TaxTMI 
TaxTMI 
1986 (7) TMI 125
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....nue authorities. 2.The question involved in all these, is, whether the sales in question were within the state of Tamil Nadu and as such subject to tax under the Tamil Nadu General Sales Tax Act, 1959, hereinafter called the "Act". 3.The dealers who are the petitioners in the writ petitions and are the appellants in the appeals and the petitioners in special leave petitions are dealers in stores and were doing business as ship chandlers in the relevant years. The appellants/petitioners used to supply the goods imported as stores to foreign going vessels and other diplomatic personnel. The appellants/petitioners imported these goods from foreign countries. At the time of import they complied with the statutory provisions of the Customs Act and other enactments relating to import of goods. They had given an undertaking to the concerned authorities to supply the imported goods to foreign going vessels and/or to diplomatic personnel and to receive the goods in custom bonded warehouse. Under Section 59 of the Customs Act, 1962 the importer of any dutiable goods which had been entered for warehousing and assessed to duty under Section 17 or Section 18 should execute a bond binding hims....
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....n Customs Water" is defined in the Customs Act under Section 2(28) as follows : "`Indian customs waters' means the waters extending into the sea up to the limit of contiguous zone of India under Section 5 of the Territorial Waters, Continental Shelf, Exclusive Economic Zones Act, 1976 and includes any bay, gulf, harbour, creek or tidal river." 7.Under Article 297 of the Constitution, all lands, minerals and other things of value underlying the ocean within the territorial waters or the continental shelf of India shall vest in the Union and are held for the purposes of the Union. 8.It is the contention of the appellants/petitioners that sales therefore took place outside the state as territorial waters are vested in the Union Government and not in the State of Tamil Nadu. The turnover in question was not exigible according to the appellants/petitioners, to sales tax under the provisions of the Act. It is this plea which the petitioners/appellants sought to raise as an additional ground before the High Court in the appeal out of which Civil Appeal No. 642 of 1974 arose. But it was not permitted by the High Court. 9.The taxing authorities' plea on the other hand was that the vario....
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....e was an appeal before the Tribunal. The Appellate Assistant Commissioner relied on the decision of the Madras High Court in the case of Deputy Commissioner of Commercial Taxes v. Caltex India Ltd., Madras - (1962) 13 STC 163. The Tribunal accepted the contentions of the dealer and held that the sales did not take place within the State of Tamil Nadu. It was pointed out that there was significant change in the Customs Act, 1962 from Sea Customs Act, 1878, and the Tribunal held that import of goods in question had not become complete and as the goods were sold to the ocean going vessels, the sales in question could not be deemed to be within the State of Madras. On revision the High Court relying on the decision of this Court in The State of Madras v. Davar & Co. - (1969) 24 STC 481 (SC) held that the sales took place in the State of Madras and assessment to tax was valid. Civil Appeal No. 642 of 1974 arises from the said decision. 12.Civil Appeal Nos. 1798-1800 of 1981 followed the said decision and are based on the said reasons. These appeals are for the assessment years 1968-69 and 1970-71. It may be mentioned that Civil Appeal No. 642 of 1974 was concerned with the assessment t....
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.... and Steel Co. Limited, Bombay v. S.R. Sarkar and Others - (1960) 11 STC 655 (SC). In that case this Court was dealing with the relevant provisions in a petition under Article 32 of the Constitution challenging the demand of the Sales Tax Officer of State of West Bengal under the Central Sales Tax Act, 1956 in respect of certain sales of steel goods. The petitioner company in that case had its registered office in Bombay and its head sales office in Calcutta in the State of West Bengal and factories in Jamshedpur in the State of Bihar. The company was registered as a "dealer" under the Bihar Sales Tax Act and was also registered as "dealer" in the State of West Bengal under the Central Sales Tax Act, 1956. For the period of assessment 1st July, 1957 to 31st March, 1958, the company submitted its return of taxable sales to the Commercial Tax Officer, Lyons Range, Calcutta. The assessment order was passed. It is not necessary to deal exhaustively with the history of the present Sections 4 and 5 of the Central Sales Tax Act which has been dealt with by this Court. Interpreting the relevant provisions of the Central Sales Tax Act, 1956, it was observed that the Act by Section 3 indicat....
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....tion spirit was sold and delivered to aircraft proceeding abroad for their consumption. The question was whether these supplies to the aircraft which proceeded to foreign countries were liable to sales tax under the Bengal Motor Spirit Sales Taxation Act, 1941. The contention of the appellants in that case was that such sales were made in the course of export of such aviation spirit out of the territory of India, that they took place outside the State of West Bengal, that inasmuch as aviation spirit was delivered for consumption outside West Bengal, the sales could not fall within the explanation to clause (1)(a) of Article 286 as it then stood. It was held by this Court that in order to exclude the taxation by the State of West Bengal, the appellants had to prove that there was some other State where goods could be said to have been delivered as a direct result of the sale for the purpose of consumption in that other State and that as they failed to do so, the aviation spirit loaded on board an aircraft for consumption though taken out of India, was not exported since it had no destination, where it could be said to be imported and so long as it did not satisfy that test, it could....
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.... the supply of "bunker coal" from their depots in Candle Island for steamers arriving at the port of Cochin in the State of Travancore-Cochin for the outward voyage of the steamers from the Cochin port. In respect of these sales of coal, tax was claimed by the Travancore-Cochin State for the years 1951-52 and 1952-53 but the respondent claimed exemption under Article 286(1)(b) or (2) of the Constitution and also under a notification dated 5th February, 1954 and published in the official Gazette of 16th February, 1954. It was held that the sales of coal by the respondent were sales in the course of inter-State trade and fell within the bane of Article 286(2), but the levy of tax on such sales had been validated by the Sales Tax Laws Validation Act, 1956. It was further held that the sales were not sales "in the course of export" within the meaning of Article 286(1)(b) and were therefore not exempt under that article but they fell within the explanation to Article 286(1)(a) inasmuch as the coal was delivered in the State of Travancore-Cochin and the steamers were the actual consumers who were at liberty to consume the coal whenever they desired; that the notification dated 5th Februa....
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....t, in construing the customs frontiers, referred to the extent of territorial waters, declaration of the President dated 22nd March, 1956, the contents of which were set out in that decision which need not be repeated here. 24.We have noted the further contentions which were only raised in the writ applications and not raised in Davar's case (1969) 24 STC 481 (SC). In our opinion these further contentions have been elaborately discussed in the two decisions, one of the Andhra Pradesh high Court and another of the Madras High Court, which we shall presently notice but it may be pointed out that there is a difference between the two High Courts on the interpretation whether Section 4(2)(a) or 4(2)(b) of the Central Sales Tax Act would apply or not. It may be noted that it was observed by Sarkar and Das Gupta, JJ. in Tata Iron and Steel Co. Limited, Bombay v. S.R. Sarkar and others - (1960) 11 STC 655 (SC) (supra) that clauses (a) and (b) of Section 3 were mutually exclusive and (a) sale could not fall under both the clauses. We are not here directly concerned with the question whether clauses 4(2)(a) and 4(2)(b) of the Central Sales Tax Act, 1956 are mutually exclusive or not. We ar....
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....y, did not enter the local market. The delivery receipt sent along with the goods by the assessee was signed by an officer of the ship in token of having received the goods in good condition. The question that arose for consideration was whether the sale took place within the State of Tamil Nadu and liable to be taxed under the Tamil Nadu General Sales Tax Act, 1959. It was held (i) that there was nothing to show in the communications from the ship that the goods had necessarily to be supplied only in the ship. It was open to the officers working in the ship to come and take delivery of the goods in which event the sale would be a local sale. Therefore, assuming that the territorial waters did not form part of the State of Tamil Nadu, as there was nothing in the contemplation of the contracting parties that the goods were to be moved from one State to another, it was held that it was not possible to take the view that the sales were inter-State sales; and (ii) that the assessee was not selling specific or ascertained goods, because the goods formed part of a larger stock within the bonded warehouse and had, therefore, to be separated and appropriated to the contract as and when ord....
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.... held that appropriation, which completed the contract, took place at the licensed premises of the appellant and not at the club, and, accordingly, though guilty of the offence of selling liquor out of permitted hours, the appellant was not guilty of selling liquor on unlicensed premises as charged. In our opinion that is the correct position and appropriation was made within the State of Tamil Nadu. 31.In our opinion as the goods were within the State of Tamil Nadu in case of ascertained goods at the time when the contract of sale was made and in case of unascertained goods at the time of their appropriation to the contract by the seller, sale must be deemed to be within the State of Tamil Nadu. 32.In our opinion, therefore, Shri M.M. Abdul Kader, learned counsel for the respondents was right that under Section 2(n) of the Act read with explanation 3, these sales were within the State. 33.It may be mentioned that there was an amendment in 1976 of the Central Sales Tax Act, 1956 by Act 103 of 1976. By that provision, the following was inserted in Section 2 of the Central Sales Tax Act, 1956 : `crossing the customs frontiers of India' meant crossing"(ab) the limits of the area o....