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1963 Supreme(Cal) 69
HIGH COURT OF CALCUTTA
D. Basu
ASSOCIATED ELECTRICAL INDUSTRIES (INDIA) (P) LTD. - Appellant
Versus
COMMERCIAL TAX OFFICER - Respondent
C. R. 338 (W) Of 1961
Decided On : APRIL 5, 1963
MEYER, NIRMAL CHAKRAVARTY, S.K.ROY CHAUDHARY, SAMARENDRA NATH DUTTA, SANKAR GHOSH, SURATHI MOHAN SANYAL,
A sale in the course of import is exempt from sales tax under Article 286 (1) (b) of the Constitution.
Headnote:
SALES TAX - Exemption - Sale in course of import - Contract for supply of materials and services - Whether sale of goods - Whether composite contract - Whether sale took place outside the State - Whether alternative remedies bar application under Article 226.
Fact of the Case:
The petitioner, Associated Electrical Industries (India) Private Ltd., claimed exemption from sales tax for the sum of 56 lakhs and odd, being the amount invoiced in respect of transactions which took place prior to July, 1957, on two-fold grounds, viz., that there was no transaction of sale in respect of this amount, or, if there was any such transaction it was a sale in course of the import of the goods into the territory of India and that, accordingly, no sales tax was payable on the amount referred to. The Commercial Tax Officer rejected the claim for exemption and made the impugned assessment and demanded a tax of Rs. 2,31,867. 95 np.
Finding of the Court:
The court held that the transaction represented by the sum of Rs. 33,70,831. 18 np. was a transaction of sale of goods to the Punjab Government or the Punjab State Electricity Board and that it was not a composite contract for the supply of works, labour and materials. The court also held that the sale took place within the State of West Bengal and that the application was not barred by alternative remedies.
Issues: 1. Whether the transaction represented by the sum of Rs, 33,70,831. 18 np. was a transaction of sale of goods to the Punjab Government or the Punjab State Electricity Board? 2. Whether it was a composite contract for the supply of works, labour and materials? 3. Whether it represented a sale in the course of import? 4. Whether the sale took place outside the State of West Bengal? 5. Whether the application is barred by alternative remedies?
Ratio Decidendi: 1. The court held that the transaction was a sale of goods because there was an agreement to sell movables, for a price, and property passing therein pursuant to that agreement. The court also held that the petitioner never became the owner of the goods which were imported and that the goods were imported by the petitioner as an agent of respondent 3 or the Punjab Government. 2. The court held that the contract was not a composite contract for the supply of works, labour and materials because the petitioner was not to erect the plant for a lump sum and that the petitioner's part in the erection of the plant was limited to the supply of Engineers for the purpose of supervising the erection. 3. The court held that the sale took place in the course of import because the movement of the goods from abroad into the territory of India was caused by a covenant in the contract between the seller and the buyer. 4. The court held that the sale did not take place outside the State of West Bengal because the goods were within West Bengal at the time of the appropriation. 5. The court held that the application was not barred by alternative remedies because the imposition of a sales tax in contravention of the prohibition contained in Article 286 constitutes an infringement of the fundamental right guaranteed to the assessee under Article 19 (1) (g).
Final Decision: The court allowed the application in part and quashed the order of assessment in part, i.e., in so far as it assesses the tax on the transaction of Rupees 33,70,831. 18 np. between the petitioner and respondent 3; and respondent 1 shall be restrained, by an order in the nature of mandamus, from enforcing the said assessment order against the petitioner without allowing the exemption in respect of the aforesaid transaction.
( 1 ) THOUGH this Application under Article 226 is a voluminous document, the case of the petitioner may be briefly stated as follows: The petitioner, Associated Electrical Industries (India) Private Ltd. , a registered dealer, submitted its return on 29-12-58 to the Sales Tax Authorities in respect of the financial year ending 31-10-58, in which return he claimed exemption from sales tax for the sum of 56 lakhs and odd, being the amount invoiced in respect of transactions which took place prior to July, 1957, on two-fold grounds, viz. , that there was no transaction of sale in respect of this amount, or, if there was any such transaction it was a sale in course of the import of the goods into the territory of India and that, accordingly, no sales tax was payable on the amount referred to.
( 2 ) THE Commercial Tax Officer (Respondent No. 1), by his order dated 20-2-61 (Annexure 'c' to the application--page 26), rejected the claim for exemption and made the impugned assessment and demanded a tax of Rs. 2,31,867. 95 np. The petitioner by the letter in (Annexure 'j' page 118), demanded justice from the Commercial Tax Officer and this letter summarises, in brief, his case in the present Application. Its grievance is that out of the sum claimed for exemption before respondent 1, the sum of Rs. 33,70,831. 18 np. represented the C. I. F. value of the goods imported by the petitioner for and on behalf of the Punjab State Electricity Board and that the impugned order of the Commercial Tax Officer rejecting the exemption with respect to this amount was illegal and! without jurisdiction on the following grounds-- (1) That it did not constitute a "sale" inasmuch as (a) the petitioner was never the owner of the said goods and never transferred property in goods to the Punjab State Electricity Board and (b) it was an indivisible contract for supply of work, labour and materials and for the erection of immovable property and not a transaction or sale of goods. (2) That even if it was a "sale", such sale took place in the course of the import of the goods into the territory of India and shall accordingly be exempted from sales tax by virtue of Article 286 (1) (b) of the Constitution. (3) That the "sale" did not take place within the State of West Bengal and accordingly, it was a sale taking place outside the State within the meaning of Article 286 (1) (a), read with Section 4 of the Central Sales Tax Act, 1956.
( 3 ) THE petitioner, accordingly, prays that the impugned order of the respondent No. 1 as well as the notice issued by the respondent No. 1 dated 21-2-61 after rejection of the claim for exemption (Vide Aunexure 'c' page 31) be quashed by a writ of certiorari and the respondents be directed not to give effect to the said order or notice or to demand or collect say sales tax from the petitioner in respect of the impugned transaction, referred to above. In the Application the Commercial Tax Officer has been impleaded by his official designation as respondent No. 1. The officer who is at present holding his office has been impleaded as respondent No. 2, Respondent No. 3 is the Punjab State Electricity Board which, it is stated in the petition, has been impleaded as a proper party, without any relief being claimed against it. Respondent No. 2 has filed a counter-affidavit on behalf of the respondent No. 1 and himself. In this affidavit it is denied that the petitioner imported the goods for and on behalf of the Punjab State Electricity Board and it is contended that the petitioner imported these goods for selling the same to the East Punjab Government. It is also contended that it is the petitioner who had property in the goods and not the Chief Engineer of the Government of Punjab. There was according to the counter-affidavit, a transaction of sale with respect to the amount referred to in the application and the transaction involved a contract for the sale of goods as well as for rendering services, the two contracts bei
