Tax on Sales of Ship-stores for Foreign Vessels Upheld by High Court

The High Court held that the sales of ship-stores procured from foreign countries and delivered to vessels bound for foreign destinations were exigible to tax under the Andhra Pradesh General Sales Tax Act, 1957. The court determined that the sales did not qualify as sales in the course of import or export of goods out of the territory of India, as they took place within the state and did not have a foreign destination for import or export. Therefore, the petitioners' claim for exemption from tax was dismissed, and the tax on the sales of ship-stores was upheld.

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Issues:
1. Whether the sales of ship-stores procured from foreign countries and delivered to vessels bound for foreign destinations are exigible to tax under the Andhra Pradesh General Sales Tax Act, 1957.
2. Whether the sales in question took place in the course of import or export of the goods out of the territory of India.

Analysis:
1. The petitioners claimed exemption on sales of ship-stores totaling Rs. 72,061.69, arguing that these sales were not exigible to tax under the Andhra Pradesh General Sales Tax Act, 1957, as they were sales outside the state. The Deputy Commercial Tax Officer initially held that the transactions were taxable as the goods were within the state at the time of sale. On appeal, the Assistant Commissioner disagreed, stating that since customs duty was never levied on the goods intended for supply as ship-stores, they must be deemed to have been imported into Andhra Pradesh. The Deputy Commissioner, on further revision, set aside the Assistant Commissioner's order and restored the tax. The Sales Tax Appellate Tribunal also dismissed the appeal, concluding that the sales were not in the course of import. The High Court upheld these decisions, stating that the sales took place within the state and were thus not exempt from tax.

2. The second contention raised was whether the sales took place in the course of import or export of goods out of the territory of India. The argument presented was that the goods were imported from outside India, stored in bonded warehouses, and subsequently exported, thus not exigible to tax. Citing precedents, the High Court rejected this argument. Referring to the Supreme Court decisions in similar cases, it was established that for a sale to be considered in the course of export, the goods must have a foreign destination where they can be received as imports. The court emphasized that the intention for the goods to be consumed during the voyage did not establish a foreign destination for the goods. Therefore, the sales in question did not meet the criteria for being exempt from tax under the Andhra Pradesh General Sales Tax Act, 1957.

In conclusion, the High Court dismissed the tax revision case, upholding that the sales of ship-stores were exigible to tax under the Andhra Pradesh General Sales Tax Act, 1957, as they took place within the state and did not qualify as sales in the course of import or export of goods out of the territory of India.

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