Central Sales Tax Act, 1956 – First explanation to s.3; s.6 – Inter-State sale – Benefit of exemption u/s.6(2) – Goods delivered to carrier for transmission – If a timeframe can be imposed for delivery of goods to be taken therefrom – Circulars in question inter alia treated retention of goods beyond 30 days (as per the later Circular) in transporters’ godown as cut-off period – After that date, assessee was deemed to have had taken constructive delivery of goods and sale beyond that period within the State was held to be local sales and subjected to sales tax under the State Act – In first set of appeals (C.A No.2217 of 2011 & C.A No.2220 of 2011), High Court quashed the two circulars – In another set of appeals also (C.A No.10000 of 2011 and C.A No.10001 of 2011) following the aforesaid judgment, High Court quashed the orders of statutory authorities imposing tax under State Act and invalidated the two circulars – Held: A legal fiction is created in first explanation to s.3 – That fiction is that the movement of goods, from one State to another shall terminate, where the good were delivered to a carrier for transmission, at the time of when delivery is taken from such carrier – No concept of constructive delivery either express or implied in the said provision – Movement of the goods, for the purposes of s.3(b) would terminate only when delivery is taken, having regard to first explanation to that section – It does not qualify the term ‘delivery’ with any timeframe within which such delivery shall have to take place – Thus, fixing of timeframe impermissible – High Court rightly held in the judgment assailed in C.A No.2217 of 2011 that there is no place for any intendment in taxing statutes – Judgments of the High Court in the four appeals, not interfered with – Rajasthan Sales Tax Act, 1954 – Sale of Goods Act, 1930 – s.51 – Interpretation of Statutes.
Dismissing the appeals, the Court
HELD: 1.1 In this set of appeals where the respondent is Bombay Machinery Store, transfer of documents of title were effected subsequent to the goods reaching the location within destination State. But when the goods are delivered to a carrier for transmission, first explanation to Section 3 of the 1956 Act specifies that movement of the goods would be deemed to commence at the time when goods are delivered to a carrier and shall terminate at the time when delivery is taken from such carrier. The said provision does not qualify the term ‘delivery’ with any timeframe within which such delivery shall have to take place. In such circumstances fixing of timeframe by order of the Tax Administration of the State would be impermissible. [Para 12][535 F-G]
1.2 Sub-clause (1) of the Section 51 of the Sale of Goods Act, 1930 specifies when the goods shall be deemed to be in course of transit and sub-clause (3) thereof lays down the conditions for termination of transit. That condition is an acknowledgment to the buyer or his agent by the carrier that he holds the goods on his behalf. There is no material to suggest such an acknowledgment was made by the independent transporter in these appeals. In the case of Arjan Dass Gupta principle akin to constructive delivery was expounded. However, such construction would not be proper to interpret the provisions of Section 3 of the 1956 Act. A legal fiction is created in first explanation to that Section. That fiction is that the movement of goods, from one State to another shall terminate, where the good have been delivered to a carrier for transmission, at the time of when delivery is taken from such carrier. There is no concept of constructive delivery either express or implied in the said provision. On a plain reading of the statute, the movement of the goods, for the purposes of clause (b) of Section 3 of the 1956 Act would terminate only when delivery is taken, having regard to first explanation to that Section. There is no scope of incorporating any further word to qualify the nature and scope of the expression “delivery” within the said section. The legislature has eschewed from giving the said word an expansive meaning. The High Court under the judgment which is assailed in Civil Appeal No.2217 of 2011 rightly held that there is no place for any intendment in taxing statutes. The interpretation of the Division Bench of the Delhi High Court given in the case of Arjan Dass Gupta does not lay down correct position of law. The Tax Administration Authorities cannot give their own interpretation to legislative provisions on the basis of their own perception of trade practise. [Paras 14, 15][536-G-H; 537-A-F]
Arjan Dass Gupta and Brothers v. Commissioner of Sales Tax, Delhi Administration (1980) 45 STC 52 (Delhi) – not approved.
CTO v. Bhagwandas & Sons (1996 Tax World 107);
Guljag Industries Limited v. State of Rajasthan & Another (2003) 129 STC 3 (Raj.) – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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