(1.) THE assessees are dealers in ships stores. During the assessment years 1964-65 and 1965-66 they imported goods from foreign countries, and as soon as the goods were landed in the Madras Harbour they were kept in bonded warehouses and on receipt of orders from ships'masters, they sold the goods to the outgoing ships. THE assessees, however, had not registered themselves as dealers and they had not filed any return, since according to them, the sales effected by them from bounded warehouses were not taxable for the reason that they were in the course of import. THE assessing authority, however, took the view that the sales effected by the assessees from the bonded warehouses to the outgoing ships were taxable under the Madras General Sales Tax Act, as they were effected after the course of import had ended, and in that view he assessed the respondents for the year 1964-65 on a taxable turnover of Rs. 35,674. 93 and for the year 1965-66 on a taxable turnover of Rs. 65,150. 98. THE assessing authority also levied a penalty of Rs. 1,271 for the year 1964-65 and a penalty of Rs. 2,250 for the year 1965-66 under section 12 (3) of the Act. Both against the assessments as well as against the levy of penalty, there were appeals before the Appellate Assistant Commissioner. But those appeals were unsuccessful. THEre were further appeals to the Tribunal. Before the Tribunal, it was urged by the assessees that the sales effected by them of goods from the bonded warehouse to the outgoing ships being sales in the course of import were no taxable under the Madras General Sales Tax Act. THE Tribunal upheld the contention put forward on behalf of the assessees and set aside the orders of assessment as well as the order levying penalty. Aggrieved against the orders of the Tribunal, the State has come before us.
(2.) IT is urged by the learned Government Pleader that the view taken by the Tribunal that the sales by the assessees from the bonded warehouse to the outgoing ships had taken place before the goods crossed the customs barriers and, therefore, they were not taxable by the Madras State is based on a decision of this court in Deputy Commissioner of Commercial Taxes, Madras Division v. Devar and Co. ([1963] 14 S. T. C. 904.), that the said decision has since been reversed by the Supreme Court in State of Madras v. Devar and Co. ([1969] 24 S. T. C. 481 (S. C. ).) and that, therefore, the Tribunals's view is no longer tenable. This contention advanced on behalf of the revenue has to be accepted.