TaxTMI 
TaxTMI 
1969 (5) TMI 47
X X X X Extracts X X X X
X X X X Extracts X X X X
....by the State of Madras, are directed against the common judgment dated July 17, 1963, of the Madras High Court. The short question, that arises for consideration in these appeals, is as to whether the turnover, which was the subject of consideration by the High Court, was liable for sales tax under the Madras General Sales Tax Act, 1959 (1 of 1959) (hereinafter called the Madras Act). The assessees claimed that the turnover in question represented sales in the course of import and, as such, not liable to tax under the Madras Act. The State of Madras claimed that in all these cases the sales had been effected by a transfer of documents of title to the respective buyers after the ships had crossed the territorial waters and hence they were l....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ourse of import and that such sales were not liable to tax as they were covered by Article 286(1)(b) of the Constitution. This claim was based on the following circumstances. The respondent- assessee entered into contracts for sale of timber with a firm of merchants called Velu and Brothers (hereinafter called the buyers). The timber was to be imported from Burma. Under the contract the buyers were to pay the assessee 8 per cent. profit on the C.I.F. value of timber sold and also the sales tax and other charges and expenses. The buyers were to retire the shipping documents at least 10 days before the expected arrival of the steamer carrying the timber. The assessee imported two consignments of timber from Rangoon. The value of the first co....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the course of import. The Appellate Tribunal took the view that the sale by the assessee to the buyers had been effected by transferring the documents of title relating to the goods before the goods crossed the customs barrier and before the import became complete. Therefore, according to the Tribunal, the sales should be treated as being in the course of import and, in consequence, not liable for tax under the Madras Act. On the facts stated above, the parties were not in dispute; but, before the High Court, the State raised the contention that the sales in question were not sales in the course of import as the documents of title were handed over by the assessee to the buyers after the ship had crossed the "territorial waters". According....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... this view the High Court held that as the sale had been effected by transfer of title to the goods before they entered the customs barrier, the sale was not liable to tax under the Madras Act. On behalf of the appellant-State, Mr. A.K. Sen, learned counsel, urged that the view of the Madras High Court construing the words "customs frontiers" as "customs barriers" in the Central Act was erroneous. According to the learned counsel, on the admitted facts the sales in all these cases had been effected by transfer of the documents of title long after the sales had ceased to be in the course of import. This contention, on behalf of the State, was resisted by Mr. Thiagarajan and Mr. K. Jayaram, appearing for the respondent in Civil Appeals Nos. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rs of India." In this case, the claim made by the assessee for exemption from tax liability is on the ground that the sale was effected by transfer to the buyer of documents of title to the goods. Under section 5(2) of the Central Act, in order to treat the sale as one in the course of import, the documents of title must have been transferred before the goods have crossed the customs frontiers of India. The question is what does the expression "customs frontiers" of India, in section 5 of the Central Act, mean? To answer this question, it is necessary to refer to certain Proclamations made by the President of India and notifications issued by the Central Government under section 3-A of the Sea Customs Act, 1878 (8 of 1878) (hereinafter cal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....earlier Proclamation of March 22, 1956, has been superseded and the territorial waters of India have been declared to extend into the sea to a distance of twelve nautical miles measured from the appropriate base line. But in the present appeals, we are concerned only with the earlier Proclamation dated March 22, 1956. Section 3-A of the Act gives power to the Central Government, to define, by notification in the Official Gazette, the "customs frontiers" of India. By virtue of the powers conferred by this section, the Central Government (Ministry of Finance, Revenue Division) had issued a Notification No. 25-Customs, dated April 1, 1950, defining the "customs frontiers" of India; but it is not necessary to consider the definition contained ....