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1960 Supreme(Bom) 59
HIGH COURT OF BOMBAY
K. K. DESAI, J.
Burmah Shell Oil Storage and Distributing Co. of India, Ltd.
Versus
State of Bombay
Suit No.53 of 1956
Decided On : 04-08-1960
Jhaveri with R.J. Joshi, for Plaintiffs; G.N. Joshi with Baptista, for Defendants.
Sales of aviation spirit and oil to foreign going aircrafts are not sales in the course of export of the goods out of the territory of India as mentioned in Article 286(1)(b) of the Constitution.
Headnote:
BOMBAY SALES OF MOTOR SPIRIT TAXATION ACT, 1946 - SECTION 22 - LIMITATION - ARTICLE 286(1)(B) OF THE CONSTITUTION - SALE OF GOODS IN THE COURSE OF EXPORT - INTERPRETATION.
Fact of the Case:
Plaintiffs, an oil company, filed a suit for refund of sales tax paid on aviation spirit and oil sold to foreign going aircrafts. The sales tax officer assessed the plaintiffs for the relevant period and the plaintiffs paid the tax. Subsequently, the plaintiffs claimed a refund of the tax paid on the ground that the sales were exempt from sales tax under Article 286(1)(b) of the Constitution. The Collector of Sales Tax rejected the plaintiffs' claim. The plaintiffs filed a suit for refund of the tax paid.
Finding of the Court:
The court held that the suit was barred by limitation under Section 22(2) of the Bombay Sales of Motor Spirit Taxation Act, 1946. The court also held that the sales of aviation spirit and oil to foreign going aircrafts were not sales in the course of export of the goods out of the territory of India as mentioned in Article 286(1)(b) of the Constitution.
Issues: 1. Whether the suit was barred by limitation under Section 22(2) of the Bombay Sales of Motor Spirit Taxation Act, 1946? 2. Whether the sales of aviation spirit and oil to foreign going aircrafts were sales in the course of export of the goods out of the territory of India as mentioned in Article 286(1)(b) of the Constitution?
Ratio Decidendi: 1. The court held that the suit was barred by limitation under Section 22(2) of the Bombay Sales of Motor Spirit Taxation Act, 1946. The court held that the assessments made and rejection of the plaintiffs' application for refund were "anything done under the Act" as mentioned in Section 22(2) of the Act. The court held that the plaintiffs' claim was more than six months after the act which the plaintiffs must of necessity challenge in this case, viz. the assessments made in January 1955. The court held that the suit was accordingly barred under the provisions of S.22(2) or the Act. 2. The court held that the sales of aviation spirit and oil to foreign going aircrafts were not sales in the course of export of the goods out of the territory of India as mentioned in Article 286(1)(b) of the Constitution. The court held that the sales were completed inside the territory of India and there was no obligation on the plaintiffs as sellers to procure a contract for carriage of the goods sold outside the territory of India, or to have effected physical delivery of the goods sold to the purchaser outside the territory of India in performance of the sales.
Final Decision: The court dismissed the suit.
JUDGMENT:- This is a suit for repayment and refund of the principal amount of Rupees 1,90,590-8-0 paid towards sales-tax levied under the Bombay Sales of Motor Spirit Taxation Act, 1946 (Bombay Act No.VI of 1946) and interest and costs.
2. The Plaintiffs case is that between April 1, 1948, and September 30th, 1952, as also subsequent thereto the Plaintiffs had in accordance with and as required by section 10 of the Act submitted every month statements of sales of aviation spirit and aviation oil and before submitting such statements paid into the Government treasury the full amount of the tax stated in such statements to be due from them under the Act. These statements included particulars of sales of goods supplied to foreign going aircrafts for consumption during the flights and payments made by the Plaintiffs included the tax on the amount of such sales.
3. By correspondence beginning with a letter dated August 16, 1952 the Plaintiffs through "Oil Industry Supply Sub-committee" wrote to the Collector, of Sales-tax asking him to let them have his confirmation that sales of aviation spirit and aviation turbine fuel for foreign going aircrafts were exempt from sales-tax with effect from January 26, 1950. That correspondence was obviously addressed because under Article 286(1)(b) of the Constitution a State is prevented from imposing a tax on "the sale of goods" where such sale is made "in the course of export of the goods out of territory of India".
4. By a letter dated December 24, 1953, addressed to the Standard Vacuum Oil Co., the Collector of Sales Tax expressed an opinion that sales of aviation spirit and oil to foreign going aircrafts for actual consumption during the flights was exempt from payment of sales-tax. Before the Plaintiffs had received a copy of that letter the Sales-tax Officer L.C. Ward took up the assessment of the returns made by the Plaintiffs in respect of sales mentioned above. By three different letters each dated January 9, 1953, the sales-tax officer intimated to the Plaintiffs that assessment of the Plaintiffs returns had been completed under section 4 of the Act:- (i) for the period from April 1, 1948 to 31st March, 1951 and no balance of tax was due from the Plaintiffs for that period; (ii) for the period from 1st April, 1951 to 17th June, 1952 and in respect of that period Rs.75,307-14-6 were refundable to the Plaintiffs; (iii) and for the period from 18th June, 1952 to 30th September, 1952 and Rs.17,763-12-0 were refundable to the Plaintiffs.
5. The Collector of Sales-tax thereafter by his letter dated April 23, 1954, wrote to the Plaintiffs that with effect from January 26, 1950, by virtue of sub-clause (b) of Article 286(1) of the Constitution sales of goods supplied to foreign going aircrafts for actual consumption during the flights would be exempt from sales-tax. The Plaintiffs thereafter by their letter dated January 6, 1955, addressed to the Collector of Sales-tax claimed refund of Rs.5,13,056-11-0 as being the aggregate amount of tax paid by the Plaintiffs on the sales of aviation spirit and aviation turbine fuel to foreign bound aircrafts during the period January 26, 1950 to 30th April, 1954. The Collector of Sales-tax forwarded the Plaintiffs application to the Sales-tax officer and informed the Plaintiffs of that fact. The Sales-tax Officer by his letter dated January 28, 1955, informed the Plaintiffs that the Plaintiffs had already been assessed under section 4 of the Act for the periods, which I have already referred to above and the Plaintiffs claim for refund for the period January 26, 1950 to September 30, 1952, was not entertainable by him at that stage. The Sales-tax officer also further stated that the Plaintiffs claim for refund for the period from October 1, 1952 to April 30, 1954, would be considered by him at the time of assessments for that period.
6. The Plaintiffs thereafter addressed certain correspondence to the Collector of Sales-tax and subsequently by a lette
