West Bengal Sales Tax Act, 1954 – West Bengal Sales Tax Act, 1994 – Sale of goods imported from foreign country and after unloading the same on the land-mass of the State kept in the bonded warehouse without payment of customs duty to foreign bound ships as “ship stores” – Amenable to sales tax or not – The Tribunal held that the sale had taken place on the land-mass of the State and the sale was neither for import nor for export and rejected the claim of the appellants for exemption – The High Court upheld the view of the Tribunal – Before the Supreme Court, the appellants contended that the process of import was not complete at the time of sale of the goods in question to the foreign-going ship and the transaction of sale was “in the course of import”, for which reason it was not amenable to sales tax – Held: A priori, for a sale or purchase to qualify as a sale or purchase in course of import, the essential conditions are that such sale shall occur before the goods had crossed the customs frontiers of India and the import of the goods must be effected or the import is occasioned due to such sale or purchase – In the instant case, the sales in question did not occasion import – The stated sales or appropriation of goods kept in bonded warehouse within the land-mass/ territory of the State of West Bengal are neither in the course of import or export and more so, were effected beyond the customs port/ land customs station area – Therefore, in law, it was a sale amenable to levy of sales tax under the 1954 Act and the 1994 Act, as the case may be, r/w. s. 4 of the CST Act – There is no infirmity in the view taken by the authorities below and which had justly commended to the High Court – Central Sales Tax Act, 1956 – s.5 r/w. s.2(ab)
Dismissing the appeals, the Court
HELD: 1. The sale to be in the course of import, must be a sale of goods and as a consequence of such sale, the goods must actually be imported within the territory of India and further, the sale must be part and parcel of the import so as to occasion import thereof. Indeed, for the purposes of Customs Act, only upon payment of customs duty the goods are cleared by the Customs authorities whence import thereof can be regarded as complete. However, that would be no impediment for levy of sales tax by the State concerned in whose territory the goods had already landed/unloaded and kept in the bonded warehouse. For seeking exemption, it is necessary that the goods must be in the process of being imported when the sale occurs or the sale must occasion the import thereof within the territory of India. The word “occasion” is used to mean “to cause” or “to be the immediate cause of”. In the present case, the stated sales in no way occasioned import of the goods into the territory of India. For, the goods were taken away by the foreign-going ship as ship stores for being consumed after the goods had crossed the customs frontiers/Indian Waters. [Para 12][1148-D-F]
2. Indubitably, the sale which is to be regarded as exempt from payment of sales tax, is a sale which causes the import to take place or is the immediate cause of the import of goods. The appellants having failed to establish that the stated goods would be actually imported within the territory of India and had not crossed the customs station, cannot contend that the sale was in the course of import as such within the meaning of Section 5 read with Section 2(ab) of the Central Sales Tax Act, 1956. Moreover, there is no direct linkage between the import of the goods and the sale in question to qualify as having been made in the process or progress of import.[Para 13][1148-G-H; 1149-A]
3. In the present case, it is not the case of the appellant that the goods in question were being exported. Since the goods are to be consumed on the board of the foreign going ship and the same would be consumed before reaching a destination, it does not fall under the definition of ‘export’. The sale cannot qualify as a sale occasioning export unless the goods reach a destination which is a place outside India. Further, since the goods have been sold from the bonded warehouse and had crossed the customs port/land customs station prior to their sale, it cannot qualify as a sale in course of export within the meaning of Section 5(1) read with Section 2(ab) of the CST Act. [Para 24][1156-F-G]
4. In regard to the contention that declaration under Section
69 of the Customs Act was made by the appellant, there is nothing on record to show that such declaration was made in respect of the goods pertaining to subject sale(s). Even otherwise, the benefit extended under the Customs Act of waiver of customs duty cannot be taken as waiver of sales tax under the relevant state and central laws. Similarly, insertion of sub-Section (3) in Section 5 of the CST Act in 1976 does not affect these cases because the bonded warehouse where the stated sales or appropriation of the goods occurred is within the land-mass of the State of West Bengal and not shown to be within the customs station area. [Para 25][1156H; 1157-A-B]
5. A priori, it must be held that the stated sales or appropriation of goods kept in bonded warehouse within the landmass/territory of the State of West Bengal are neither in the course of import or export and more so, were effected beyond the customs port/land customs station area. Therefore, in law, it was a sale amenable to levy of sales tax under the 1954 Act and the 1994 Act, as the case may be, read with Section 4 of the CST Act. As a result, these appeals must fail, as we find no infirmity in the view taken by the authorities below and which had justly commended to the High Court. [Para 26][1157-C] K. Gopinathan Nair and Ors. v. State of Kerala (1997)
10 SCC 1 : [1997] 3 SCR 226; Md. Serajuddin and Ors. v. State of Orissa (1975) 2 SCC 47 : [1975] 0 Suppl. SCR 169 – relied on
J.V. Gokal & Co. (Private) Ltd. v. Assistant Collector of Sales-Tax (Inspection) & Ors. [1960] 2 SCR 852; Indian Tourist Development Corporation Limited v. Assistant Commissioner of Commercial Taxes & Anr. (2012) 3 SCC 204 : [2012] 1 SCR 808 – inapplicable. M/s. Ranjit Shipping Pvt. Ltd. & Anr. v. State of West Bengal & Ors. (1980) SCC Online Cal 141 : (1980) 2 CHN 192; Madras Marine and Co. v. State of Madras (1986) 3 SCC 552 : [1986] 3 SCR 236; State of Travancore-Cochin & Ors. v. Shanmugha Vilas Cashew Nut Factory, Quilon & Ors. [1954] SCR 53; Minerals & Metals Trading Corporation of India Ltd. v. Sales Tax Officer & Ors. (1998) 7 SCC 19 : [1998] 2 Suppl. SCR 112; State of Kerala & Ors. v. Fr. William Fernandez & Ors. (2017) SCC Online SC 1291 : (2017)
12 SCALE 463; Coffee Board, Bangalore v. Joint Commercial Tax Officer, Madras & Anr. (1969) 3 SCC
349 : [1970] 3 SCR 147; Commissioner of Customs (Import), Mumbai v. Dileep Kumar and Company & Ors. (2018) 9 SCC 1 : [2018] 7 SCR 1191; Burmah Shell Oil Storage and Distributing Co. of India Ltd. & Anr. v. Commercial Tax Officer & Ors. [1961] 1 SCR 902; Kiran Spinning Mills v. Collector of Customs (2000) 10 SCC 228; State of Kerala & Ors. v. Cochin Coal Company Ltd. [1961] 2 SCR 219; Fairmacs Trading Co. v. The State of Andhra Pradesh (1975) 36 STC 260 (AP); Fairmacs Trading Co. v. The State of Tamil Nadu (1978)
41 STC 157 (Mad) – 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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