Back
2020 Supreme(SC) 58
SUPREME COURT OF INDIA
A.M. Khanwilkar, Dinesh Maheshwari, JJ.
Nirmal Kumar Parsan – Appellant
Versus
Commissioner of Commercial Taxes & Ors. – Respondents
CIVIL APPEAL NO. 7863 OF 2009
WITH
Parsan Brothers and Anr. – Appellants
Versus
Assistant Commissioner of Commercial Taxes & Ors. – Respondents
CIVIL APPEAL NO. 7864 OF 2009
Decided On : 21-01-2020
For the Appellant(s) :Siddharth Bhatnagar, Joydeep Mazumdar, Dhruv Surana, Rohit Dutta, Priyata Chakraborty, Shubhangi Sangal, Ashish Choudhaury, Ravina Sharma, Aditya Sidhra, Shalini Kaul, Shalini Kaul, Advocates
For the Respondent(s):Madhumita Bhattacharjee, Srija Choudhary, Advocates
IMPORTANT POINT
Sale to be in course of import, must be a sale of goods and as a consequence of such sale, goods must actually be imported within territory of India and sale must be part and parcel of import so as to occasion import thereof.
Headnote:
(A) Taxation – Sales Tax – Levy of sales tax on imported goods stored in bonded warehouse – Sale to be in course of import, must be a sale of goods and as a consequence of such sale, goods must actually be imported within territory of India and sale must be part and parcel of import so as to occasion import thereof – For the purposes of Customs Act, only upon payment of customs duty goods are cleared by Customs authorities whence import thereof can be regarded as complete – However, that would be no impediment for levy of sales tax by State concerned in whose territory goods had already landed/unloaded and kept in bonded warehouse – For seeking exemption, it is necessary that goods must be in process of being imported when sale occurs or sale must occasion import thereof within territory of India – Sale which is to be regarded as exempt from payment of sales tax, is a sale which causes import to take place or is immediate cause of import of goods – Appellants having failed to establish that stated goods would be actually imported within territory of India and had not crossed customs station, cannot contend that sale was in course of import as such within meaning of Section 5 read with Section 2(ab) of CST Act – There is no direct linkage between import of goods and sale in question to qualify as having been made in process or progress of import. (Paras 4, 12 and 13)
(B) Taxation – Sales Tax – Exemption – Levy of sales tax on imported goods stored in bonded warehouse – Assessing officer rejected claim for exemption from payment of sales tax in respect of stated sales of imported cigarettes from stock, as cigarettes were sold to outgoing vessels from bonded warehouse within landmass of State of West Bengal – A priori, for a sale or purchase to qualify as a sale or purchase in course of import, essential conditions are that such sale shall occur before goods had crossed customs frontiers of India and import of goods must be effected or import is occasioned due to such sale or purchase – In present case, sales in question did not occasion import – It is not the case of appellant that goods in question were being exported – Since goods are to be consumed on board of foreign going ship and same would be consumed before reaching a destination, it does not fall under definition of ‘export’ – Sale cannot qualify as a sale occasioning export unless goods reach a destination which is a place outside India – Since goods have been sold from bonded warehouse and had crossed customs port/land customs station prior to their sale, it cannot qualify as a sale in course of export within meaning of Section 5(1) read with Section 2(ab) of CST Act – Benefit extended under Customs Act of waiver of customs duty cannot be taken as waiver of sales tax under relevant state and central laws – Stated sales or appropriation of goods kept in bonded warehouse within landmass/territory of State of West Bengal are neither in course of import or export and more so, were effected beyond customs port/land customs station area – In law, it was a sale amenable to levy of sales tax under 1954 Act and 1994 Act, as the case may be, read with Section 4 of CST Act – No infirmity in view taken by authorities below and which had justly commended to High Court. (Paras 20, 24, 25 and 26)
Facts of the case:
Principal question involved in these appeals is whether subject sales (of goods imported from foreign country and after unloading the same on the landmass of the State of West Bengal, kept in the bonded warehouse without payment of customs duty) to foreign bound ships as “ship stores” can be regarded as sale within territory of the State and amenable to sales tax under the West Bengal Sales Tax Act, 1954 or the West Bengal Sales Tax Act, 1994.
Findings of Court:
It is not the case of the appellant that goods in question were being exported. Since the goods are to be consumed on the board of the foreign going ship and the same would be consumed before reaching a destination, it does not fall under definition of ‘export’. The sale cannot qualify as a sale occasioning export unless the goods reach a destination which is a place outside India. Further, since the goods have been sold from the bonded warehouse and had crossed the customs port/land customs station prior to their sale, it cannot qualify as a sale in course of export within the meaning of Section 5(1) read with Section 2(ab) of the CST Act.
Result : Appeals dismissed.
JUDGMENT
A. M. KHANWILKAR, J.
1. The principal question involved in these appeals is whether the subject sales (of goods imported from foreign country and after unloading the same on the landmass of the State of West Bengal, kept in the bonded warehouse without payment of customs duty) to foreign bound ships as “ship stores” can be regarded as sale within the territory of the State and amenable to sales tax under the West Bengal Sales Tax Act, 1954 (for short, ‘the 1954 Act’) or the West Bengal Sales Tax Act, 1994 (for short, ‘the 1994 Act’).
2. The admitted factual position in the present cases is that after importing foreign made cigarettes, the appellants stored the same in the customs bonded warehouse within the landmass of the State of West Bengal and some of those articles were sold to the Master of a foreigngoing ship as ship stores, without payment of customs duty. Those goods were escorted to the stated ship under the supervision of the officials of the Customs authority.
3. These appeals take exception to the judgment and order of the High Court at Calcutta (for short, ‘the High Court’), dated 16.8.2007 in W.P.T.T. Nos. 5/2007 and 6/2007 respectively, whereby it had upheld the decision of the West Bengal Taxation Tribunal (for short, ‘the Tribunal’) that the stated sales were within the territory of the State of West Bengal and amenable to sales tax.
4. Civil Appeal No. 7863/2009 emanates from the assessment order passed by the Commercial Tax Officer, West Bengal, dated 13.3.1985 pertaining to assessment period – 1.4.1980 to 31.3.1981. The assessing officer rejected the claim for exemption from payment of sales tax in respect of the stated sales of imported cigarettes from the stock, as the cigarettes were sold to outgoing vessels from the bonded warehouse within the landmass of the State of West Bengal following the decision of the High Court in M/s. Ranjit Shipping Pvt. Ltd. & Anr. vs. State of West Bengal & Ors., 1980 SCC Online Cal 141 : (1980) 2 CHN 192. The authority found that it was not a sale in the course of import as claimed by the assessees (appellants). The appellants unsuccessfully carried the matter in appeal and finally in revision before the Tribunal, which came to be rejected on 30.3.2007. Before the revisional authority, the only contention pursued was that there was no sale within the State of West Bengal or even in India because the buyer had no right to consume the goods before the ship crossed the territorial Waters of India. It was urged by the appellants before the revisional authority that the process of import was not complete at the time of sale to the foreigngoing ship and the transaction was a sale in the course of import. Resultantly, the sold goods were not taxable under the concerned West Bengal Sales Tax laws because the goods never entered the local area of the State of West Bengal, crossing the customs frontiers of India as defined in Section 2(ab) of the Central Sales Tax Act, 1956 (for short, ‘the CST Act’). The Tribunal, however, held that the sale had taken place on the landmass of the State of West Bengal and the sale was neither for import nor for export. The Tribunal essentially relied upon the exposition in Madras Marine and Co. vs. State of Madras, (1986) 3 SCC 552 to reject the revision filed by the appellants being devoid of merits. Feeling aggrieved, the appellants carried the matter to the High Court by way of a writ petition being W.P.T.T. No. 5/2007, which came to be rejected by the Division Bench of the High Court whilst upholding the view taken by the Tribunal as just and proper.
5. Civil Appeal No. 7864/2009 emanates from the order dated 22.10.2003 passed by the Assistant Commissioner of Commercial Taxes under Section 65 of the 1994 Act pertaining to assessment periods – 1.4.1999 to 31.3.2000, 1.4.2000 to 31.3.2001, 1.4.2001 to 31.3.2002 and 1.4.2002 to 31.3.2003. The claim of the appellants that the sales in question were in the course of import on high seas and
