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1981 Supreme(Bom) 28
IN THE BOMBAY HIGH COURT
D.P. Madon, Sujata V. Manohar, JJ.
BATLIBOI & COMPANY PVT. LTD.
Versus
THE STATE OF MAHARASHTRA
Sales Tax Reference No. 43 of 1977
Decided On: Decided On : 02-02-1981
H. K. Shah with S. V. Vaidya, for the applicant.
R. P. Vyas, for the respondent.
A sale of goods is taxable under the Bombay Sales Tax Act, 1959, if it is a sale within the State of Maharashtra.
Headnote:
BOMBAY SALES TAX ACT - SALE OF GOODS - SALE IN THE COURSE OF IMPORT - SALE OUTSIDE THE STATE - APPROPRIATION OF GOODS TO THE CONTRACT - TRANSFER OF PROPERTY - SALE WITHIN THE STATE - TAXABILITY.
Fact of the Case:
The applicants, M/s. Batliboi & Company Pvt. Ltd., had entered into a contract with M/s. Kirloskar Brothers Ltd. to sell them a double column vertical turning and boring mill, Model SK-40A complete with standard equipment and electrical equipment, manufactured in Czechoslovakia. The applicants had an import license for import of machinery. Prior to their contract with M/s. Kirloskar Brothers Ltd., the applicants had placed an order with the Czech manufacturers of the machine for the import of the machine in question. The applicants had also filled in a tender with the defense department under which, inter alia, they were required to supply this machine to the defense department. Thereafter by their letter dated 1st April, 1972, the applicants made an offer to M/s. Kirloskar Brothers Ltd. (hereinafter referred to as "Kirloskars") offering to sell to them the same machine. In the letter of 1st April, 1972, addressed by the applicants to Kirloskars the applicants set out a telex which was sent by them to Kirloskars. In the telex they had mentioned that the machine was under offer to the defense department until the end of June, 1972, and that they could sell the machine to M/s. Kirloskar Brothers Ltd., provided the defense department released the same. In the offer which was set out in the said letter the applicants set out the term relating to delivery as follows : "Ready at works in Czechoslovakia, subject to prior sale, to be imported against our own import licence. ........" Thereafter by their letter dated 3rd April, 1972, addressed to the applicants, Kirloskars placed an order with the applicants for the purchase of this machine. This order stipulated for erection and commissioning of the machine by the applicants with the help of erection engineers from the works in Czechoslovakia. By another letter of 5th April, 1972, addressed by Kirloskars to the applicants, Kirloskars added a further stipulation in the purchase order to the effect that the property in the machine offered by the applicants shall stand transferred to Kirloskars as soon as the machine is ready-packed in crates for shipment from Czechoslovakia. The addition of this stipulation was confirmed by the applicants. Thereafter in May, 1972, the machine was shipped by the Czech manufacturers to Bombay. The machine arrived in Bombay on or about 11th July, 1972. The applicants cleared this shipment and thereafter some time in the months of July/August, 1972, the machine was sent by the applicants to Kirloskars at Kirloskarwadi by rail. The railway receipts in connection with the goods so sent are dated 17/19th July, 1972, 26/27th July, 1972, and 5/12th August, 1972. In respect of this sale of the machine effected by the applicants to Kirloskars the applicants sent their bill dated 14th August, 1972, to Kirloskars.
Finding of the Court:
The court held that the sale in question was a sale within the State of Maharashtra and hence sales tax was payable by the applicants on this transaction.
Issues: Whether the transaction between the applicants and Kirloskars was a sale within the State of Maharashtra as defined under section 2(28) of the Bombay Sales Tax Act, 1959, and whether any sales tax was payable under the Bombay Sales Tax Act, 1959, by the applicants in respect of this transaction.
Ratio Decidendi: The court held that the sale in question was not a sale in the course of import and hence it was not exempt from sales tax under the provisions of the Bombay Sales Tax Act, 1959. The court also held that the sale was not a sale outside the State of Maharashtra and hence it was not exempt from sales tax under the provisions of the Central Sales Tax Act, 1956. The court further held that the appropriation of the goods to the contract took place in the State of Maharashtra and hence the sale was a sale within the State of Maharashtra.
Final Decision: The court answered the question in the affirmative, that is to say, in favor of the department and against the applicants.
The judgment of the Court was delivered by
SUJATA V. MANOHAR, J. - The applicants, M/s. Batliboi & Company Pvt. Ltd., had entered into a contract with M/s. Kirloskar Brothers Ltd. to sell to them a double column vertical turning and boring mill, Model SK-40A complete with standard equipment and electrical equipment, manufactured in Czechoslovakia. The applicants have an import licence for import of machinery. Prior to their contract with M/s. Kirloskar Brothers Ltd., the applicants had placed an order with the Czech manufacturers of the machine for the import of the machine in question. The applicants had also filled in a tender with the defence department under which, inter alia, they were required to supply this machine to the defence department. Thereafter by their letter dated 1st April, 1972, the applicants made an offer to M/s. Kirloskar Brothers Ltd. (hereinafter referred to as "Kirloskars") offering to sell to them the same machine. In the letter of 1st April, 1972, addressed by the applicants to Kirloskars the applicants set out a telex which was sent by them to Kirloskars. In the telex they had mentioned that the machine was under offer to the defence department until the end of June, 1972, and that they could sell the machine to M/s. Kirloskar Brothers Ltd., provided the defence department released the same. In the offer which was set out in the said letter the applicants set out the term relating to delivery as follows :
"Ready at works in Czechoslovakia, subject to prior sale, to be imported against our own import licence. ........"
Thereafter by their letter dated 3rd April, 1972, addressed to the applicants, Kirloskars placed an order with the applicants for the purchase of this machine. This order stipulated for erection and commissioning of the machine by the applicants with the help of erection engineers from the works in Czechoslovakia. By another letter of 5th April, 1972, addressed by Kirloskars to the applicants, Kirloskars added a further stipulation in the purchase order to the effect that the property in the machine offered by the applicants shall stand transferred to Kirloskars as soon as the machine is ready-packed in crates for shipment from Czechoslovakia. The addition of this stipulation was confirmed by the applicants. Thereafter in May, 1972, the machine was shipped by the Czech manufacturers to Bombay. The machine arrived in Bombay on or about 11th July, 1972. The applicants cleared this shipment and thereafter some time in the months of July/August, 1972, the machine was sent by the applicants to Kirloskars at Kirloskarwadi by rail. The railway receipts in connection with the goods so sent are dated 17/19th July, 1972, 26/27th July, 1972, and 5/12th August, 1972. In respect of this sale of the machine effected by the applicants to Kirloskars the applicants sent their bill dated 14th August, 1972, to Kirloskars.
The applicants thereafter made an application under section 52 of the Bombay Sales Tax Act, 1959, for the purpose of determining whether the transaction between the applicants and Kirloskars was a sale within the State of Maharashtra as defined under section 2(28) of the Bombay Sales Tax Act, 1959, and whether any sales tax was payable under the Bombay Sales Tax Act, 1959, by the applicants in respect of this transaction. The Deputy Commissioner, on this application, concluded that the sale in question had taken place in the State of Maharashtra. It was, therefore, a sale as defined under section 2(28) of the Bombay Sales Tax Act, 1959, and hence sales tax was payable by the applicants on this transaction. Being aggrieved by the order of the Deputy Commissioner, the applicants preferred an appeal before the Tribunal. This appeal was dismissed by the Tribunal. Thereafter at the instance of the applicants, a reference has been made to the High Court. The question which has been referred to us for determination is as follows :
"Whether, on the facts and in the circumstances of the
