TaxTMI 
TaxTMI 
2019 (2) TMI 551
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....n 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 the context of the sales of the goods while bein....
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....ea 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 has undergone a material change. Now, the Madras High Cou....
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....ashtra 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 context of two different taxing statutes, convey the same meanin....
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....oods 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 was entered into before the ship arrived at the port and therefore, wh....
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..... 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, shall not be deemed to be a dealer within the meaning of this clause; Exception II - An educational ....
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.... 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 securities), and includes growing crops, grass, and trees and plants (including the produce thereof) and all other things attached to or forming part of the land which are agreed to be served before sale or under the contra....
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....nside 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 until such liability ceases under sub-section (3), be liable to pay tax under this Act on his turnover of sales, and on his turnover of purchases, made, on or after the notified day: Provided that, a dealer to whom sub-clause (i) does not apply but sub-clause (ii) applies and....
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....00. 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 sold or purchased by the dealer during the year is not less than Rs. 10,000. (5) For the purpose of calculating the limit of turnover for liability to tax. - (a) except as otherwise expressly provided, the turnover of all sales or as the case may be, the turnover of all purchase....
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....r 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 levy and collect the tax and for this purpose prescribe the same system of registration, assessment, etc., as prevails in the States concerned under their own sales tax system. (ii) an important aspect of the Central legislation will be concerned with the definition of the locale of sales for the purpose of defining in detail the....
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....ly 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 whatever name called, and whether of the same description as hereinbefore mentioned or not, who carries on the business of buying, selling, supplying or distributing, goods belonging to any principal whether disclosed or not; and (iii) an auctioneer who carries on the business of selling or auctioning goods belonging to any principal, whether disclosed or not and whether the offer of the intending purchaser is....
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....ayment 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 or a charge or pledge on goods." 29. The term "sales tax law" is defined in section 2(i) to read as under:- "2(i) "sales tax law" means any law for the time being in force in any State or part thereof which provides for the levy of taxes on the sale or purchase of goods generally or on any specified goods expressly mentioned in that behalf and includes value added tax law, and "general sales tax law" means any law for the time being in force in any State or part thereof which provides for the levy of tax on ....
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....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 the course of the 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 documents of title to the goods after the goods have crossed the customs frontiers of India. (2) A sale or purchase of goods shall be deemed to take place in the course of the 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 documents of title to the goods before the goods have crossed the customs frontiers of Indi....
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....se 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 reproduced the definition of the term "crossing the customs frontiers of India" and that definition has come in by an amendment to this section 2. That amendment was inserted by the Amendment Act 103 of 1976. Thus, when crossing in the limits of the area of a customs station in which imported or export goods are ordinarily kept before clearance by customs authorities would denote crossing the customs frontiers of India. 32. To understand this concept, some provisions of the Customs Act, 1962 would have to be referred to. The Customs Act, 1962 is an Act to consolidate and....
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....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 principal functions of the Act is to curb the ills of smuggling on the economy. In the light of these findings, it would be antithetical to consider that "smuggled goods" could be read within the definition of "imported goods" for the purpose of the act. In the same light, it would be contrary to the purpose of exemption notifications to accord the benefit meant for imported goods on smuggled goods." 33. From a perusal of the Chapters into which this Act is divided, it is evident that Chapter I is containing preliminary provisions. Chapter II is titled as "officers of Customs", whereas....
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....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 Indirect Taxes and Customs constituted under the Central Boards of Revenue Act, 1963 notifies in the Official Gazette the ports and airports which alone shall be customs ports or customs airports for unloading of imported goods and loading of export goods or any class of such goods. The Board can also notify the places which alone shall be inland container depots or air freight stations for unloading of imported goods and loading of export goods or any class of such goods. As we have referred above, there is a separate Chapter in the Customs Act, titled as "Warehousing" (Chapter IX). Now, it is e....
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....leared 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. Section 46 of the Customs Act, 1962 reads as under:- "46. Entry of goods on importation. - (1) The importer of any 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 such form and manner as may be prescribed: Provided that the Principal Commissioner of Customs or Commissioner of Customs may, in cases where it is not feasible to make entry by presenting electronically, on the customs automated system allow an entry to be presented in any oth....
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....f 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 the bill of entry would result in certain consequences and particularly for protecting the interest of the Revenue. 40. Section 47 provides for clearance of goods for home consumption and that reads as under:- "47. Clearance of goods for home consumption. - (1) Where the proper officer is satisfied that any goods entered for home consumption are not prohibited goods and the importer has paid the import duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance of the goods for home consumption: Provided that such order may also be made electronically through th....
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....ssioner 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 to such goods: Provided that the Principal Commissioner of Customs or Commissioner of Customs may extend the period of storage for a further period not exceeding thirty days at a time. After substitution - 49. Storage of imported goods in warehouse pending clearance or removal. - Where - (a) 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; (b) in the case of any imported dutiable goods, entered for warehousing, the Assistant Commissioner of Customs or Deputy Commissioner of Cus....
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....f 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 sections 57 to 73A. A combined reading of these sections would indicate as to how there are public warehouses, private warehouses and special warehouses for all of which, licences can be issued. By section 59, a warehousing bond is provided and section 60 provides permission for removal of goods for deposit in warehouse. Section 61 sets out the period for which goods may remain warehoused and section 64 preserves the owner's rights to deal with the warehoused goods. Sections 60 and 61 read as under:- "60. Permission for removal of goods for deposit in warehouse. - (1) When the provisions of section 59 have been complied with in respect of any goods, the proper officer may make an order permitting removal of the goods from a cust....
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....d 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 shall be charged under this section; (c) by notification in the Official Gazette, specify the class of goods in respect of which the interest shall be chargeable from the date on which the proper officer has made an order under sub-section (1) of section 60. Explanation. - For the purpose of this section, - (i) "electronic hardware technology park unit" means a unit established under the Electronic Hardware Technology Park Scheme notified by the Government of India. (ii) "hundred per cent export oriented undertaking" has the same meaning as in clause (ii) of Explanation 2 to sub-section (1) of section 3 of the Central Excise Act, 1944 (1 of 1944); and (iii) "software technology park unit" means a unit established under the Software Technology Park Scheme notified by the Governmen....
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....d 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 this section will reveal as to how 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. 51. By section 71, it is categorically stated that goods not to be taken out of warehouse except as provided by this Act. 52. Thus, the import is complete on compliance of the above noted provisions of the Customs Act, 1962 and therefore, that expression for the purposes of the BST and the CST Act has to be understood accordingly. 53. If the CST Act is now referred in the context of the above provisions, it is evident that Chapter II thereof formulates the principles for determining ....
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.... 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. Once the imported goods unloaded in a customs area have to remain in the custody of the customs authorities until they are cleared for home consumption or are warehoused, then, presenting a bill of entry for home consumption or warehousing denotes that such goods which are imported have been cleared. The importation in that sense and as understood by the Customs Act, 1962 is complete. The goods themselves cease to be imported goods when they have been cleared for home consumption. The clearance of goods for home consumption is dealt with by section 47 of the Customs Act, 1962, but storage of imported goods in warehouse only because they are not cleared after unloading having been dealt with by the Customs Act, 1962 and particularly section 48 thereof, does not mean that for the purposes of the CST Act the goods have not crossed the customs frontie....
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....pressions 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 for reliance is placed on the notification dated 21st November, 1994 which declares Nhava Sheva as customs port. We are of the opinion that this notification and its wording has limited relevance, in the sense that this may be notified as customs port, but the controversy before us and on essential facts is different. Once we have found that this is not a sale covered by the second limb of sub-section (2) of section 5, then, the argument based on this notification cannot be accepted. Pertinently, Mr.Tapare could not get over the factum of the provisional assessment made and the payment of duty in pursuance thereof. Then, the argument of Mr. Tapare is that in this case, the respondent has transferred the bill of lading in favour of the buyer before payment of customs duty. He relied upon the fact that the duty was not paid by the respondent nor physical del....
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.... 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 of the appellants and the respondents/Union of India were noted. Then, the question arose in that case as to what duty could be imposed. In the context of imposition of duty on the goods which were covered by the open general licence arose only because of the peculiar facts of that case. It is evident from the narration in para 33 onwards that the Hon'ble Supreme Court referred to a judgment delivered by it in the case of Duni Chand Rataria vs. Bhuwalka Brothers AIR 1955 SC 182. The Hon'ble Supreme Court distinguished it and then went on to consider the provisions then prevailing, but by applying them to the peculiar facts of that case. The Hon'ble Supreme Court pertinently observed that under sections 68 and 71 of the Customs Act, 1962, goods placed in a warehouse can be taken out only after clearance for home consumption. But, the customs officer ....
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.... 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 on the date when the goods had landed in India or had entered the territorial waters, the additional duty of excise was leviable under the Ordinance. 62. Reliance of Mr.Tapare on this judgment is misplaced because what this argument overlooks are the provisions of the CST Act and the definitions as well as Chapter V of the Customs Act, 1962. Section 15 of the Customs Act, 1962 has been extensively amended and that amended provision applied for the purposes of date for determination of rate of duty and tariff valuation of imported goods. Thus, this judgment in the case of Kiran Spinning Mills (supra) dealt with the issue as to whether the import duty has to be paid when the import is complete and that import is complete only when the goods crossed the customs barriers or otherwise. The Hon'ble Supreme Court held that the taxable event is as above. We do not th....
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....f 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 the permission of the proper officer. 65. We have already noted the provisions in the backdrop of the factual situation before us. We do not think that in the factual background, the respondent can derive any assistance from the discussion in the judgment in the case of Narang Hotels (supra). 66. Once we are of the firm opinion that the CST Act touches the concept of crossing the customs frontiers of India, which is distinct from customs barriers of India, then all the more we cannot agree with Mr.Tapare. 67. Mr.Tapare then relied upon the judgment of the High Court of Judicature of Madras in the case of State Trading Corporation of India vs. the State of Tamil Nadu 2002 149 ELT 3. There, the Madras High Court had before it a peculiar provision and we term this provision as peculiar simply because the court was concerned with news print which the State Trading Corporat....
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....ls 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 order, placed reliance on thedecision of the Supreme Court in the case of Madras Marine and Co. v. State of Madras (63 STC 169). The Tribunal has omitted to notice the caution set out in that judgment that the amendment introduced in Section 2 by the Act 103 of 1976 would have been relevant only if they were considering the case of sale by the transfer of documents of title to the goods as contemplated by Section 5 of the Central Sales Tax Act, but, that facts of the case before it did not involve a transfer of document of title to the goods, and therefore, the fact that the customs station itself was within the State of Tamil Nadu would not, on that score alone render all sale of goods which are in the course of import and awaiting clearance from that station, local sales. 16. The "clearance" referred to in Section 2(ab) of the C.S.T. Act, in the absence of any other compelling factor has....
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....nt 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 purchase of goods in the course of import, respectively. As we are concerned with a sale in the course of import, the relevant provision is sub-section (2) of Section 5, which is as, follows : "5(2) A sale or purchase of goods shall be deemed to take place in the course of the 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 documents of title to the goods before the goods have crossed the customs frontiers of India." 11. 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....
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....stry 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 by the issue of a fresh Notification, No. S.R.O. 1683 dated August 6, 1955. The latter notification, issued by the Ministry of Finance (Revenue Division) Customs, which is relevant for the present purpose, is as follows: "New Delhi, the 6th August 1955. S.R.O. 1633.-In exercise of the powers conferred by section 3-A of the Sea Customs Act, 1878 (VIII of 1878), and in supersession of the notification of the Government of India in the Ministry of Finance (Revenue Division) No. 25 Customs. dated the 1st April 1950, the Central Government hereby defines the customs frontiers of India as the boundaries of the territory, including territorial waters, of India. Sd/- Jt. Secretary." 14. The expression 'customs frontiers of India' in Section 5 of the Central Act, in our opinion, must be construed in accordance with the notification issued by the Central Government under Section 3-A of the Act, on August 6, 1955 read with the ....
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....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 prospective would depend upon the purpose of the Act, the object of the Act and the language used. See in this connection the observation in The Central Bank of India v. Their Workmen, [1960] 1 SCR 200; Keshavlal Jethalal Shah v. Mohanlal Bhagwandas and Anr., [1968] 3 SCR 623 and Chanan Singh and Anr. v. Jai Kaur, [19701 1 SCR 803 at 804-807. But that amendment is not relevant in the view we have taken. 36. The short question, therefore, that arises in all these matters is whether sale of the goods in question took place within the territory of Tamil Nadu. In these cases sale took place by appropriation of goods. Such appropriation took place in bonded warehouse. Such bonded warehouses were within the territory of State of Tamil Nadu. Therefore, under sub-section (2), sub-clauses (a) and (b) of section 4 of the Central Sales Tax Act, 1956, the sale of goods in question shall be deemed to have taken place inside the State because the contract of sale of ascert....
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....e 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 law of a State shall impose, or authorised the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place in the course of import of the goods into, or export of the goods out of the territory of India. Section 5 of the Central Sales Tax Act deals with this: "When is sale or purchase of goods said to take place in the course of import or export." Sub-section (1) thereof deals with exports and subsection (2) with imports. Sub-section (2) reads thus: "A sale or purchase of goods shall be deemed to take place in the course of the 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 documents of title to the goods before the goods have crossed the customs frontiers of India." The definition in Section 2(ab) of the phrase "crossing the customs frontiers of India" reads thus: "crossing the customs frontiers of India means crossing the area of a customs s....
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....s 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 the commercial world that a bill of lading represents the goods and the transfer of it operates as the transfer of goods. The delivery of the bill of lading while the goods are afloat is equivalent to the delivery of the goods themselves. 9. The facts afforested, based upon documents, show that the bill of lading had been endorsed in favour of SAIL while the consignment of the said coils was still upon the high seas. The sale, therefore, was a sale in the course of the import of the said coils into the territory of India; it was effected by transfer of the documents to the said coils before they had crossed the limits of the customs station at Paradeep Port. The position would be the same in respect of the goods sold to Paradeep Phosphates Ltd. 10. The High Court noticed the argument based on the latter part of Section 5 but did not address it. It relied upon the judgment of the Karnataka High Court in the case of Cashew Corporation of India. That was a case where notice was taken of the amendment introducing Secti....
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....f 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 goods after clearance, even though they are not physically removed from the harbour premises. They attain the character of local goods and cease to be foreign goods. Therefore, the relevant point of time for determining as to whether the sale of goods is in the course of import by a transfer of title deeds is the transfer by title deeds before filing the bill of entry and the assessment of duty irrespective of the fact whether the goods are physically cleared from the harbour or not and whether duty is paid or not. As pointed out in the earlier paras after the filing of the bill of entry the assessment of the duty the import stream dries up and ceases to flow after the customs department levies the duty declaring the eligibility of the goods to be cleared and mingles with the general mass of goods and merchandise in the country. Once the duty is levied the import is at an end and the national customs barrier is supposed to have been crossed. The reason being it is difficult to ascertain the point of time or the place at which....