JUDGMENT

SABYASACHI MUKHARJI, J. :— We are concerned with Civil Appeal No. 642(NT) of 1974, Civil Appeals Nos. 1798-1800 of 1981 and the Writ Petition No. 196 of 1974 along with Special Leave Petitions Nos. 12943-44 of 1985. All these will have to be disposed of on the main question stated hereinafter and these raise a common question, facts in all these matters are more or less identical except that certain assumptions of facts have been made in Special Leave Petitions Nos. 12943-44 of 1985 because in these there were no investigation of facts by the revenue 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 S. 59 of the Customs Act, 1962 the importer of any dutiable goods which had been entered for warehousing and assessed to duty under S. 17 or S. 18 should execute a bond binding himself for a sum equal to twice the amount of the duty assessed on such goods (a) to observe all the provisions of the Act and the rules (b) to pay on or before a date specified in a notice of demand all duties, rent and charges claimable on account of such goods under the Act, and (c) to discharge all penalties incurred for violation of the provisions of the Customs Act and relevant statutes. For the above purpose, the Assistant Collector of Customs might permit an importer to enter into a general bond for such amount as the Assistant Collector of Customs might approve in respect of the warehousing of goods to be imported by him within a specified period.

4. Sections 60, 61, and 62 of the Customs Act, 1962 provide for ancillary purposes. In substance these provide for control by the proper officer of the goods warehoused. It is not necessary for the determination of the issue involved to deal with other relevant provision of the Customs Act, 1962.

5. The appellants / petitioners after receipt of the goods kept these in a bonded warehouse under the relevant provisions. The warehouse was under dual control of the Customs Department and the importers like the appellants / petitioners so that it could not be opened by one without the presence of the other. On receipt of order from the caption of the ship requiring ship stores the petitioners supplied the goods on board after observing certain formalities imposed by the Customs Act, the rules and regulations made thereunder. These were the broad features of the way the appellants / petitioners operated. We will, however, deal with the facts as found in Civil Appeal No. 642 of 1974.

6. The case of the appellants / petitioners was that all these goods were intended for re-export only and were at all relevant time in a bonded warehouse. The delivery was on board the ship to foreign going ship. The goods were consumed only on the high seas. The property in the goods had passed only after the goods had crossed the custom frontiers. The contention was that the property in the goods did not pass in the territory of Tamil Nadu. The sales were therefore (i) in the course of export because goods were to be on board the ship and were exported outside the country and could not be cons