for such resale. It is further contended that the assessee had already entered into agreements to export the mineral ores to the Japanese buyers. It was to their knowledge that the goods were not meant for resale within the State of Orissa. According to the learned counsel the declaration was deliberately given to avoid the tax liability. 7. The High Court analysed the various terms of the contract under which the assessee effected the sale in favour of the Japanese buyers. The High Court concurred with the findings of the Tribunal that the sale to the Japanese buyers was effected at Paradeep (a port within the State of Orissa). The High Court reached the said finding on the following reasoning: "Assessee claims that it effected sales in favour of the Japanese buyers at Paradeep. The terms of the contract under which sales are said to have taken place are available on the record and it is stated that more or less the contracts are of a uniform pattern. At the time of hearing parties have, therefore, referred to us a contract dated 1-6-1965, which has been printed in the paper book. An analysis of the terms of the contract may now be made. Article 6 provides for analysis of the ore at the loading port. Article 10 provides that each shipment shall be deemed as delivered when it is loaded on board the vessel and trimmed. Under Article 12, Paradeep is a port of delivery. Insurance cover in terms of Article 9 after the ore is loaded on board the vessel is to be arranged by the buyer at its expense. Under Article 13, risk with respect to the shipment passes from the seller to the buyer when ore has been loaded and trimmed on board the vessel. Insurance cover in terms of Article 9 after the ore is loaded on board the vessel is to be arranged by the buyer at its expense. Under Article 13, risk with respect to the shipment passes from the seller to the buyer when ore has been loaded and trimmed on board the vessel. The heading of this article is title and risk and the obvious intention is that title passes to the buyer with the contemplated activity being over. Under Article 14, in the event of loss of cargo in part or in full, the result of the loading port analysis is deemed to be final. Article 16 obliges the buyer to arrange ships for transport. Provision has also been made for payment by irrevocable, transferable, assignable, divisible and confirmed without recourse to Drawer Letters of Credit to cover 100 per cent value of each shipment. On the basis of these clauses which reflect the true intention of the contracting parties, it is claimed that title in the ores passed at Paradeep and thus there were local sales within the State.... On the terms of the contract indicated above, we do not think, the Tribunal can be said to have been wrong in holding that sales took place at Paradeep.... We concur with the finding of the learned Tribunal that the assessee effected resales at Paradeep within the State of Orissa." 8. After holding that the sale by the assessee to the Japanese buyers was within the State of Orissa, the High Court further examined the question whether the sale was in the course of export and, as such, was protected by Article 286(1)(b) of the Constitution of India read with Section 5 of the Central Sales Tax Act. Relying upon the judgment of this Court in Md. Serajuddin v. State of Orissa { (1975) 2 SCC 47 , the High Court came to the following conclusions: "The analysis of the legal position given in paragraph 25 of the judgment of the Court makes it clear that the sales effected by the assessee in favour of the foreign buyer must be held to have been in course of export and is thus squarely covered by Article 286(1)(b) of the Constitution read with Section 5 of the Central Sales Tax Act. Thus the sale by the assessee in favour of the Japanese buyers though completed at Paradeep is yet not exigible to Orissa Sales Tax in view of the restriction imposed by Article 286(1)(b) of the Constitution." 9. We agree with the High Court that the sale effected by the assessee in favour of the Japanese buyers is the sale in the course of the export of the goods out of the territory of India and, as such, is not exigible to sales tax. As stated above the learned counsel for the State of Orissa has also not questioned the findings of the High Court on this point. We are, however, of the view that the High Court fell into patent error in holding that sale to the Japanese buyers was made within the State of Orissa. A sale "in the course of the export of the goods" and a sale "within the State of Orissa" are two distinct events. A sale "in the course of the export of the goods" cannot be a sale within the State of Orissa. The assessee entered into contracts with the Japanese buyers for "export sale" of the mineral ores. An "export sale" has an entirely different legal concept. In the "export sale", the "sale" and the "export" are so intertwined and intermixed that both begin and end together. The various clauses of the contract entered into by the assessee and the Japanese buyers are wholly irrelevant and are of no consequence. Even if on the construction of the contract of "export sale" the sale part of it is completed within the State it would still not be considered as legally complete because till the time the "sale" and the "export" both are completed none can be taken to be complete. It is, therefore, inherent in the concept of "export sale" that both the "sale" and the "export" are completed when the goods are appropriated by the foreign buyer. 10. Patanjali Sastri, C.J., speaking for this Court in State of Travancore-Cochin v. Bombay Co. Ltd. { 1952 SCR 1112 : (1952) 3 STC 434 }, examining the scope of the "export sale" under Article 286(1)(b) of the Constitution of India observed as under: "We are clearly of opinion that the sales here in question, which occasioned the export in each case, fall within the scope of the exemption under Article 286(1)(b). Ltd. { 1952 SCR 1112 : (1952) 3 STC 434 }, examining the scope of the "export sale" under Article 286(1)(b) of the Constitution of India observed as under: "We are clearly of opinion that the sales here in question, which occasioned the export in each case, fall within the scope of the exemption under Article 286(1)(b). Such sales must of necessity be put through by transporting the goods by rail or ship or both out of the territory of India, that is to say, by employing the machinery of export. A sale by export thus 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 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. Assuming without deciding that the property in the goods in the present cases passed to the foreign buyers and the sales were thus completed within the State before the goods commenced their journey as found by the Sales Tax Authorities, the sales must, nevertheless, be regarded as having taken place in the course of the export and are, therefore, exempt under Article 286(1)(b)." 11. M. Hidayatullah, C.J., speaking for this Court in Coffee Board, Bangalore v. Joint Commercial Tax Officer, Madras { (1969) 3 SCC 349 : (1970) 3 SCR 147 : (1970) 25 STC 528}, interpreted the phrase "sale in the course of export" in the following words: (SCC p. 361, para 28) "The phrase sale in the course of export comprises in itself three essentials - (i) that there must be a sale, (ii) that goods must actually be exported, and (iii) the sale must be a part and parcel of the export .... The export results from the sale and is round up with it. The word course in the expression in the course of means progress or process of, or shortly during. The phrase expanded with this meaning reads in the progress or process of export or during export. The export results from the sale and is round up with it. The word course in the expression in the course of means progress or process of, or shortly during. The phrase expanded with this meaning reads in the progress or process of export or during export. Therefore the export from India to a foreign destination must be established and the sale must be a link in the same export for which the sale is held." 12. In Md. Serajuddin v. State of Orissa { (1975) 2 SCC 47 : 1975 SCC (Tax) 269}, this Court examined the earlier judgments on the interpretation of Article 286(1)(b) of the Constitution of India. It would be useful to refer the following observations of the Bench in the said case: (SCC p. 64, para 35) "The expression in the course implies not only a period of time during which the movement is in progress but postulates a connected relation. Sale in the course of export out of the territory of India means sale taking place not only during the activities directed to the end of exportation of the goods out of the country but also as part of or connected with such activities." It is, therefore, clear that the export sale envisaged under Article 286(1)(b) of the Constitution of India continue to be in the process of completion till the goods reach the destination. 13. The argument of the learned counsel for the respondent that the assessee by the deposit of the mineral ores at Paradeep Port made a sale to the foreign buyer at the port is fallacious and overlooks the fact that the purchase had been made by the assessee from the registered dealers, to satisfy his pre-existing contract with the Japanese buyer and the goods were deposited or delivered at Paradeep Port for transportation, out of the country, to the destination of the foreign buyer, to satisfy the requirements of the pre-existing contract. The delivery of the goods at the Paradeep Port was thus in discharge of the obligation under the contract on the part of the exporter-assessee and formed but a single transaction. It was not a second sale to the foreign buyer in the State of Orissa. The delivery of the goods at the Paradeep Port was thus in discharge of the obligation under the contract on the part of the exporter-assessee and formed but a single transaction. It was not a second sale to the foreign buyer in the State of Orissa. The effort to confuse the delivery of goods at Paradeep Port for transportation to the destination of the foreign buyer with a sale at Paradeep Port is a futile attempt to wriggle out of his misdeclaration. In the declaration filed by the assessee, he not only misstated that the goods were meant for resale within the State of Orissa but also concealed the fact that there was a pre-existing contract between the assessee and the Japanese buyers to satisfy which of the mineral ores were being purchased, for export, from the registered dealers. The declaration made by the assessee concealed more than what it revealed. The assessee, therefore, made a declaration which was palpably incorrect. The assessee thus contravened the provisions of Section 5(2)(A)(a)(ii) of the Act and rendered itself liable under the proviso to the said section. 14. We, therefore, hold that the sale by the respondent-assessee was in contravention of the declaration given by the assessee under Rule 27(2) of the Rules and, as such, attracts the proviso to Section 5(2)(A)(a)(ii) of the Act. We allow the appeals partly. We uphold Answer No. 2 given by the High Court but we set aside Answer No. 1 of the High Court and in that place substitute the following answer. 1. On the facts and circumstances of the case the Tribunal was wrong in holding that there was no contravention of the declaration given under Rule 27(2) of the Rules. The assessee contravened the said declaration and, as such, the proviso to Section 5(2)(A)(a)(ii) of the Act was attracted. 15. The appeals are allowed in the above terms. The appellant shall be entitled to the costs which we quantify as Rs 20,000. For Citation : 1994 Supp (3) SCC 109