Territorial waters form part of State territory for sales tax jurisdiction, so goods there remain within taxing reach.

Territorial waters adjoining a coastal State were treated as part of that State's territory for sales tax purposes, so goods located in those waters were not outside State taxing jurisdiction merely because they lay beyond the landward boundary. The jurisdictional objection was rejected on constitutional and international law principles, together with prior authority on the reach of sales tax in coastal and maritime areas. The writ petition did not determine the underlying tax liability, and the petitioner was left to pursue the statutory remedy before the assessing authority.

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Issues: Whether territorial waters fall within the territory of the State for the purposes of sales tax jurisdiction.

Analysis: The Court held that territorial waters are appurtenant to the land and form part of the State territory for sales tax purposes. Relying on constitutional and international law principles, and earlier decisions on the reach of sales tax within coastal and maritime areas, the Court concluded that goods located in the territorial waters adjoining Karnataka could not be treated as lying outside the State merely because they were beyond the landward boundary.

Conclusion: The jurisdictional objection based on territorial waters was rejected and the State was held competent to proceed in relation to goods within such waters.

Final Conclusion: The writ petition did not result in a substantive adjudication on the tax liability itself and the petitioner was left to pursue the statutory remedy before the assessing authority.

Ratio Decidendi: Territorial waters adjoining a coastal State are part of that State's territory for sales tax purposes, and the mere fact that goods are situated there does not oust the State's taxing jurisdiction.

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