TaxTMI 
TaxTMI 
2019 (2) TMI 551
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....ntral Sales Tax Act, 1956 and the provision in section 5(2) of the said Act the Tribunal was legally justified in holding that the impugned bonded sales effected to parties situate in Maharashtra are exempt from tax as sales in the course of import under the second limb of section 5(2) of the Central Sales Tax Act, 1956 for the reasons of the said sales having been effected by transfer of the documents of title to the goods before crossing the customs frontiers of India?" 2. The facts and circumstances in which this question has been referred are as under:- 3. The appellant is a partnership firm, carrying on business as reseller and importer in HR/CR sheets, chashew, carnals import licence etc. The appellant's place of business was visited by the Sales Tax Officer, E-121, Enforcement Branch in 1997. The main purpose of the enforcement visit was to examine the validity of turnover of sales claimed as "high sea sales" exempt from tax under the second limb of section 5(2) of the Central Sales Tax Act, 1956 (CST Act). The enforcement authority, on verification of the relevant documents, found that the appellant's claim of high sea sales for the year 1995-96 and 1996-97 in....
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....and, the appellant, in support of its claim of high sea sales placed reliance on the Madras High Court judgment in the case of M/s. State Trading Corporation (12 STC 294) which was based on the Apex Court judgment in the case of M/s. Kiran Spinning (113 ELT 753). On interpretation of the definition of the term "crossing the customs frontiers of India" in section 2(ab) of the CST Act, the Madras High Court has unequivocally held that the bond sales do qualify as high sea sales. 6. On appeal to the Tribunal, it was held vide judgment dated 19th October, 2007 that this interpretation of section 2(ab) of the CST Act, as made by the Madras High Court is contrary to that made by this tribunal in the case of M/s. Sheventilal and Brothers (supra) and M/s. Indo Text Export Pvt. Ltd. (supra). However, it has to be noted that Madras High Court judgment in the case of M/s. State Trading Corporation of India (supra) is based on the Hon'ble Supreme Court's judgment. Further, when this tribunal interpreted the provisions of the CST Act, at that time, no judgment of the Hon'ble Supreme Court or High Court to interpret the said provision of the CST Act was available. The situation ha....
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....e not situated in the State. Some of the sales are out of Maharashtra and the same are allowed as exempt from tax solely for the reason that they qualify as high sea sales under section 5(2) of the CST Act. After referring to the judgments rendered by the Madras High Court and the Andhra Pradesh High Court, the tribunal opined that both these judgments express contrary views on the interpretation of the definition of the term "crossing the customs frontiers of India" defined in section 2(ab) of the CST Act. It may be that the Madras High Court's judgment was not available when the Andhra Pradesh High Court decided a similar case, but what the Madras High Court did was to follow a judgment of the Hon'ble Supreme Court rendered in the case of M/s. Kiran Spinning (supra). In the view of the tribunal, this judgment of the Hon'ble Supreme Court was not directly on the interpretation of the above term/words and appearing in the CST Act, but was on "crossing the customs barriers" for the purpose of taxable event under the Customs Act, 1962. Thus, whether these two expressions, namely, "crossing the customs frontiers of India" and "crossing the customs barriers" would, in the c....
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....ents of title to the goods have been transferred after removing the goods from port area for warehousing, by filing bill of entry for warehousing and assessment of duty under the Customs Act, 1962. Therefore, it cannot be said that a sale by transfer of documents of title to goods before crossing customs frontiers of India has taken place. 14. Mr. Sonpal submits that crossing of customs frontiers of India occurs when bill of entry is filed and duty assessed. He relies upon some provisions of the Customs Act and particularly sections 30, 46 and prior to them, section 17 and thereafter, section 47 and 68 of the said Act to submit that when the goods are imported by water, then, as soon as the vessel reaches an Indian port, the process of importation is complete. If the goods are carried by sea and the vessel reaches an Indian port, it is the movement or entry of the vessel which must be held to be the movement of importation of the goods. Hence, there cannot be said to be a sale in the course of import thereafter. Mr.Sonpal submits that in the present case, some events are relevant. From the documents furnished before the tribunal, it is evident that the agreement of high sea sale....
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....India Ltd. vs. Sales Tax Officer and Ors., (1998) 7 SCC 19. (xi) Narang Hotels and Resorts Pvt. Ltd. vs. State of Maharashtra and Ors., (2004) 135 STC 289. 16. For properly appreciating the rival contentions, one would have to make a brief reference to the relevant statutory provisions. Insofar as the BST Act is concerned, from its preamble, it would be evident that it is an Act to consolidate and amend the law relating to the levy of tax on the sale or purchase of certain goods and this Act extends to the whole of the State of Maharashtra. In section 2, certain definitions are set out and this section opens with the words "In this Act, unless the context otherwise requires". The word "dealer" means:- "(11) "dealer" means any person who whether for commission, remuneration or otherwise carries on the business of buying or selling goods in the State, and includes [16] the Central Government, or any State Government which carries on such business, and also any society, club or other association of persons which buys goods from or sells goods to its members; Exception I - An agriculturist who sells exclusively agricultural produce grown on land cultivated by him personally....
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....or by the principal or a nominee of the principal, shall, notwithstanding anything contained in clause (5A) or any other provisions of this Act, be deemed to be a dealer; (iii) a factor, broker, commission agent, del credere agent or any other mercantile agent, by whatever name called, who carries on the business of buying, selling, supplying or distributing goods belonging to any principal or principals whether disclosed or not, shall notwithstanding anything contained in clause (5A) or any other provisions of this Act, be deemed to be a dealer." 17. A bare perusal of this definition [section 2(11)] would indicate as to how any person, who, whether for commission, remuneration or otherwise carries on business of buying or selling goods in the State and includes the Central Government, or any State Government which carries on such business, and others are taken to be dealers. Then, the next definition and which could be relevant for our purpose is of the term/word "goods". That definition is to be found in section 2(13), which reads as under:- ""goods" means every kind of movable property (not being newspapers, or actionable claim or money, or stocks, shares or secur....
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....ion of the term "sale" denotes that it means sale of goods made within the State and for the purpose of section 2(28), the explanation which was added by the Maharashtra Act 24 of 1990 indicates that the sale within the State includes a sale determined to be inside the State in accordance with the principles formulated in sub-section (2) of section 4 of the CST Act and every disposal of goods referred to in the explanation to clause (11) of section 2 shall be deemed to be a sale. 20. The word "State" is defined in section 2(31) to mean the State of Maharashtra. The word "tax" is defined to mean a sales tax, purchase tax, turnover tax, surcharge or resale tax as the case may be, payable under the BST Act (see section 2(32). 21. Chapter II contains several provisions. Those are under the heading "Incidence and Levy of Tax". Section 3 appears thereunder and reads as under:- "S. 3. Incidence of tax. - (1) Every dealer whose turnover either or all sales or of all purchases, during - (i) the year ending on the 31st day of March 1981, (ii) the year commencing on the 1st day of April 1981 has exceeded or exceeds the relevant limit specified in subsection (4), shall unt....
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....ler, who is an importer, and the value of taxable goods sold or purchased by him during the year is not less than Rs. 10,000 and the value of any goods whether taxable or not brought by him into the State or despatched to him from outside the State during the year is not less then Rs. 25,000. Or (b) In the case of a dealer who is a manufacturer, and the value of taxable goods sold or purchased by him during the year is not less then Rs. 10,000 and the value of any goods whether taxable or not manufactured by him during the year is not less than Rs. 25,000. (ii) Limits of turnover Rs. 2,50,000 In case of dealer to whom clause (i) does not apply and who holds Liquor Vendor License in Form FLI, FL-II, FL-III or FL-IV (including temporary club licences) under the Bombay Foreign Liquor Rules, 1953 or License in Form E under the Special Permits and License Rules, 1952, or License in Form CL-II, CLIII or CL/FL/TOD/III under the Maharashtra Country Liquor Rules, 1973. (iii) Limits of turnover Rs. 5,00,000 In any case, including the case where a dealer has not become liable to pay tax under clause (i) , or, as the case may be, clause (ii), where the value of taxable goods ....
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....r purchase takes place in the course of inter-State trade or commerce or in the course of export or import or outside a State in order that the legislative spheres of Parliament and the State legislatures become clearly demarcated. We are not concerned with the goods of special importance in the course of inter-State trade or commerce. 25. It is stated that the legislation authorised by the Constitution, as amended above, is with a view to enable the State Governments to raise additional revenues by levying tax on inter-State transactions which are at present immune from tax under their respective sales tax laws. The Taxation Enquiry Commission was set up and based on its recommendations, and consultation with the States, the Government of India was of the view that certain principles should govern the scheme of the detailed legislation on the three inter-related subjects. They are:- "(i) The Central Government should authorise the State Governments to impose on behalf of the Central Government tax on the sale or purchase of goods in the course of inter-State trade or commerce. The Central legislation should also delegate to the States the Central Government's power to le....
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....gain or profit accrues from such trade, commerce, manufacture, adventure or concern; and (ii) any transaction in connection with or incidental or ancillary to, such trade, commerce, manufacture, adventure or concern; 2(ab) "crossing the customs frontiers of India" means crossing in the limits of the area of a customs station in which imported goods or export goods are ordinarily kept before clearance by customs authorities. Explanation. - for the purposes of this clause, "customs station" and "customs authorities" shall have the same meaning as in the Customs Act, 1962 (52 of 1962). 2(b) "dealer" means any person who carries on (whether regularly or otherwise) the business of buying, selling, supplying or disturbing goods, directly or indirectly, for cash or for deferred payment, or for commission remuneration or other valuable consideration, and includes - (i) a local authority, a body corporate, a company, any co-operative society or other society, club, firm, Hindu undivided family or other association of persons which carries on such business; (ii) a factor, broker, commission agent, del credere agent, or any other mercantile agent, by whatev....
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....fer of property in goods by one person to another for cash or deferred payment or for any other valuable consideration, and includes, - (i) a transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration; (ii) a transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract; (iii) a delivery of goods on hire-purchase or any system of payment by instalments; (iv) a transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; (v) a supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; (vi) a supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration, but does not include a mortgage or hypothecation of o....
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....o another. 4. When is a sale or purchase of goods said to take place outside a State. - (1) Subject to the provisions contained in section 3, when a sale or purchase of goods is determined in accordance with sub-section (2) to take place inside a State, such sale or purchase shall be deemed to have taken place outside all other States. (2) A sale or purchase of goods shall be deemed to take place inside a State, if the goods are within the State - (a) in the case of specific or ascertained goods, at the time the contract of sale is made; and (b) in the case of unascertained or future goods, at the time of their appropriation to the contract of sale by the seller or by the buyer, whether assent of the other party is prior or subsequent to such appropriation. Explanation. - Where there is a single contract of sale or purchase of goods situated at more places than one, the provisions of this sub-section shall apply as if there were separate contracts in respect of the goods at each of such places. 5. When is a sale or purchase of goods said to take place in the course of import or export. - (1) A sale or purchase of goods shall be deemed to take place in ....
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....contain the words "crossing the customs frontiers of India". What we should bear in mind is that a sale or purchase of goods shall be deemed to have taken place in the course of export of the goods out of the territory of India only if the sale or purchase either occasions such export or is effected by a transfer of document of title to the goods after the goods have crossed the customs frontiers of India. Similarly, a sale or purchase of goods shall be deemed to have taken place in the course of import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of document of title to the goods before the goods have crossed the customs frontiers of India. The important distinction between sub-sections (1) and (2) of section 5 is that the deeming fiction therein, in the case of a sale or purchase of goods in the course of the export of goods by a transfer of documents to title would be after the goods have crossed the customs frontiers of India and in the case of import, the transfer of documents of title to the goods should take place before the goods have crossed the customs frontiers of India. We have already re....
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....s import of goods and the goods become imported goods and become chargeable to duty up to the moment they are cleared for home consumption. The word "importer" has been defined in the Act as importer in relation to any goods at any time between their importation and the time when they are cleared for home consumption includes any owner or any person who holds himself out to be an importer. The word "smuggling", in relation to goods, means any act or omission which will render such goods liable to confiscation under Section 111 or Section 113 of the Act. ..... 22. In order to understand the true meaning of the term "imported goods" in the exemption notification, the entire scheme of the Act requires to be taken note of. As noted above, "imported goods" for the purpose of this Act is explained by a conjoint reading of Sections 2(25), 11, 111 and 112. Reading these sections together, it can be found that one of the primary purposes for prohibition of import referred to the latter is the prevention of smuggling [See Section 11(2) (c)]. Further, in the light of the objects of the Act and the basic skeletal framework that has been enumerated above, it is clear that one of the princ....
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....I (section 2), there are definitions. This section opens with the words "in this Act unless the context other requires". The word "bill of entry" is defined in section 2(4) to mean a bill of entry referred to in section 46. Then, the term "customs airport" is defined in section 2(10) to mean any airport appointed under clause (a) of section 7 to be a customs airport and includes a place appointed under clause (aa) of that section to be an air freight station. The other important definitions are of the words "customs area", "customs port", "customs station", "duty", "entry" and "import". The definition of the term "imported goods" is contained in section 2(25) to mean any goods brought into India from a place outside India but does not include goods which have been cleared for home consumption. 36. The above expressions would indicate as to how on their combined reading, the incidence of customs duty would fall on such goods as are imported into India from a place outside India. Now, by Chapter III, which provides for appointment of customs ports, airports etc. it is evident that the Board, namely, the Central Board of Customs and Excise, now known as the Central Board of Indirec....
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....person shall be liable to pay duty on such goods at the rate prevailing on the date of delivery of an arrival manifest or import manifest or, as the case may be, an import report to the proper officer under section 30 for the arrival of the conveyance in which the said goods were carried." 37. A perusal of section 45 leaves us in no manner of doubt that save as otherwise provided in any law for the time being in force, all imported goods unloaded in a customs area shall remain in the custody of such person as may be approved by the Principal Commissioner of Customs or Commissioner of Customs until they are cleared for home consumption or are warehoused or are transhipped in accordance with the provisions of Chapter VIII. By sub-section (2), the person having custody of any imported goods in a customs area has to discharge certain obligations and duties. By sub-section (3) of section 45, which is inserted by Act 22 of 1995, it is evident that this is a non-obstante clause. By this sub-section, the person in whose custody the goods are placed, he shall be liable to pay any duty on the goods which are pilferred after unloading thereof in a customs area while in the custody. 38. ....
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....if any, and such other documents relating to the imported goods as may be prescribed. (4A) The importer who presents a bill of entry shall ensure the following, namely:- (a) the accuracy and completeness of the information given therein; (b) the authenticity and validity of any document supporting it; and (c) compliance with the restriction or prohibition, if any, relating to the goods under this Act or under any other law for the time being in force. (5) If the proper officer is satisfied that the interests of revenue are not prejudicially affected and that there was no fraudulent intention, he may permit substitution of a bill of entry for home consumption for a bill of entry for warehousing or vice versa." 39. The marginal heading of section 46 is indicative of the fact that when the goods enter, then, the importer of the goods, other than goods intended for transit or transhipment shall make entry thereof by presenting electronically on the customs automated system to the proper officer a bill of entry for home consumption or warehousing in the prescribed form. Then, there are various sub-sections which indicate as to how the presentation of ....
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.... it is necessary in the public interest so to do, it may, by order for reasons to be recorded, waive the whole or part of any interest payable under this section." 41. Then, by section 48, there is a procedure in case of goods not cleared, warehoused or transhipped within thirty days after unloading. 42. Section 49 deals with goods stored pending clearance or removal. This section, before substitution by the Finance Act, 2017 and thereafter reads as under:- Before substitution - "49. Storage of imported goods in warehouse pending clearance. - Where in the case of any imported goods, whether dutiable or not, entered for home consumption, the Assistant Commissioner of Customs or Deputy Commissioner of Customs is satisfied on the application of the importer that the goods cannot be cleared within a reasonable time, the goods may, pending clearance, be permitted to be stored for a period not exceeding thirty days in a public warehouse, or in a private warehouse, if facilities for deposit in a public warehouse are not available; but such goods shall not be deemed to be warehoused goods for the purposes of this Act, and accordingly the provisions of Chapter IX shall not apply....
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....efined in section 2(26) to mean, in relation to any goods at any time between their importation and the time when they are cleared for home consumption, includes any owner, beneficial owner or any person holding himself out to be the importer. Thus, the term "imported goods" as defined would mean any goods brought into India from a place outside India. However, such goods cease to be imported goods once having cleared for home consumption. The "bill of entry" is defined in section 2(4) to mean a bill of entry referred to in section 46. 45. When we see this scheme in the light of the provisions contained in Chapter VI and particularly section 46 falling therein, it is evident that the filing of bill of entry means the importer of any goods, on importation, presenting this bill to the proper officer for home consumption or warehousing. If they have to be cleared for home consumption, then, the procedure under section 47 of the Customs Act, 1962 has to be followed and when they have to be warehoused after unloading, then, section 48 is the provision which has to be abided by the concerned persons. 46. When we refer to the Chapter title "Warehousing" (Chapter IX), that contains s....
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....han one year at a time: provided further that where such goods are likely to deteriorate, the period referred to in the first proviso may be reduced by the Principal Commissioner of Customs or Commissioner of Customs to such shorter period as he may deem fit. (2) Where any warehoused goods specified in clause (c) of sub-section (1) remain in a warehouse beyond a period of ninety days from the date on which the proper officer has made an order under sub-section (1) of section 60, interest shall be payable at such rate as may be fixed by the Central Government under section 47, on the amount of duty payable at the time of clearance of the goods, for the period from the expiry of the said ninety days till the date of payment of duty on the warehoused goods: Provided that if the Board considers it necessary so to do, in the public interest, it may, - (a) by order, and under the circumstances of an exceptional nature, to be specified in such order, waive the whole or any part of the interest payable under this section in respect of any warehoused goods; (b) by notification in the Official Gazette, specify the class of goods in respect of which no interest shal....
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....en made by the proper officer: Provided that the order referred to in clause (c) may also be made electronically through the customs automated system on the basis of risk evaluation through appropriate selection criteria: Provided further that the owner of any warehoused goods may, at any time before an order for clearance of goods for home consumption has been made in respect of such goods, relinquish his title to the goods upon payment of penalties that may be payable in respect of the goods and upon such relinquishment, he shall not be liable to pay duty thereon: Provided also that the owner of any such warehoused goods shall not be allowed to relinquish his title to such goods regarding which an offence appears to have been committed under this Act or any other law for the time being in force." 50. The importer of any warehoused goods may clear them for home consumption, if a bill of entry for that purpose has been presented in a prescribed form and the import duty leviable on such goods and penalties etc. in respect of such goods have been paid and an order for clearance of such goods for home consumption has been made by the proper officer. The second proviso to t....
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....g imported goods either by vessel or an aircraft and he has to deliver to the proper officer such a manifest. Then, by sections 31 and 32, it is clear that the imported goods cannot be unloaded from the vessel until entry inwards is granted or imported goods not to be unloaded unless mentioned in arrival manifest or import manifest or import report. The loading and unloading of goods can take place at appropriate place only and the goods cannot be loaded or unloaded except under the supervision of the customs officer (see sections 33 and 34 of the Customs Act, 1962). Then, there are other provisions in this Chapter and that conveyance which has brought the goods cannot be permitted to leave the customs station until a written order to that effect has been given by the proper officer. The clearance of imported goods and export goods is a matter dealt with by Chapter VII to which we have made extensive reference. Hence, when crossing the customs frontiers of India is a concept dealt with by the CST Act, then, the limits of the area of customs station in which the imported goods are ordinarily kept before clearance by the customs authorities is mentioned. That is for a limited purpose....
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....ct, by relying on the bill of lading which is a document of title to the goods, with the local customers. It is stated that the customers, which are local, on the basis of this bill of lading, prepared the bill of entry for home consumption and after completing the customs formalities and payment of customs duty, the goods were then cleared for home consumption. 55. Once on this factual position, the dealer claims the transaction to be effected by transfer of document of title to the goods before clearance from customs authorities, then, it is evident that in the light of the discussion in the forgoing paragraphs about the legal provisions, particularly of the Customs Act, 1962 and the BST Act, the second limb of sub-section (2) of section 5 of the CST Act is not attracted. 56. Mr. Tapare has relied upon the definitions of some relevant words and expressions appearing in the CST Act and the Customs Act, 1962. We need not advert to these legal provisions once again for we have discussed them in great detail. 57. Then, Mr. Tapare submitted that the goods which are stored in the bonded warehouse are still within the customs area. Once again, this argument is without any merit....
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....e goods are brought in clearance namely, when the imported goods are made free for home consumption. Till then, they are in custody and control of the customs authorities. Without following the procedure under the Customs Act, 1962, they cannot be lifted out. 59. In this regard, Mr. Tapare placed strong reliance upon the judgment of the Hon'ble Supreme Court in the case of M/s. Priyanka Overseas Pvt. Ltd. and Anr. vs. Union of India and Ors. AIR 1991 SC 583. There, the question before the Hon'ble Supreme Court arose in the typical factual background. The Government of India framed import policy for the years 1985-88 under which import of items under open general licence have been mentioned under Appendix 6 Entry No. 1. The Hon'ble Supreme Court was concerned with serial number 4 which fell in Appendix 5 part B. That dealt with petroleum products, oil, seeds etc. Then, the peculiar facts have been referred from para 4 onwards up to para 14. From para 15 onwards, the first part of the issue/controversy and contentions in relation thereto have been noticed. Thereafter, reliance was placed on section 68 of the Customs Act, 1962 and from paras 20 onwards, the contentions ....
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.... payable equivalent to the additional excise duty levied under that Ordinance. The goods, which were imported by the appellant were cleared from the bonded warehouse after 4th October, 1978 and that is why demand of additional duty was made relying on this Ordinance. The appellant before the Hon'ble Supreme Court paid that amount under protest, but thereafter, filed application for refund. After being unsuccessful before the authorities and the tribunal, appeals were filed in the Hon'ble Supreme Court. The argument there was that this duty would apply and take effect from 4th October, 1978. It being a new duty/levy, it would not be attracted on goods in fully manufactured condition and in stock with the manufacturer on the midnight of 3rd October, 1978 and 4th October, 1978. The contention was that at the time when the goods landed in India, additional duty of excise was not payable on similarly manufactured goods in India even if they were placed in a bonded warehouse in India and therefore, no additional duty could be charged under the Excise Act. This argument was expressly rejected by holding that the taxable event being the date of crossing the customs barriers and not....
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....the issue is very clear and that is that the Customs Act, 1962 imposes a duty on import. The goods which are described loosely as imported goods are now expressly defined and section 2(25) of the Customs Act, 1962 says that imported goods means any goods imported, but does not include goods which have been cleared for home consumption. The clearance for home consumption could be of also warehoused goods. True it is that the importer of any warehoused goods has cleared such goods prior to the amendment to sub-section (1), but from the unamended and amended sections, it is evident that the warehoused goods can also be cleared for home consumption. The bill of entry within the meaning of section 46 can be filed for both, home consumption or warehousing. It may be that the clearance of goods for home consumption by section 47 is independently possible. However, in the case of warehoused goods, a procedure for clearance after unloading is provided by section 48. Such goods, which are not cleared for home consumption or warehousing or transshipped within 30 days from the date of unloading thereof at a customs station, then, these goods can be cleared after following this procedure with t....
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....ustoms barrier until the duty is paid and the goods are brought out of the limits of the customs station. In the case of Kiran Spinning Mills (1999) 113 ELT 753, the apex Court has observed thus; "In other words, the taxable event occurs when the customs barrier is crossed. In the case of goods which are in the warehouse, the Customs barriers would be crossed when they are sought to be taken out of the customs and brought to the mass of goods in the country." 13. Until such time as the duty payable on those goods is not paid, the amount of duty payable being determined with reference to the rate at which the duty was levied as on the date of the removal of the goods from the warehouse, the goods cannot be regarded as having crossed the customs barrier of India. 14. Section 47 of the Customs Act refers to clearance of goodsfor home consumption, while Section 68 of the Act deals with clearance of warehoused goods for home consumption. In this case, the goods had been warehoused and the clearance for home consumption was made under Section 68, after the title to the goods had been transferred to the buyers. The duty was paid by the buyers. 15. The Tribunal has in its....
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.... case of State of Madras vs. Davar and Co. (supra). In this judgment, the Hon'ble Supreme Court made the distinction very clear. Paragraphs 10 to 14 of this judgment are relevant. They read as under:- "10. We are of the view that the judgment of the Madras High Court cannot be sustained and the, expression 'customs frontiers' in Section 5 of the Central Act cannot be construed to mean 'customs barriers'. Article 286(1) places a ban on the State imposing or authorising the imposition of a tax on the sale or purchase of goods where such sale or purchase takes place outside the State or in the course of import of goods into or export of goods out of the territory of India. Clause (2) of Article 286 gives power to the Parliament, by law, to formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in clause (1). Accordingly Parliament has enacted the Central Act. Section 5 of that Act lays down the conditions under which a sale or purchase of goods can be said to take place in the course of import or export. Sub-sections (1) and (2) deal with sale or purchase of goods in the course of export and sale or purchas....
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....xtend into the sea to a distance of six nautical miles measured from the appropriate base line." RAJENDRA PRASAD, President." On September 30, 1967 another Proclamation was issued by the President of India and published with the notification of the Government of India in the Ministry of External Affairs, No. F.L/lll(1)/67, dated September 30, 1967. By this Proclamation the 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. 13. 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 in this notification, as it has been superseded....
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..... vs. State of Madras AIR 1986 SC 1760 the Hon'ble Supreme Court noticed the position prior to this Amendment Act and later on as under:- "34. It may be mentioned that there was an amendment in 1976 of the Central Sales Tax Act, 1956 by Act 3 of 1976. By that provision, the following was inserted in section of the Central Sales Tax Act, 1956: "(ab) "crossing the customs frontiers of India" meant crossing the limits of the area of a customs station in which imported goods or export goods are ordinarily kept before clearance by customs authorities. Explanation-For the purposes of this clause, "customs station" and "customs authorities", shall have the same meanings as in the Customs Act, 1962." 35. Mr. Desai sought to urge that this was declaratory and was valid for all the relevant years. Whether a law is a declaratory or not, depends upon the Act and the language used. There was nothing in the Act or object of the Act which stated that it was further to amend the Central Sales Tax Act, 1956 that it was declaratory and not prospective in nature. Our attention was drawn to certain decisions, whether an Act is retrospective and declaratory in operation or p....
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....Minerals and Metals Trading Corporation of India Ltd. vs. Sales Tax Officer and Ors AIR 1999 SC 121 is clear. There, the bill of lading representing the title document was transferred while the consignment was still upon high seas. That is how the sale was taken to be in the course of import and outside the local tax. However, the discussion in this judgment is extremely relevant for our purpose. We reproduce paras 5 to 11 from this judgment as under:- "5. The appellant filed writ petitions in the High Court of Orissa challenging the levy of sales tax on the aforesaid sales. The High Court noted the argument that the aforesaid sales on high seas basis had been effected prior to the imported goods "crossing the customs frontier of India", which expression was defined in Section 2 (ab) of the Central Sales Tax Act by an amendment which had taken place prior to the aforesaid sales. The High Court, however, relying upon the judgment of the Karnataka High Court in the case of cashew Corporation of India v. State of Karnataka, (1986) 63 STC 90, held that the appellant was liable to sales tax and dismissed the writ petitions. 6. By reason of the provisions of Article 286 (1)(b) no l....
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....s have crossed the limits of the area of the customs station in which they are kept before clearance by the customs authorities. 8. The judgment of a Constitution Bench of this Court in J. V. Gokal and Co. (Private) Ltd. v. The Assistant Collector of Sales Tax (Inspection) and Ors., 1960(2) SCR 852, has set out the legal position of import sales thus: "The legal position vis-a-vis the import-sale can be summarized thus: (1) The course of import of goods starts at a point when the goods cross the customs barrier of the foreign country and ends at a point in the importing country after the goods cross the customs barrier, (2) the sale which occasions the import is a sale in the course of import; (3) a purchase by an importer of goods when they are on the high seas by payment against shipping documents is also a purchase in the course of import and (4) a sale by an importer of goods, after the property in the goods passed to him either after the receipt of the documents of title against payment or otherwise, to a third party by a similar process is also a sale in the course of import." The judgment states that it is well settled in th....
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.... Commission recommending amendment to Section 2 of CST to get over the difficulty to actually ascertain the point of time when a ship crosses the territorial waters of India. We have already referred to Section 5(2) read with Section 2(ab). The goods will cross the limit of the area of the customs station only on clearance by the customs authorities. Clearance by the customs authorities will be after filing the bill of entry and after the assessment of duty under Section 38 of the Act. Before the assessment of the duty the goods kept in the customs port cannot cross the limits of the customs port. Therefore irrespective of the fact whether duty is paid or not, when once the bill of entry is filed and the imported duty is assessed, then only the goods can cross the limits of the customs port, therefore, any transfer of documents of title before the clearance of the goods by the customs authorities on making the assessment of goods would amount to a sale in the course of import, as after the assessment is made and on filing of the bill of entry the goods get mingled with the general mass of goods and merchandise of the country. The goods get the eligibility to be declared as local....