Transferable import licences as goods under sales tax law upheld, with purchase tax and penalty consequences sustained.

Section 13AA of the Bombay Sales Tax Act, 1959 was treated as constitutionally valid in light of the later Supreme Court ruling sustaining the substituted provision, so the challenge to its validity failed. Special Import Licences were held to be transferable import licences with intrinsic market value and therefore goods falling within the relevant statutory entry, making purchase tax leviable when they were bought and used for imports and not resold. As the substantive tax liability was upheld, the accompanying penalty and interest were also sustained. The writ petitions consequently failed and the tax demand, with ancillary levies, stood confirmed.

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Issues: (i) Whether section 13AA of the Bombay Sales Tax Act, 1959 was unconstitutional and void. (ii) Whether Special Import Licences were goods and import licences within section 2(13) and entry 26 of Schedule C, Part I of the Bombay Sales Tax Act, 1959 so as to attract purchase tax under section 13AA. (iii) Whether penalty and interest levied under the Act were sustainable.

Issue (i): Whether section 13AA of the Bombay Sales Tax Act, 1959 was unconstitutional and void.

Analysis: The challenge to section 13AA was already concluded by the Supreme Court decision upholding the validity of the substituted provision. The prior declaration that the original provision was beyond legislative competence had been displaced by the later ruling sustaining the amended section and treating the earlier contrary view as not stating the correct law. The constitutional attack on section 13AA therefore could not survive.

Conclusion: The challenge to the constitutional validity of section 13AA was rejected and is against the assessee.

Issue (ii): Whether Special Import Licences were goods and import licences within section 2(13) and entry 26 of Schedule C, Part I of the Bombay Sales Tax Act, 1959 so as to attract purchase tax under section 13AA.

Analysis: Transferable licences having intrinsic market value are goods for sales tax purposes. The settled principle was that import-related transferable licences are commercial commodities, are freely bought and sold, and are not actionable claims. Special Import Licences were treated as part of the same class of transferable import licences, and the statutory entry covering import licences was construed to include them. The explanation inserted to the entry removed any doubt, and the Finance Minister's speech could not override the plain statutory coverage. Since the licences were purchased and used for imports, and were not resold, the conditions for purchase tax under section 13AA were satisfied.

Conclusion: Special Import Licences were goods and import licences covered by the relevant entry, and purchase tax under section 13AA was leviable, against the assessee.

Issue (iii): Whether penalty and interest levied under the Act were sustainable.

Analysis: The levy arose in a period after the Supreme Court had upheld the validity of the provision. In that situation, the assessee could not successfully contend that the levy of penalty and interest lacked jurisdiction. Once the substantive tax liability was upheld, the ancillary consequences also followed.

Conclusion: The levy of penalty and interest was sustained, against the assessee.

Final Conclusion: The writ petitions failed in full, the tax demand was upheld, and the ancillary levy of penalty and interest also stood sustained.

Ratio Decidendi: Transferable import licences having intrinsic market value are goods for sales tax purposes, and when the statute specifically includes them, their purchase and use for import can attract purchase tax; a later constitutional validation of the charging provision also sustains consequential penalty and interest.

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