ARABIAN EXPORTS LTD Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) HEARD the learned Counsel for the parties at length. The controversy in this case is whether surrender of unutilised exim scrips by the petitioners to the designated banks in terms of the circular of Government of India, Ministry of Commerce dated 5th May 1993 amounts to sale within the meaning of clause 28 of section 2 of the Bombay Sales Tax Act, 1959. The case of the respondents appears to be that it would be a sale because the petitioners have received compensation by way of premium. The case of the petitioners is that the compensation by way of premium has been given to the petitioners not for transfer of right which was available to them on the basis of the exim scrips but for surrender of exim scrips to the licensing authority for extinguishment of that right. According to the learned counsel for the petitioners, extinguishment of right by cancellation of the licence does not amount to sale within the meaning of section 2(28) of the Bombay Sales Tax Act. In support of this contention, the learned counsel relies on the decision of the Supreme Court in Vania Silk Mills P. Ltd. v. C.I.T. (1991) 191 ITR 647. On hearing counsel for the parties, it appears that the question whether surrender of exim scrips to the Government for cancellation on receipt of the premium determined by the Government amounts to sale and the amount of premium can be regarded as sale price for the purpose of levy of sales tax requires consideration. Hence rule, returnable after two months. Respondents waive service.

(2.) HEARD the learned counsel for the petitioners on prayer for stay. Also heard Mr.N.T. Saraf, learned counsel for the respondents. Considering the facts and circumstances of the case and the nature of controversy, we direct that recovery of sales tax levied on the amount received by the petitioners as premium on surrender of exim scrips shall remain stayed on furnishing of bank guarantee of a nationalised bank by the petitioners in favour of the respondent No.2 within four weeks from today. Certified copy expedited.