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2020 Supreme(SC) 342
SUPREME COURT OF INDIA
Deepak Gupta, Aniruddha Bose, JJ.
COMMERCIAL TAXES OFFICER – APPELLANT
VERSUS
M/S. BOMBAY MACHINERY STORE – RESPONDENT
CIVIL APPEAL NO. 2217 of 2011 WITH CIVIL APPEAL NO. 2220 of 2011; CIVIL APPEAL NO. 10000 of 2017 AND CIVIL APPEAL NO. 10001 of 2017
Decided on : 27-04-2020
For the Appellant :Milind Kumar, Advocate,
For the Respondent:P. V. Yogeswaran, Advocate
The court emphasized that fixing a timeframe for delivery of goods by the tax authorities was impermissible as the statute does not specify any timeframe for delivery. The court also held that the concept of constructive delivery does not apply to the provisions of the Act and that any unintended benefit under the Act should be addressed through legislative amendment, not administrative interpretation.
Headnote:
Central Sales Tax Act - Interpretation of Sections 3 and 6 - The court addressed the question of whether tax authorities can impose a limit or timeframe for delivery of goods to a carrier for transmission in the course of inter-state sale to qualify for the benefit of Section 6(2) of the Central Sales Tax Act, 1956. The court held that fixing a timeframe by the tax administration would be impermissible as the statute does not qualify the term 'delivery' with any timeframe. The court also emphasized that the concept of constructive delivery does not apply to the provisions of the Act, and any unintended benefit under the Act should be addressed through legislative amendment, not administrative interpretation.
Fact of the Case:
The appeals involved disputes related to the application of Sections 3 and 6 of the Central Sales Tax Act, 1956. The cases revolved around the retention of goods in the carrier's godown beyond a certain period, leading to the imposition of tax under the State Act. The respondents claimed the benefit of exemption under Section 6(2) of the Act for inter-state sales, while the tax authorities argued that the sales were local and subject to state tax due to the extended retention of goods.
Finding of the Court:
The court found that fixing a timeframe for delivery of goods by the tax authorities was impermissible as the statute does not specify any timeframe for delivery. The court also held that the concept of constructive delivery does not apply to the provisions of the Act. It emphasized that any unintended benefit under the Act should be addressed through legislative amendment, not administrative interpretation.
Issues: The key issues involved the interpretation of Sections 3 and 6 of the Central Sales Tax Act, 1956, and the applicability of a timeframe for delivery of goods to qualify for the benefit of Section 6(2) of the Act.
Ratio Decidendi: The court's decision was based on the plain reading of the statute, which does not qualify the term 'delivery' with any timeframe. The court emphasized that the concept of constructive delivery does not apply to the provisions of the Act and that any unintended benefit under the Act should be addressed through legislative amendment, not administrative interpretation.
Final Decision: The court dismissed the appeals and held that the tax authorities cannot impose a timeframe for delivery of goods to qualify for the benefit of Section 6(2) of the Central Sales Tax Act, 1956. The court also emphasized that any unintended benefit under the Act should be addressed through legislative amendment, not administrative interpretation.
JUDGMENT
Aniruddha Bose, J.
All these four appeals are being dealt with by this judgment as they all involve adjudication on a common question of law arising out of Sections 3 and 6 of the Central Sales Tax Act, 1956 (1956 Act), which was operational at the material point of time. The question is as to whether as a condition of giving the benefit of Section 6(2) of the said Act, the tax authorities can impose a limit or timeframe within which delivery of the respective goods has to be taken from a carrier when the goods are delivered to a carrier for transmission in course of inter-state sale. For proper appreciation of the dispute involved in these appeals, the aforesaid provisions are reproduced below:-
"3. When is a sale or purchase of goods said to take place in the course of inter-State trade or commerce. A sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase-
(a) occasions the movement of goods from one State to another; or
(b) is effected by a transfer of documents of title to the goods during their movement from one State to another.
Explanation 1 - Where goods are delivered to a carrier or other bailee for transmission, the movement of the goods shall, for the purposes of clause (b), be deemed to commence at the time of such delivery and terminate at the time when delivery is taken from such carrier or bailee.
Explanation 2 - Where the movement of goods commences and terminates in the same State it shall not be deemed to be a movement of goods from one State to another by reason merely of the fact that in the course of such movement the goods pass through the territory of any other State.
Explanation 3 - Where the gas sold or purchased and transported through a common carrier pipeline or any other common transport or distribution system becomes co-mingled and fungible with other gas in the pipeline or system and such gas is introduced into the pipeline or system in one State and is taken out from the pipeline in another State, such sale or purchase of gas shall be deemed to be a movement of goods from one State to another."
6. Liability to tax on inter-State sales.- [(1)] Subject to the other provisions contained in this Act, every dealer shall, with effect from such date as the Central Government may, by notification in the Official Gazette, appoint, not being earlier than thirty days from the date of such notification, be liable to pay tax under this Act on all sales [of goods other than electrical energy] effected by him in the course of inter-State trade or commerce during any year on and from the date so notified:
[Provided that a dealer shall not be liable to pay tax under this Act on any sale of goods which, in accordance with the provisions of sub-section (3) of section 5 is a sale in the course of export of those goods out of the territory of India.]
[(1A) A dealer shall be liable to pay tax under this Act on a sale of any goods effected by him in the course of inter-State trade or commerce notwithstanding that no tax would have been leviable (whether on the seller or the purchaser) under the sales tax law of the appropriate State if that sale had taken place inside that State.]
[(2) Notwithstanding anything contained in sub-section (1) or sub-section (1A), where a sale of any goods in the course of inter-State trade or commerce has either occasioned the movement of such goods from one State to another or has been effected by a transfer of documents of title to such goods during their movement from one State to another, any subsequent sale during such movement effected by a transfer of documents of title to such goods, -
(a) to the Government, or
(b) to a registered dealer other than the Government, if the goods are of the description referred to in sub-section (3) of section 8,
shall be exempt from tax under this Act:
Provided that no such subsequent sale shall be exempt from tax under this sub-section unless the dealer effecting the sale furnishe
