Baraka Overseas Traders Vs. Commissioner of Commercial Taxes and anr. - Court Judgment

Excerpt:
- order 41, rule 27: [s.abdul nazeer, j] production of additional evidence at the appellate stage permissibility - discretion of the court - limitations specified under order 41 rule 27 - held, the appellate court would not generally travel outside the record of the lower court, or allow additional evidence. no doubt, it has discretion to allow production of additional evidence, but that discretion is circumscribed by the limitations specified under order 41, rule 27 of the code of civil procedure. additional evidence cannot be allowed to be produced, either for shaking the credit of a witness or for allowing a litigant to patch up the weak parts of his case. similarly, the mere fact that certain evidence is important is not sufficient for adding that evidence in appeal. the appellate court is bound to consider the application under order 41 rule 27 of the cpc only when the appeal is to be decided on merits. further, the case of the appellant does not fall within the conditions prescribed in order 41 rule 27(a) and 27(aa) of the code of civil procedure. it is not the case of the appellant that notwithstanding the exercise of due diligence, the evidence in question was not within his knowledge or that he could not produce the same or that the court below has refused to admit the said evidence which ought to have been admitted. even rule 27(b) of order 41 of code of civil procedure does not assist the appellant for production of the documents in question. on facts held, this appeal arises out of a decree passed in a suit filed by the plaintiff for recovery of the amount in question on the basis of a promissory note dated 16.11.1998. ex.p-1 and a consideration receipt dated 16.11.1998, ex. p-2 respectively executed by defendant nos.1 and 2 in favour of the plaintiff. therefore, the documents produced along with the applications misc.cvl. nos. 14135/2009 and 14673/2009 are not necessary for disposal of the present appeal. applications filed under order 41 rule 27 are rejected. - assistant commissioner of commercial taxes ilr 1996 kar 1136 wherein it was held that a contract relating to goods can be said to be a contract of sale only if the consideration for transfer of property in goods in favour of the transferee is money, and if the goods are agreed to be transferred for any other consideration like exchange for any other goods or for services rendered, in law, such a contract, cannot be said to be a contract of sale of goods. assistant commissioner of commercial taxes ilr 1996 kar 1136, wherein it is held that a contract relating to goods can be considered as a contract of sale only if the consideration for transfer of property in goods in favour of the transferee is money ;and that if goods are agreed to be transferred for any other consideration like exchange with any other goods or services rendered, then in law, such a contract cannot be said to be a contract of sale of goods and therefore such a transaction cannot be subjected to sales tax. secondly 'exchange' presuppose that the export house was entitled to some 'benefit' under the income-tax act which was real and not illusory, and if there was no exchange, the export house would have enjoyed such 'benefit'.let us therefore consider whether the export house would have or could have received any benefit at all under section 80hhc if there was no disclaimer thereof in favour of the appellant.r.v. raveendran, j. 1. sri g.k. bhat, learned government pleader, is directed to take notice for respondents.2. the appellant is an exporter of marine products. it is a registered dealer under the karnataka sales tax act, 1957 ('the kst act', for short) and the central sales tax act, 1956 ('the cst act', for short) and a registered exporter under the laws governing exports/imports.3. during the course of its business, the appellant entered into agreements with several recognised export houses. each of these agreements provided that the appellant should export marine products on behalf of the export houses. the procedure agreed with the export houses is as follows :(a) export orders had to be secured by the appellant. the export house may also secure orders. orders for shipment will however be arranged in the name of export house and letters of credit will be in favour of the export house. the bills of lading will be in the joint names of the appellant and the export house ;(b) all expenses up to placing the cargo on board will be borne and paid by the appellant ;(c) the appellant will hand over to the export house, the clean bill of lading and all relative documents after completing all the formalities in respect of the export, within 15 days from the date of the respective bill of lading ;(d) the export house will advice the appellant's bankers to credit the proceeds of the export to the account of the appellant on negotiation without recourse to the export house.3.1. the term relating to sharing of export benefits contained in one of the agreements with export houses is extracted below [note : the term 'processor' and veol in the said agreement refer to the appellant and the export house respectively] :'benefits of income-tax under section 80hhc of the income-tax act, 1961 on the exports will be to the account of the processors. veol shall provide disclaimer certificate to the processors to enable the processors to claim relief under the provisions of the income-tax act and other income-tax benefits, if any, all other benefits such as advance licence to be applied under deec and performance related against this export shall be to the account of veol and shipper will issue necessary disclaimer certificate and furnish documents if any, required to effect the same.veol will pay the service charges at the rate of 2.4 per cent on f.o.b. value of exports to the processors.......'.similar provisions are found in other agreements entered by the appellant with export houses. the payment by the export house to the appellant is however described as 'service charge' or 'incentive' or 'commission' or 'premium'.3.2. the other relevant terms in the agreements relating to export are as follows :(i) the appellant alone will be responsible for all the claims made by any authority or buyer in india or abroad due to any lapses, defective quality or packing or for any other reason whatsoever in respect of the shipments and the processor will keep the export house indemnified in that behalf.(ii) the export house shall be deemed to have purchased the marine products in the course of export on board the ship outside the customs frontiers of india on invoice price obtained by the export house against orders.(iii) the export house will not be responsible for taxes that may be leviable on the export of the said marine products and any tax (if applicable) shall be to the account of the appellant.4. in pursuance of such agreements, the appellant routed several exports of marine products through recognised export houses. the appellant received the entire payment in regard to such exports and also obtained the benefit of exemption from payment of income-tax under section 80hhc of the income-tax act, 1961 on the profits of exports. though the export was counted in favour of the respective export houses, with which the appellant had entered into agreements, the export houses received neither payment, nor profit, nor benefit under section 80hhc of the income-tax act, in regard to such exports.5. as per the import and export policy in force at the relevant time, an exporter is entitled to import certain essential inputs, and were issued replenishment licences, later known export-import scrips (for short rep licences or exam scrips) equal to the prescribed percentage of the value of exports. these rep licenses/exam scrips were freely transferable. the appellant executed letters of disclaimer in regard to the rep licenses/exam scrips, to which it was entitled as an exporter, in favour of the export houses in pursuance of the aforesaid agreements. consequently, the rep licenses/exam scrips, which, but for the terms of the agreement between the appellant and the export house and the disclaimer executed by the appellant would have been issued to the appellant, were issued to the export houses entitling the export houses to either sell or transfer them to others for consideration or to import goods under them. the declaration made by the appellant while issuing the disclaimer certificates in favour of the export houses was as follows :'this is to declare that in respect of the following shipping bill, we have no objection if (the name of export house), claim the export house/trading house benefits.we hereby further declare that we have not claimed any trading house benefits nor shall we claim the same in future in respect of exports covered by the aforesaid shipping bill.we further declare that we have not paid any commission nor it is payable at future date to the foreign agent (in regard to) the export covered by the above shipping bill.we further declare that we have not been debarred from receiving the benefits from any of the licensing authority under the import (control) order.'6. according to the appellant the direct exports by the appellant differed from exports made by the appellant in pursuance of agreements with export houses. the position under direct exports and exports routed through export houses are highlighted in the form of a comparative statement, below :in a directexport by the appellant as exporter.in an export bythe appellant routed through a recognised export house.(a) the bill oflading will be in the name of the exporter.the bill oflading will be in the joint names of exporter and export house.(b) the relief undersection 80hhc of income-tax act accrues directly and automatically to theexporter.the relief undersection 80hhc of income-tax act accrues tothe exporter on account of the disclaimer given by the export house infavour of the exporter.(c) the foreign exchange earned by the exports by the exporter will be in the name of theexporter.the foreignexchange earned by the exporter will be in the name of the export house.(d) the benefits ofthe exports rep licenses/exam scrips) accrueto the exporter.the benefits of exports(eep licenses/exam scrips) accrue to the export house in pursuance of thedisclaimers issued by the exporter.(e) the exporter gets :the exporter gets : (i) proceeds of the export. (i) proceeds of the export. (ii) benefit ofsection 80hhc of income-tax act. (ii) benefit of section80hhc of income-tax act. (iii) benefit of exports(rep licenses/exam scrips). (iii) 2.4 percent of f.o.b. value of exports (or other agreed percentage).(f) the exporterwill be responsible for any claim on account of defective quality.the exporter willbe responsible for any claim on account of defective quality.7. in so far as the export house is concerned, its benefits and liabilities under such an arrangement with the appellant are as follows :(i) the export and foreign exchange earning is counted to the account of the export house and enables the export house to reach the export targets required to continue recognition as an. export house. the export house does not get any part of the price, or profit or commission or any other monetary benefit on account of the export.(ii) the export house gets the benefit of export (rep licenses/exam scrips) in view of the disclaimer certificates given by the exporter.(iii) the export house pays 2.4 per cent or other agreed percentage of f.o.b. value to the exporter (known as service charge/premium/incentive amount).(iv) the export house does not get any benefit under section 80hhc of income-tax act, firstly because it does not get any income/profit from the export transaction arid secondly because under the agreement, the benefits of section 80hhc of income-tax act, 1961 are to the account of the exporter.8. in regard to assessment years 1989-90, 1990-91, 1991-92, 1993-94 and 1994-95, the appellant received rs. 14,82,926, rs. 8,74,726, rs. 52,39,939, rs. 18,44,363.42 and rs. 72,50,000 as service charges/premium/ incentive/commission, from export houses, in pursuance of agreements entered into with them (of the nature described in para 3 above) by parting with export benefits (rep licenses/exam scrips) by issuing disclaimer certificates. the net result of such transaction is that the export house gets the rep licenses/exam scrips and the benefit of the export being counted to its name, by paying a consideration (called as 'service charge') of 2.4 per cent or other agreed percentage of f.o.b. value of exports, to the exporter. the description of this payment of a percentage of f.o.b. value as 'service charge' is a misnomer because the exporter does not render any service to the export house. if at all any service is rendered it is by the export house by sometimes securing the export orders for execution by the exporter. the service charge is also described as 'premium' or 'incentive amount' in some agreements.9. before the assessing authority, the appellant contended that the amount received was nothing but a consideration received for rendering a service (that is exporting goods on behalf of the export house to enable them to fulfil their obligation of achieving their export commitment) and the transaction between the appellant and export house was in the nature of exchange of the benefits under section 80hhc of the income-tax act and the import-export policy. reliance was placed on the decision of a learned single judge of this court in steel authority of india ltd. v. assistant commissioner of commercial taxes ilr 1996 kar 1136 wherein it was held that a contract relating to goods can be said to be a contract of sale only if the consideration for transfer of property in goods in favour of the transferee is money, and if the goods are agreed to be transferred for any other consideration like exchange for any other goods or for services rendered, in law, such a contract, cannot be said to be a contract of sale of goods.10. the assessing authority while framing the assessments, held that the disclaimer of rep licenses/exam scrips in favour of export house by the appellant as per the terms of the agreement amounted to sale of such rep licenses/exam scrips by the appellant to the export houses and subjected the transactions to central sales tax at 10 per cent over the percentage of f.o.b. value received by the appellant as service charge/premium/commission/ incentive, treating such receipts as the 'consideration' received by the appellant for transfer of the 'right to export benefits' exigible to sales tax as 'sale of goods' in view of decision of the supreme court in vikas sales corporation v. commissioner of commercial taxes : 1997(57)ecc1 . the assessing authority rejected the contention of the appellant that a transaction between the appellant and the export house was in the nature of an exchange under which in consideration of the transfer of the benefit under section 80hhc of the income-tax act by the export houses to the appellant, the appellant transferred the 'export benefit' (rep licenses/exam scrips) under the import-export policy. the assessing authority, held that section 80hhc of income-tax act contemplates and provides for the supporting manufacturer (appellant) getting the benefit of deduction of profits derived from exports under section 80hhc (by producing a certificate from the export house certifying that it had not claimed the deduction in regard to such export turnover) ; and the appellant would have received the said benefit under section 80hhc, even without a disclaimer by the export house ; and that if there was really an exchange of benefit under section 80hhc of income-tax act and export benefits under import-export policy, the question of the export house paying an agreed percentage of f.o.b. price to the appellant would not have arisen. he held that the act of disclaimer in the rep licenses/exam scrips in favour of the export houses, amounted to sale of the export benefits (rep licenses/exam scrips) by the appellant in favour of such export houses. the assessing authority also levied penalty under section 9(2) of cst act read with section 12a(1a) of kst act on the ground that the appellant had not disclosed the turnover relating to premium/service charge received from export houses in the annual return.11. feeling aggrieved, the appellant filed appeals before the joint commissioner of commercial taxes (appeals), mangalore, in cst appeals nos. 3, 4, 5, 6 and 7 of 1997-98. the appellate authority by its common order dated may 5, 1997 allowed the appeals in part. he held that the service charge (percentage of f.o.b. price) should be reckoned as additional sale value received on exports for which no tax is leviable under the act and not as consideration for transfer of rep licenses/exam scrips. he therefore set aside the levy of cst on the service charge/premium/commission paid by the export house to appellant, as also the levy of penalty by the assessing authority.12. the additional commissioner of commercial taxes, mysore zone, initiated suo motu revision proceedings under section 22a(1) of the kst act in regard to the appellate order dated may 5, 1997 passed by the joint commissioner of commercial taxes (appeals), in addl. cct.mvs. mng.smr. 17, 18, 19 and 20/1997-98 and 21/1997-98. however, subsequently, the additional commissioner, dropped the said proceedings by an order dated december 5, 1997 on the following reasoning :'the appellant, as per the contract with export houses, routed export of marine products through the export houses, in return for which it receives certain amounts called the 'service charge or premium or incentive amount' which is calculated as a percentage of f.o.b. value of the goods. the appellant also got entitlement for income-tax relief under section 80hhc of the income-tax act. the appellant has given disclaimer letters to the import/ export office in favour of the export houses. the transaction by the appellant routing the goods through the export house so as to facilitate such export house to meet the export target, does not constitute either sale of rep licenses/exam scripts/special import licence as held by the supreme court in the case of vikas sales corporation : 1997(57)ecc1 nor does the receipt of export incentive (percentage of f.o.b. value) amounts to any sale of right, liable to tax. as the appellant has not even applied for rep licenses/exam scrips, nor received the rep licenses/exam scrips, the question of appellant selling them does not arise. a percentage of earning of the export house is passed on to appellant by way of export incentive or premium.'13. the commissioner of commercial taxes initiated suo motu revisional proceedings under section 22-a(2) of the kst act, in regard to the proceedings relating to assessments for the periods 1989-90, 1990-91, 1991-92, 1993-94 and 1994-95 ending with the orders dated december 5, 1997 passed by the additional commissioner under section 22-a(1) of the kst act. the commissioner, after hearing has passed the impugned common order dated january 22, 2000 holding that there was a transfer of rep licenses/exam scrips, by the appellant to the export houses, by executing disclaimer certificates for consideration, and such transfer amounted to sale, the sale price being the 'percentage of f.o.b. price' paid by the export house to the appellant under the description of 'service charge' or 'premium' or 'export incentive' or 'commission'. he therefore set aside the revisional order dated december 5, 1997 passed by the additional commissioner of commercial taxes, mysore zone, and the appellate order dated may 5, 1997 passed by the joint commissioner of commercial taxes (appeals), mangalore. he restored the orders dated march 15, 1997 and march 5, 1997 of the assessing authority with a direction to redo the assessment on the lines mentioned in his order dated january 22, 2000. feeling aggrieved by the said order dated january 22, 2000, the appellant has filed these five appeals under section 24(1) of the kst act.14. the appellant has contended that the export houses became entitled to the rep licenses/exam scrips in terms of the joint venture agreements between the appellant and export houses which provided that the export was to be counted as being done by the export houses ; and in terms of such agreement, the export houses became entitled to claim the benefits of export, that is rep licenses/exam scrips in their own right ; and therefore, mere disclaimer of export benefits by the appellant in favour of the export houses did not amount to sale. it is further contended that the 'percentage of f.o.b. price' paid by the export houses to the appellant is not a 'consideration' for transfer of 'rep licenses/exam scrips', but a incentive/ premium/commission/service charge paid by the export house for having helped the export house to reach its export target to maintain its recognition as an export house. the appellant describes the reason for payment of percentage of f.o.b. value by the export house to the appellant as follows in the appeal memo :'(a) the assessee as per the contract with certain export houses has routed export of marine products through export houses, in return for which he has received certain amounts called 'premium of incentive amount', which is calculated as a percentage of f.o.b. value of the goods. the assessee also gets entitlement for income-tax relief under section 80hhc of the income-tax act. the assessee has given disclaimer letter to the import/ export officer.(b) export incentive amount received by the assessee for having routing the goods through the export house so as to facilitate such export house to meet the export target, does not constitute either sale of rep, licence or special import licence which is a subject-matter of the decision of the honourable supreme court in the case of vikas sales corporation : 1997(57)ecc1 , or any sale of right liable to tax. in fact, the assessee has not even applied for rep licence and therefore the question of selling the licence does not arise. the percentage of earning of the export house is passed on to assessee by way of export incentive or premium.'it is lastly contended that even if it is held that there is any transfer of export benefits, that is the right to get rep licenses/exam scrips, the transfer took place in the course of an export transaction outside the territory of india and therefore there is no liability to pay sales tax under cst act.15. the following questions therefore arise for consideration on the contentions raised :(i) whether there is a sale of rep licenses/exam scrips by the appellant exigible to tax under cst act, on account of appellant entering into an agreement agreeing that the export house will be entitled to directly receive the export benefits of the appellant and by executing disclaimers in regard to such export benefits in favour of export houses.(ii) whether the payment by the export house to the appellant (by way of a percentage of the f.o.b. price), termed as 'service charge' or 'export incentive' or 'premium' or 'commission', can be treated as consideration for such sale.(iii) if there is a sale/transfer of export benefit, whether it took place in the course of an export transaction outside the territory of india and not in the course of inter-state trade or commerce and therefore there is no liability to central sales tax under the cst act.re : point (i) :16. the first question is whether there is a 'sale' exigible to central sales tax. the term 'sale' is defined in section 2(g) of the central sales tax act, 1956. it means any transfer of property in goods by one person to another for cash or for deferred payment or for any other valuable consideration. section 2(d) of the cst act defines 'goods' as including all materials, articles, commodities and all other kinds of movable property, but does not include actionable claims, stocks, shares, securities and newspapers.17. in vikas sales corporation v. commissioner of commercial taxes : 1997(57)ecc1 , the supreme court considered the question whether replenishment licenses/exam scrips issued as per import policy, are 'goods' and whether transfer thereof is exigible to tax under sales tax laws. the supreme court held that replenishment licences which became export-import licence (for short 'exam licence') with effect from july 3, 1991 are goods and that they were neither 'actionable claims' nor 'securities' which are excluded from the definition of 'goods', under the cst act and kst act ; and that transfer thereof to another constituted sale of goods within the meaning of and for the purposes of the cst act and kst act, exigible to tax. the following observations of the supreme court are relevant :'the rep licences (and exam scrips) have their own value. they are bought and sold as such. the original licensee or the purchaser is not bound to import the goods permissible thereunder. he can simply sell it to another and that another to yet another person. in other words, these licenses/exam scrips have an inherent value of their own and are traded as such. they are treated and dealt with in the commercial world as merchandise, as goods. an rep license/exam scrip is neither a chose-in-action nor an actionable claim. it is also not in the nature of a title deed. it has a value of its own. it is by itself a property--and it is for this reason that it is freely bought and sold in the market. for all purposes and intents, it is goods. unrelated to the goods which can be imported on its basis, it commands a value and is traded as such. this is because, it enables its holder to import goods which he cannot do otherwise.18. the appellant contends that it has not 'sold' or, 'transferred' rep licenses/exam scrips. it is stated that under the agreements entered by it with export houses, the export houses are entitled to all export benefits (that is, rep licenses/exam scrips) and it is entitled to the benefit under section 80hhc of income-tax act and it merely gave effect to the said term of the agreement by issuing disclaimers in favour of the export house regarding the, rep licenses/exam scrips. it is pointed out that in pursuance of the agreements between the appellant and export houses and in view of the disclaimers, the rep licenses/exam scrips were directly issued to the export houses (in the names of the export houses), by the concerned licensing authority (joint controllers of exports/imports) of the states where the export houses are situated. according to the appellant, the question of a transfer or sale of rep licenses/exam scrip would arise only if the rep license/exam scrips had been issued in its name and if it had thereafter transferred them for consideration to anyone else.19. any transfer of property in 'goods' by one person to another for valuable consideration is a sale and any consideration received for such sale is 'sale price'. a transaction need not be referred to as 'sale' to be exigible to sales tax. if any agreement or arrangement between two parties results in transfer of goods from one to the other, there is a sale. the import and export policy provided that the exporter is entitled to rep licenses/exam scrips and that the exporter can transfer them to any one and enabled the transferee to import the goods permitted therein. the transfer of rep licenses/exam scrips does not require any endorsement of permission from the licensing authority. a transfer of rep licenses/exam scrips, which by themselves are goods, in the normal course would be by a sale invoice or letter confirming the transfer or agreement of sale coupled with delivery or by means of an endorsement of transfer on the rep license/exam scrip itself. but, it does not mean that a transfer cannot be effected by other means. any agreement or arrangement by which a person entitled to the rep license/exam scrip empowers and authorises another to receive the export benefit (rep license/exam scrip) directly from the licensing authority 'and undertakes to furnish the necessary disclaimer and the necessary documents to enable such other party to secure the rep license/exam scrip directly in his name, is also a transfer of the rep license/exam scrip. a transfer does not necessarily involve getting the rep licenses/exam scrips physically by the exporter and then transferring it to someone else. if 'a' is entitled to rep license/exam scrip under the import export policy, and by any stratagem or scheme, the rep licenses/exam scrip to which 'a' is entitled is made to be issued to 'b' or to vest in 'b', for a consideration paid by 'b' to 'a', the stratagem or scheme would itself be the agreement of sale or transfer, and the taxable event will occur, when, in pursuance of such agreement between a and b and the disclaimer issued by a, the rep license/exam scrip to which 'a' is entitled, is delivered to b, that is issued to b by the appropriate licensing authority. the act of disclaimer/renunciation for consideration, in the circumstances, is a transfer exigible to tax and the taxable event would be the issue of hep licenses/exam scrips to 'b'. to ascertain whether there is sale, the essence of the agreement between the two parties and the reality of the transaction in its entirety should be considered and not whether there is physical delivery by the seller to buyer or whether the transaction is referred to as 'sale'.20. the madras high court in p.s. apparels v. deputy commercial tax officer [1994] 94 stc 139, makes it clear that the transaction need not be termed as 'sale' or 'transfer' to be exigible to tax. in that case the assesses surrendered the rep licences to a bank for consideration. when the transaction was sought to be taxed, it was contended that there was no 'sale' or 'transfer'. repelling the said contention, the madras high court held :'mr. gangadharan, learned counsel appearing in w.p. no. 19467 of 1993, raised a plea that the authorities are seeking to levy sales tax also on the value or sum received by the petitioner therein on surrendering the licence in question to the specified or designated banks and the act of surrender cannot be treated as a transaction of sale attracting liability to sales tax. the learned additional government pleader (tax) submitted that if in any case it is substantiated that there was merely a surrender and no transfer or sale has really taken place such transactions may not be taxed by the assessing authorities. the submission on behalf of the petitioner, in our view, is based upon an imperfect claim on a coloured version of the nature of the transaction itself. the act of surrender is one where the licence granted is returned back to the grantor. in the context of surrender of rights generally it conveys an abdication or giving up of a right in favour of some one who also holds an interest in the very matter. the word 'surrender' is an anachronistic word for the identification or description of the action of the petitioner. it is not the case of the petitioner that the licence under consideration was returned to or handed over back to the grantor-department of the government of india but on the other hand the specific claim is that it has been delivered to the designated bank on receipt of valuable consideration therefor.'therefore the test is whether the export house could have received or obtained the rep licenses/exam scrips, but for the agreement and consequential disclaimer by the appellant. if the answer is that the export house would have received the rep licenses/exam scrips without any disclaimer or authority issued in its favour by the appellant, then there would be no transfer of sale by appellant. but, if the authority granted, and disclaimer issued, by the appellant is the basis for the export house getting the rep license/exam scrip directly in its name, then there is a transfer by the appellant in favour of the export house.21. a reading of the agreements between the appellant and export houses make it clear that the main object of the agreement is to transfer the export benefits (rep licenses/exam scrips) from the appellant to the export houses for a consideration. the following factors, that is, (a) the appellant was responsible for any claim for defective quality of goods exported, (b) that the appellant received the entire price for the exported goods, (c) that the bills of lading were in the joint names of the appellant and the export house, (d) that the relief under section 80hhc of the income-tax act accrued to the appellant and (e) that relief under section 80hhc could not have been availed of by the export house as it did not receive any part of the sale consideration, make it clear that but for the disclaimer by the appellant issued as per the agreements, the export benefits (rep licenses/exam scrips) would have been issued in the name of the appellant and not in the names of the export house. only the exporter is entitled to the rep licenses/exam scrips under the import-export policy. if the rep licences and exam scrips which became due on account of exports by the appellant, were issued in favour of the export house instead of the appellant, it is only in view of the terms of the agreement between appellant and the export house and consequential disclaimer by the appellant. therefore, renunciation or disclaimer of export benefits (rep licenses/exam scrips) by the appellant in favour of export houses amounts to a sale taxable under the act even though rep licenses/exam scrips were directly issued in the name of the export houses.22. it is alternatively contended that the transaction between appellant and the export house is in the nature of a barter or exchange ; that is, the export benefits to which appellant is entitled are exchanged for the income-tax benefits to which the export house is entitled. reliance is placed on the decision of a learned single judge of this court in steel authority of india ltd. v. assistant commissioner of commercial taxes ilr 1996 kar 1136, wherein it is held that a contract relating to goods can be considered as a contract of sale only if the consideration for transfer of property in goods in favour of the transferee is money ; and that if goods are agreed to be transferred for any other consideration like exchange with any other goods or services rendered, then in law, such a contract cannot be said to be a contract of sale of goods and therefore such a transaction cannot be subjected to sales tax. this contention is on the assumption that there is an exchange between the appellant and the export house, in respect of export benefits and income-tax benefits. but according to the respondents the consideration for transfer of rep licenses/exam scrips, is not the 'income-tax benefits', but payment of a percentage of the f.o.b. value by the exporter. a clear examination would show that contention of the revenue is correct. this is because, there is, in actual fact, no exchange of export benefits and income-tax benefits as the income-tax benefit would have anyhow accrued to the exporter (that is the appellant) and not to the export house having regard to the nature of transaction and the provisions of section 80hhc. secondly 'exchange' presuppose that the export house was entitled to some 'benefit' under the income-tax act which was real and not illusory, and if there was no exchange, the export house would have enjoyed such 'benefit'. let us therefore consider whether the export house would have or could have received any benefit at all under section 80hhc if there was no disclaimer thereof in favour of the appellant. the alleged benefit in question is the right to seek deduction of profits derived by the assessee from export of goods, in computing the total income of the assessee. in other words, the profit from export becomes tax-free. but, in this case, the export house did not get any part of the price, let alone any profit, in respect of the export. the price and profit of export is received by the appellant. therefore, even if there was no disclaimer by the export house in favour of the appellant, the said 80hhc benefit would have accrued only to the appellant and in no event to the export house.23. we therefore hold that transaction between the appellant and export houses, under which the export house obtains the rep licenses/exam scrips directly from the licensing authority, in pursuance of the disclaimer by appellant, amounts to a sale of rep licenses/exam scrips by the appellant to the export houses.re : point no. (ii) :24. the next question relates to identifying the consideration for the sale or transfer of rep licenses/exam scrips. it is seen from the agreement between the parties that the actual export is by the appellant and not by the export house. even the bill of lading is in the joint names of the appellant and the export house. the entire proceeds of exports are received by the appellant. in fact, the benefit of section 80hhc of the income-tax act accrues to the appellant in view of the fact that the entire proceeds of the export are received by the appellant. as no part of the proceeds of export is received by the export house, the export house could not have derived any benefit under section 80hhc. hence, the disclaimer by the export house in favour of the appellant in regard to income-tax benefit is illusory. it is not therefore possible to accept the contention of the appellant that the disclaimer regarding the benefit under section 80hhc of the income-tax act by the export house is the consideration for the appellant issuing disclaimer in regard to the export benefits (rep licenses/exam scrips). as already held (in para 22) the disclaimer by the export house in favour of the appellant in regard to the relief under section 80hhc of the income-tax act is only an empty red herring intended to deviate the attention from the real consideration.25. under the agreement/arrangement between the appellant and the export house, the appellant as exporter does not render any service to the export house. therefore, the question of the export house paying 2.4 per cent or any other percentage of the f.o.b. price to the appellant as service charge/ commission/premium/incentive does not arise. necessarily therefore the said payment is only a consideration for the transfer of export benefits (rep licenses/exam scrips). it is possible that the export benefits incidentally include the benefit of counting the export to the account of the export house, and thereby attain the minimum quantity of exports required to continue the recognition. thus, by process of exclusion, all that remains under the agreement is the act of transfer of the benefits of export (rep licenses/exam scrips) by the appellant in favour of the export house on the one hand and payment of a percentage of the f.o.b. price by the export house to the appellant on the other. the only inference therefore is that the said payment of a percentage of f.o.b. value by whatever name it is called, i.e., service charge, commission, premium or export incentive, is nothing but the consideration for transfer of the benefits of export, i.e., rep licenses/exam scrips.26. the contention that the appellant renders some service to the export house, in agreeing to treat the export to be counted as export by the export house and thus enable the export house to reach the export target so that their recognition as export house is continued, is without substance. if that is so, it would mean that the appellant is giving up the benefits of export (rep license/exam scrip), which is very valuable free of any cost. that is not what any prudent businessman would do. nor is it the case of the appellant that they gave up such benefit free of any change.re : point no. (iii) :27. the contention of the appellant is that even if it has to be held that there is a sale or transfer of export benefit, it took place in the course of the export transaction outside the territory of india and not in the course of inter-state trade or commerce, and therefore there is no liability to pay central sales tax. this contention is not sound. the subject-matter of sale or transfer which is being taxed is not the exported goods (marine products). the subject-matter of the sale is rep licenses/exam scrips. the sale or transfer of rep licenses/exam scrips took place in pursuance of the agreement between the appellant and the export house. as the goods (rep licenses/exam scrips) were not in existence at the time of the agreements, the transfer is completed only on delivery of the goods. in this case therefore, the taxable event is the issue of the rep licenses/exam scrips in favour of the export house by the licensing authority in pursuance of the agreement and the disclaimer by the appellant. thus, it cannot be said that the sale/transfer took place outside the territory of india.28. we do not find any error in the impugned revisional order dated january 22, 2000 passed by the commissioner of commercial taxes (karnataka). as all the points raised by appellant are answered against the appellant, it follows that there is no merit in these appeals. accordingly, these appeals are rejected.