GOPAL RAO EKBOTE, C.J. - This revision petition is from the order of the Sales Tax Appellate Tribunal Andhra Pradesh, given in Tribunal Appeal No. 778 of 1970 on 26th September, 1972.

The essential facts are that the petitioners are dealers in liquors, cigarettes, etc., and also are ship-chandlers. They submitted returns of their turnover for the year 1967-68 showing Rs. 2,19,972.82 as gross turnover and Rs. 97,462.58 as net turnover. They claimed exemption on transactions totalling Rs. 1,22,510.24. The said claim included Rs. 72,061.69 comprising of sales of "bonded warehouse ship-stores". According to the petitioners, the ship-stores were imported from foreign countries, kept in bonded warehouses of the customs department and later sold and delivered to ships' masters for consumption aboard the ships. They claimed that such sales were not exigible to tax under the Andhra Pradesh General Sales Tax Act, 1957, hereinafter called the Act, being sales outside the State of Andhra Pradesh. In the reply, which the petitioners gave on 29th January, 1969, to the pre-assessment notice dated 16th January, 1969, they set up their claims as follows :

"We procure the ship-store goods from foreign countries after obtaining the approval of the Reserve Bank of India, and on arrival, the goods were examined by the customs authorities and restricted to bonded warehouse. These goods were only intended to be supplied as ship-stores to vessels bound for foreign destinations. These goods were supplied on orders received from the ships' masters/authorised personnel and until delivery inside the ships were watched by the customs authorities. The preventive officer of the customs accompanies the ship. The stores are locked in the lockers and the customs preventive officer seals the locker. The seals are subsequently broken by the ships' personnel which the vessels are at sea and well away from the port boundary limit of 15 miles. So the sales are not effected within the State since these goods procured by us from the foreign countries are not imported into the State but they kept in the bounded warehouse without assessment or levy of customs duty, and they are delivered to the ocean-going vessels and so the sales were outside the Andhra Pradesh.

These sales were not either inside State sales or inter-State sales, but were outside State sales. These goods were not assessed to duty as per sections 17(2) and 85 of the Sea Customs Act, 1962, and so the warehousing of such goods in the bonded warehouse will not amount to be an import of such goods as they were intended for supply to the outgoing foreign vessels and as the goods were delivered to the steamers, the sales are outside the customs frontier and hence not taxable by the Andhra Pradesh. These goods were allowed to be warehoused without the goods being assessed to duty on the declaration made by us that the goods are intended to be supplied as ship-stores to foreign going vessels. In these cases, the customs duty has never been paid and so these do not come under actual import for sale. As these goods were exempt from section 17(2) and 85 of the Sea Customs Act of 1962, they cannot be considered as actual imports, on which customs duty is levied, and so these are exempted from Andhra Pradesh sales tax, and we are therefore entitled for the exemption on our ship-stores business of Rs. 72,061.69 claimed now."

The Deputy Commissioner Tax Officer, by his order dated 19th January, 1969, held that since the goods were within the State at the time of sale, the transactions are exigible to tax. He taxed the petitioners accordingly.

On appeal, the Assistant commissioner, disagreeing with the view of the Deputy Commercial Tax Officer, held that the customs duty was never levied as the goods were intended to be supplied as stores to vessels and since the goods were not assessed to duty, the goods must be deemed to have been imported into Andhra Pradesh. The sales in question were sales in the course