10 June 2024


Judgments

Supreme Court

Nirmal Kumar Parsan and Ors. Vs. Commissioner of Commercial Taxes and Ors.

MANU/SC/0063/2020

21.01.2020

Sales Tax/VAT

Benefit extended under Customs Act waiving customs duty cannot be taken as waiver of sales tax under state and central laws

The admitted factual position in the present cases is that, after importing foreign made cigarettes, the Appellants stored the same in the customs bonded warehouse within the land-mass of the State of West Bengal and some of those articles were sold to the Master of a foreign-going ship as ship stores, without payment of customs duty. Those goods were escorted to the stated ship under the supervision of the officials of the Customs authority.

The Appellants resorted to revision before the Tribunal, which came to be rejected. The Appellant carried the matter by way of a writ petition before the High Court, which came to be dismissed by the High Court, upholding the decision of the authority, which had held that the sales in question would be amenable to sales tax under the West Bengal Sales Tax Act, 1994.

The thrust of the argument of the Appellants in present appeals is 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 and in fact, the State would have no authority to levy such tax. It was urged that the stated sales were in the course of import and could not be subjected to levy of sales tax by the State under the State legislation.

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 (CST Act). 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.

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 present case, the sales in question did not occasion import.

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.

In regard to the contention that declaration under Section 69 of the Customs Act, 1962 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.

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, read with Section 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. Appeals dismissed.

Tags : Sales tax Levy Legality

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