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The Constitution Bench of this Court in the recent decision in Mohd. Serajuddin etc. v. State of Orissa(1) held that manganese merchants who bought manganese from mines and thereafter sold the goods to the State Trading Corporation for short the S.T.C. could not be said on the terms and conditions of the contracts in that case to be exporters of the goods. The S.T.C. contracts with the manganese merchants and the S.T.C. contracts with the For- eign Buyers were held not to be integrated activities in the course of export. The crucial words in section 5 of the Central Sales Tax Act 1956 are that a sale or purchase of goods shall be deemed to take place 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. This Court found that the contracts between the manganese merchants and the S.T.C. on the one hand and the contracts between the S.T.C. and their foreign buyers on the other were two separate and independent con- tracts of sale. The S.T.C. entered into direct contract with their foreign buyers. The S.T.C. alone agreed to sell the goods to their foreign buyers. The S.T.C. was the exporter of goods. There was no privity of contract between the manganese merchants and the foreign buyers from the S.T.C. The privity of contract was between the S.T.C. and the foreign buyers. The immediate cause of the movement of goods and export was the contract between the foreign buyers who were the importers and the S.T.C. who was the exporter and shipper of the goods.

Counsel for the State submitted that there were six contracts and it has been the case of the appellants that the contracts were different, and, therefore, there should be examination of five other contracts. It may be stated here that counsel for the State did not dispute that the decision in Serajuddin's case (supra) applied to one of the six contracts but he disputed the application of the ruling in Serajuddin's case to the other five contracts. The reasons given by counsel for the State are these. Only one contract was referred to in the High Court. The case of the appellants has all along been that the Sales Tax Appel- late authorities considered only one contract. The High Court also considered only one contract. In the special leave petition the appellants assailed the assumption made by the High Court to the effect that all contracts between the appellants and the M.M.T.C. were similar. (1) [1975] Supp. S.C.R. 169. (2) [1970] 3 S.C.R. 147. (3) [1974] 1 S.C.C. 459.

Counsel for the State put in the forefront the conten- tion that the M.M.T.C. could not be the last purchaser of goods within the State of Andhra Pradesh because property in the goods passed from the appellants to the M.M.T.C. on board the ship. In aid of that contention reliance was placed on F.O.B. character of the contract between the appellant and the M.M.T.C. The position is identical in all the six contracts.

This Court in Serajuddin's case (supra) pointed out that mention of F.O.B. price in the contracts between the manga- nese merchants and the S.T.C. did not render these contracts F.O.B. contracts with the foreign buyers from the S.T.C. The reason is simple. The contracts between the S.T.C. and the foreign buyers are different contracts and it is the S.T.C. which entered into independent contracts with their foreign buyers on F.O.B. basis. Under the contracts between the manganese merchants and the S.T.C. the merchants were required to bring the goods F.O.B. to the ship named by the S.T.C. It has to be appreciated that quite often merchants dealing in goods which are exported out of our country enter into what is called string contracts for purchase of the goods from the factory or the mines for sale to exporters for sale to foreign buyers. The Trading Corporations are often the only authorities allowed to export out of our country. These Corporations enter into direct contracts with their foreign buyers for export. The directions given by the Corporations to the merchants to place the goods on board the ship are pursuant to the contracts of sale between the merchants and the Corporation. These directions are not in the course of export, because the export sale is an independent one between the Corporation and their foreign buyers. The taking of the goods from the merchants' place to the ship is completely separate from the transit pursuant to the export sale (See Serajuddin's case at pp. 184-185). In string contracts or chain contracts delivery is made by the original seller and eo instanti it is delivered in implement under each separate contract in the chain. In chain or string contracts starting between the mills or mines or factories and their immediate buyer and ending with the ultimate buyer through several intermediaries not only does the mill give and its immediate buyer take actual delivery but eo instanti each middleman gives and takes actual delivery This process of delivery of possession goes all along the chain at the same moment when delivery is made to the steamer. See Duni Chand Rataria v. Bhuwalka Brothers Ltd.(1).

This Court in Serajuddin's Case '(supra) has laid down that the mere mention of F.O.B. price or F.O.B. delivery in contract between a merchant and the S.T.C. which .exports the goods under a separate contract with the foreign buyer to the latter will not make the two contracts either inte- grated or the contract between the merchant and the S.T.C. an F.O.B. contract. There cannot be two last purchasers in the sale of same goods within the same State. Similarly, there cannot be two exporters in respect of the same goods. After the decision of the Constitution Bench in Serajuddin's case (supra) the decision in National Tractors Hubli v. Commissioner of Commercial Taxes Bangalore(1) is no longer good law.