Exclusive economic zone sales and jurisdictional tax limits under the Central Sales Tax Act

A sale moving goods from Gujarat to Bombay High in the exclusive economic zone was not an inter-State sale under the Central Sales Tax Act because the offshore area is outside a State, and the Act had not been extended there by notification. In the absence of such extension, the tax demand lacked jurisdictional basis and was unsustainable. The availability of an appellate remedy did not bar writ jurisdiction where the assessment was challenged as wholly without jurisdiction, so direct writ relief was maintainable and the alternative-remedy objection failed.

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Issues: (i) Whether the sale of goods moved from Gujarat to Bombay High in the exclusive economic zone was exigible to tax under the Central Sales Tax Act in the absence of any notification extending that Act to the relevant area; (ii) Whether the writ petition could be entertained notwithstanding the availability of an appellate remedy, the assessment being challenged as wholly without jurisdiction.

Issue (i): Whether the sale of goods moved from Gujarat to Bombay High in the exclusive economic zone was exigible to tax under the Central Sales Tax Act in the absence of any notification extending that Act to the relevant area.

Analysis: Article 1 of the Constitution confines the territory of India to the States, Union territories, and other territories acquired. The Maritime Zones Act confers only limited sovereign rights over the exclusive economic zone and permits extension of enactments to that area only by notification. The Central Sales Tax Act had not been so extended. On the admitted facts, the goods moved from Hazira to Bombay High, which is not part of any State, and therefore the movement could not be treated as movement from one State to another within section 3 of the Central Sales Tax Act. In the absence of a notification extending the Act to the relevant offshore area, the demand under the Central Sales Tax Act lacked jurisdictional foundation.

Conclusion: The levy under the Central Sales Tax Act was not sustainable, and the issue was answered in favour of the assessee.

Issue (ii): Whether the writ petition could be entertained notwithstanding the availability of an appellate remedy, the assessment being challenged as wholly without jurisdiction.

Analysis: The existence of an alternative remedy does not bar writ jurisdiction where the impugned action is without jurisdiction. Since the assessment was attacked on the ground that the taxing authority lacked power to levy the tax at all on the stated facts, the matter fell within the recognised exception to the rule of alternative remedy.

Conclusion: The writ petition was maintainable and the objection based on alternative remedy failed.

Final Conclusion: The assessment order was quashed because the transaction was outside the reach of the Central Sales Tax Act on the facts found, and the High Court properly exercised writ jurisdiction despite the statutory appeal remedy.

Ratio Decidendi: A sale occasioning movement of goods to the exclusive economic zone is not an inter-State sale under section 3 of the Central Sales Tax Act unless the Act has been validly extended to that area by notification; an assessment made without such jurisdictional basis can be challenged directly in writ proceedings.

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