FAIRMACS TRADING COMPANY Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) THIS revision petition is from the order of the Sales Tax Appellate Tribunal Andhra Pradesh, given in Tribunal Appeal No. 778 of 1970 on 26th September, 1972. The essential factare that the petitioners are dealers in liquors, cigarettes, etc. , and also are ship-chandlers. They submitted returns of their turnover for the year 1967-68 showing Rs. 2,19,972. 82 as gross turnover and Rs. 97,462. 58 as net turnover. They claimed exemption on transactions totalling Rs. 1,22,510. 24. The said claim included Rs. 72,061. 69 comprising of sales of "bonded warehouse ship-stores". According to the petitioners, the ship-stores were imported from foreign countries, kept in bonded warehouses of the customs department and later sold and delivered to ships' masters for consumption aboard the ships. They claimed that such sales were not exigible to tax under the Andhra Pradesh General Sales Tax Act, 1957, hereinafter called the Act, being sales outside the State of Andhra Pradesh. In the reply, which the petitioners gave on 29th January, 1969, to the pre-assessment notice dated 16th January, 1969, they set up their claims as follows :

(2.) THE Deputy Commissioner Tax Officer, by his order dated 19th January, 1969, held that since the goods were within the State at the time of sale, the transactions are exigible to tax. He taxed the petitioners accordingly. On appeal, the Assistant commissioner, disagreeing with the view of the Deputy Commercial Tax Officer, held that the customs duty was never levied as the goods were intended to be supplied as stores to vessels and since the goods were not assessed to duty, the goods must be deemed to have been imported into Andhra Pradesh. The sales in question were sales in the course of import of the goods which had not crossed the customs barrier. The appeal was accordingly allowed. On a further revision, suo motu, the Deputy Commissioner held that the order of the Assistant Commissioner was bad. He therefore set it aside and restored the order of the Deputy Commercial Tax Officer.

(3.) IT is common ground that clause (b) is inapplicable to the instant case. If clause (a) applies then what is to be seen is whether the goods in question were within the State at the time of the contract of sale. That the goods in question were specific or ascertained was not in doubt. The goods in question were stored in the bounded warehouses located within the territory of Andhra Pradesh was also not disputed. When the owners of these goods sold the same to the ship's authorities with an intent that they can be consumed during the course of voyage by those who are on the ship, the contract of sale of these goods thus took place when the goods were within the State. What follows is that the requirement of section 4 (2) (a) is fully satisfied. We are therefore clear in our view that since the sales took place within the State of Andhra Pradesh, it cannot be validly contended that the sales took place outside the State within the meaning of article 286 (1) (a ). After the explanation attached to article 286 (1) was omitted in September, 1956, and article 286 was amended in the present form, the Constitution steered clear of all the previous controversies arising out of the omitted explanation. It is unnecessary to go into such controversies. We therefore reject the first contention. We then turn to the second contention. As can be seen article 286 (1) (b) provides that no law of a State shall impose or authorise the imposition of tax on the sale or purchase of goods where such sale or purchase takes place in the course of import of the goods into, or export of the goods out if, the territory of India. In pursuance of sub-article (2) of article 286, section 5 of the Central Sales Tax enacts as to when a sale or purchase of goods can be said to take place in the course of import or export. According to that section, a sale or purchase shall be deemed to take place in the course of the export of the goods out of the territory of India only if the sale or purchase either occasions such export or is effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India.