By C. B. Thakar Advocate, G. G. Goyal, Janak Vaghani Chartered Accountants
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Sale in Course of Import or Export – Sale of
Goods In Air Port – By Duty Free Shop – Is Sale in Course of Imports,
section 5 (2) of The Central Sales Tax Act, 1956.
FACTS:
The
appellant dealer is managed by the Indian Tourism Department
Corporation having duty free shops at all major international air ports
in India. At the duty free shops, the dealer sold several articles
including liquor to foreigners and also to Indians, who are going abroad
or coming to India by air. The dealer claimed the sale of goods to
customers as sale in course of Import and the goods were delivered
before importing the goods or before the goods had crossed the customs
frontiers of India. The Karnataka sales tax authorities levied tax while
passing an assessment order on such sales made by the duty free shop at
Bengaluru. The dealer filed writ petition before the Karnataka High
Court against the said assessment order. The Karnataka High Court
dismissed the Writ Petition on the ground that the dealer had not
exhausted equally efficacious alternative remedy available to it under
the provisions of the Act. The dealer filed a special Leave Petition
before the SC against the said judgment of the High Court.
HELD:
It
is an admitted fact that the goods were imported by the dealer from
foreign countries and were kept in a bonded warehouse and they were
transferred to duty free shops situated at the Bengaluru International
Airport, as and when the stock of goods lying at the duty free shops was
exhausted. When the goods are kept in bonded warehouses, it cannot be
said that the said goods had crossed the customs frontiers of India. The
goods are not cleared from the customs till they are brought in India
by crossing the customs frontiers. When any transaction takes place
outside the customs frontiers of India, the transaction would be said to
have taken place outside India. Though the transaction might take place
within India but technically looking to the provisions of section 2(11)
of the Customs Act and Article 286 of the constitution, the said
transaction would be said to have taken place outside India.
The
SC further held that submissions of the department with regard to the
sale not taking effect by transfer of document of title to the goods are
absolutely irrelevant. The Transfer of document of title to the goods
is one of the methods whereby delivery of goods is effected. The
delivery may be physical also. At the duty free shops, goods are sold to
the customers by giving physical delivery, it would not mean the sales
were taxable under the Act. Accordingly, the SC allowed the SLP filed by
the dealer and quashed the assessment so far as the transactions which
were the subject matter of the litigation.
