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2019 Supreme(Bom) 295
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S.C. DHARMADHIKARI, B.P. COLABAWALLA, JJ.
COMMISSIONER OF SALES TAX MAHARASHTRA - Appellant
Versus
RADHASONS INTERNATIONAL, MUMBAI - Respondent
Sales Tax Reference No. 52 of 2009, 60 of 2009; Reference Application No. 46 of 2008, 45 of 2008
Decided on : 08-02-2019
Advocate Appeared:
V.A. Sonpal, Adv., Jyoti Chavan, Adv., N.V. Tapare, Adv.
Headnote:
Central Sales Tax Act, 1956 - Section 5/2 – Claim of compensation – Jurisdiction - Trial court - Enforcement authority, on verification of relevant documents found that the appellants claim of high sea sales for context of the sales of goods while being in customs bonded warehouse was erroneous and it insisted that the appellant should pay taxes on impugned sales – Accordingly appellant made certain advance payments – Thereupon enforcement authority communicated findings of its scrutiny to the concerned ward officer with a request to consider them appropriately in assessment for the relevant periods - Whether on the facts and circumstances of case and on a true and correct interpretation of the definition of term crossing of customs frontiers of India in section 2 Central Sales Tax Act, 1956 and provision in section 5(2) of said Act Tribunal was legally justified in holding that the impugned bonded sales effected to parties situate in Maharashtra are exempt from tax as sales in the course of import under the second limb of section 5(2) of Central Sales Tax Act, 1956 for the reasons of the said sales having been effected by transfer of documents of title to goods before crossing the customs frontiers of India – Held, Court do not think that our view is in any way different – Court have noticed all sections of Customs Act, 1962 which are relevant to the issue, including Chapter VI and particularly sections 15 and 18 thereof - Hence court are of firm view that it is not necessary to refer to all the judgments relied upon by - Judgment finally relied upon by close of his submissions in the case of Hotel (supra) is distinguishable on facts – There India Tourism Development Corporation managed a duty free shop at the international airport - Argument was that the return under the CST Act was not filed as no tax was payable. The goods which had been sold from this duty free shop were sold directly to the customers before importing the goods or before the goods had crossed the customs frontiers of India - There, on facts, it was found that the goods which had been brought from foreign countries had been kept in bonded warehouse and they were transferred to duty free shop situated at the international airport of further admitted fact was that the goods were kept be in bonded warehouse by execution of bond. When the goods were kept in bonded warehouse, it cannot be said that they had crossed the customs frontiers. Paragraph 1 of this judgment relied upon by cannot carry the respondents case further - Bonds and coupled with the fact that the goods were in the bonded warehouse and taken to the duty free shops at the international airport at was a typical distinguishing feature - Once the duty is levied the import is at an end and the national customs barrier is supposed to have been crossed - Reason being it is difficult to ascertain the point of time or the place at which the goods have entered the limits of the customs port - Therefore, the assessing authorities under the APGST Act does not get jurisdiction to assess goods if transfer of title deeds is effected before clearance of goods by filing bill of entry under the Customs Act and after making assessment of import duty payable under Section 28 of Customs Act, 1962 – Appeal disposed of
S. C. DHARMADHIKARI, J.
1. The Second Bench of the Maharashtra Sales Tax Tribunal at Mumbai (for short "MSTT") on 24th June, 2008, on two reference applications bearing Nos. 45 of 2008 and 46 of 2008 arising out of Second Appeal Nos. 1358 and 1359 of 2003, decided on 19th October, 2007, has referred the following question for opinion and answer of this court:-
"Whether on the facts and circumstances of the case and on a true and correct interpretation of the definition of the term 'crossing of customs frontiers of India' in section 2(ab) of the Central Sales Tax Act, 1956 and the provision in section 5(2) of the said Act the Tribunal was legally justified in holding that the impugned bonded sales effected to parties situate in Maharashtra are exempt from tax as sales in the course of import under the second limb of section 5(2) of the Central Sales Tax Act, 1956 for the reasons of the said sales having been effected by transfer of the documents of title to the goods before crossing the customs frontiers of India?"
2. The facts and circumstances in which this question has been referred are as under:-
3. The appellant is a partnership firm, carrying on business as reseller and importer in HR/CR sheets, chashew, carnals import licence etc. The appellant's place of business was visited by the Sales Tax Officer, E-121, Enforcement Branch in 1997. The main purpose of the enforcement visit was to examine the validity of turnover of sales claimed as "high sea sales" exempt from tax under the second limb of section 5(2) of the Central Sales Tax Act, 1956 (CST Act). The enforcement authority, on verification of the relevant documents, found that the appellant's claim of high sea sales for the year 1995-96 and 1996-97 in the context of the sales of the goods while being in customs bonded warehouse was erroneous and it insisted that the appellant should pay taxes on the impugned sales. Accordingly, the appellant made certain advance payments. Thereupon, the enforcement authority communicated the findings of its scrutiny to the concerned ward officer with a request to consider them appropriately in the assessment for the relevant periods.
4. The Ward Officer [STO (C-440)], Bandra Division, Mumbai then assessed the appellant for the period 1st April, 1995 to 31st March, 1996 and for the period 1st April, 1996 to 31st March, 1997 under the Bombay Sales Tax Act, wherein, the impugned bond sales were assessed to Sales Tax by disallowing the claim of high sea sales. The assessment orders, thus, resulted in certain demands. The appellant filed appeals against the said assessment orders aggrieved by dis-allowance of claim of high sea sales and subjecting it to tax @ 4% under the Bombay Act. The goods being iron and steel coils covered by Schedule Entry B-6, it was contended before the first appellate authority that the bond sales were effected on high sea basis by transfer of documents of title to the goods before the goods have crossed the customs frontiers of India and hence were exempt from tax under the second limb of section 5(2) of the CST Act. Alternatively, it was contended that the sales were in the course of import occasioning the import of goods into India covered by the first limb of section 5(2) of the CST Act. However, the first appellate authority confirmed the disallowance of the claim of the appellant of high sea sales by passing order dated 25th April, 2003. Therefore, the appellant filed the second appeals before the tribunal challenging the decision of the first appellate authority.
5. It was submitted on behalf of the Revenue that the cases of M/s. Indo Text Export Pvt. Ltd. (S. A. Nos. 284 and 285 decided on 17th June, 1995) and M/s. Sheventilal and Brothers (Appeal No. 104 of 1980 decided on 15th April, 1983) are applicable to the present matter. The above cited judgments decide the issue that once the imported good
