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In the Coffee Board case (supra) the Coffee Board framed rules for sale of coffee to registered exporters. Only dealers who registered themselves as exporters of coffee with the Coffee Board and who held permits from the Chief Coffee Marketing Officer in that behalf were permitted to participate at the auction. After the bid the price would be paid in accordance with the conditions. One of the conditions called ,export guarantee' provided that it was an essential condition of the auction that the coffee sold thereat "shall be exported to the destination stipulated in the catelogue of lots, or to any other foreign country outside India as may be approved by the Chief Coffee Marketing Officer and that it shall not under any circumstances be diverted to another destination, sold, or be disposed or otherwise released in India". Another condition provided that "if the buyer fails or neglect to export the coffee within the prescribed time, he would be liable to pay a penally". Another condition provided that if the buyer made any default to export the coffee, it would be lawful for the Chief Coffee Marketing Officer without reference to the buyer to seize the unexported coffee and deal with the same as if it was part and parcel of the coffee held by the board in their Pool Stock. The Coffee Board contended that the auctions were in the course of export, because the sales themselves occasioned the export of coffee. The Revenue contended that the sales were not bound up with the export. This Court held that the phrase "sale in the course of export" authorised not only a sale and an actual export but that the sale must be a part and parcel of the export. The word "occasion" in the context of sale or purchase was held to mean to cause export or to be the immediate cause of export. The introduction of an intermediary between the seller and the importing buyer was held to break the link. There was one sale to the intermediary and another to the importer. The first sale was not in the course of export because the export began from the intermediary and ended with the importer. The ruling of this Court in the Coffee Board case (supra) is that there must be a single sale which itself causes the export and that there is no room for two or more sales in the course of export. Though the sales by the Coffee Board were sales for export, they were not sales in the course of export. They were two independent sales in the export programme. The first sale was a sale between the Coffee Board as seller to the export promoter. Then there was the sale by the export promoter to a foreign buyer. It was the second sale which was in the course of export since the second sale caused the movement of goods between an exporter and an importer. In the, Coffee Board case (supra) the rules compelling export meant compelling persons who bought on their own to export in their own turn by entering into another agreement for sale. An essential condition as to export of coffee purchased at the auction was held not to amount to turn the transaction into a sale in the course of export. The reason given was that if the registered exporter who was the bidder at the auction did not export he would commit a default of conditions No. 30 and 31 and be liable to penalty and seizure of the coffee.

In Coffee Board, Bangalore v. Joint Commercial Tax Officer, Madras & Anr.(2) this Court dealt with a case relating to the export of coffee. Export of coffee outside India was controlled under the Coffee Act, 1942, by the Coffee Board. Coffee especially screened and selected was sold to registered exporters at 'export auctions'. Permits were given to such registered exporters to participate at the auction. The Coffee Board prepared a set of rules which incorporated the terms and conditions of sale of coffee in the course of export. Under condition 26 of the Rules a registered dealer was to give an ,export guarantee' under which export would be made only to stipulated or approved destinations. The buyer at an export auction was free to export the coffee either by himself or through a forwarding agent, without selling the goods to the forwarding agent. Immediately after the export evidence of the shipping bad to be produced before the (1) [1966] 3 SCR 352.

(2) [1970] 3 SCR 147.

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Chief Marketing Officer. In case of default, according to conditions 30 and 31, the permit holder was liable to fine and the unexported coffee wits liable to be seized. The Coffee Board claimed that sales of coffee to registered exporters had been made in the course of export. It was held by the majority that the sales by the Coffee Board were sales for export and not in the course of export. Hidayatullah C.I. speaking for the majority in that case observed :

Mr. S. T. Desai on behalf of the respondents has laid great stress on the observations in the case of Coffee Board (supra), according to which there must be a single sale which causes the export and there is no room for two or more sales in the course of export. It is urged that it was the agreement of sale between STC and the foreign buyer which can be said to cause the export. The sale by theappellant to STC of the chrome concentrates was only for the purpose of export and as such was not exempt from payment of tax.Learned counsel further submits that once there are two contracts, one between the dealer and the intermediary and the other between the intermediary and the foreign buyer, the court 'need not took any further, for it would be only the contract between the intermediary and the foreign buyer which would occasion the export and not the other contract. I find it difficult to accede to the above submission of Mr. Desai. The observations in the case of Coffee Board (supra) that there was no room for two or more sales in the course of export were made in the context of two independent sales. Those observations cannot be invoked in a case like the present where the two sales are so interconnected as to be part of one integrated transaction. Hidayatullah CJ. speaking for the majority took full note of that aspect of the matter and it was in that context that lie observed "Here there are two independent sales involved in the export programme. The first is a sale between the Coffee Board as seller to the export promoter. Then there is the sale by the export promoter to a foreign buyer. Of the latter sale the Coffee Board does not have any inkling when the first sale takes place. The Coffee Board's sale is not in any way related to the second sale. Therefore, the first sale has no connection with the second sale which is in the course of export, that is to say, movement of goods between an exporter and an importer."