S. Ananda Reddy, J
1. These tax revision cases by the assessee are directed against the common order of the A.P. Sales Tax Appellate Tribunal. As common issue is involved, they are disposed of by this common judgment.
2. The assessee i.e., Spares Corporation, Visakhapatnam, is a registered dealer under A.P. General Sales Tax Act (APGST) as well as the Central Sales Tax Act (CST). It imports spares from the foreign countries as well as other States and sells to the fishing trawlers for consumption in the course of fishing operations. According to the assessee, the disputed sales are the sales affected in the course of exports. Therefore, the sales are not exigible to tax under the provisions of the APGST as well as CST Acts. This claim was not accepted by all the authorities under the statute. Hence, the present tax revision cases.
3. The learned Counsel for the petitioner contended that the relevant terms including the term export were not defined under the provisions of either the APGST or CST Act. In exercise of the powers conferred under Article 286 of the Constitution of India, the Parliament enacted the Customs Act to deal with imports and exports where all the relevant terms in respect of imports and exports are defined and further in exercise of such power the authorities under the said Act have treated the disputed sales as export sales. Therefore, the said adjudication is binding on the authorities under the APGST as well as CST Act and hence the impugned orders are liable to be set aside. The learned Counsel also contended that there are no provisions relating to the procedure or power to determine whether a particular transaction is a sale in the course of export out of the territory of India. There are no provisions in the APGST or CST Act relating to the procedure. In the absence of such clear provisions or power to adjudicate whether particular sales are affected in the course of exports, the adjudication made under the Customs Act, is binding on the authorities. Hence, the authorities under the State Acts are not justified in not accepting the claim of the petitioner. The learned Counsel also placed reliance on the decision of the Apex Court in the case of Collector of Customs v. Sun Industries, 71 STC 149.
4. The learned Special Government Pleader for Commercial Taxes, on the other hand, supported the impugned orders passed by the Tribunal. It is contended that the issue is concluded by the earlier judgments of this Court in the assessee’s own case. Therefore, it is not open to the petitioner to raise the very same pleas, which were rejected earlier after elaborate consideration. The learned Counsel also contended that the APGST or CST Acts are independent Codes by themselves for the purpose of levy; the authorities are fully empowered to adjudicate under the various provisions of the said Acts. There is no provision in the Act either putting any restriction on the authorities to adjudicate any transaction or imposing the decision of the authorities under the Customs Act to be binding for deciding whether a sale is an export sale or not. The learned Counsel also relied upon the following decisions :
Spares Corporation v. State of A.P., 97 STC 645; Burmah Shell Company Limited v. Commercial Tax Officer, 11 STC 765; Madras Marine Company v. State of A.P., 56 STC 154; Madras Marine and Company v. State of Madras, 63 STC 169; Mohd. Sirajuddin v. State of Orissa, 36 STC 136, and Consolidated Coffee Limited v. Coffee Board, 46 STC 164.
5. Heard both sides and considered the material on record.
6. The dispute in these tax revision cases in whether the sale transactions affected by the petitioner are not exigible to tax under the provisions of either APGST or CST Act.
7. There is no dispute as to the factual aspects of the cases are concerned. The petitioner’s case ought to have been rejected at the threshold as the petitioner’s earlier TRCs have already been rejected by this Court. However, the learned Counsel contended that the earlier decision was
rendered on certain facts, which according to the petitioner are in correct and in fact, that judgment was sought for a review on that ground. This Court by a separate order dismissed the said review petition. Under the above circumstances, we shall proceed to consider the case of petitioner on merits.
8. According to the petitioner/dealer, the import of spares is regulated by the Customs Act, which contains the definitions of various terms relating to the imports and exports and the importer is not free to remove the imported goods without the prior order of the customs authorities. Even for export of the same also the delivery of goods has to be effected in accordance with the provisions of the Customs Act through the officers or under the supervision of the Officers under the Customs Act. Further, according to the petitioner, the customs authorities have treated the disputed sales as sales in the course of exports. Therefore, it is not open to the Respondent-authorities not to treat them as export sales. The above contentions are to be noted only for rejection. First of all, the provisions of APGST or CST Acts are independent Codes by themselves and the authorities are empowered to adjudicate the issues that arise for consideration. Therefore, it is not open to the petitioner to contend that the adjudication made under the provisions of the Customs Act is binding on the authorities under the State Acts.
9. Coming to the merits of the claim, the petitioner’s case is that the disputed sales were affected in the course of exports. Therefore, the sales are not exigible to sales tax. It is not in dispute that the sales are made to the purchasers, who are residents of Visakhapatnam. But, what was contended is that the goods are delivered to the foreign going vessels on the high seas. Therefore, the sales are in the course of exports. As according to the petitioner the sales were affected outside the territory of the State, it would be appropriate to consider Section 5 of the CST Act, which is a relevant provision in deciding the claim of the petitioner, which is as follows:–
“5. When is a sale or purchase of goods said to take place in the course of import or export :–(1) A sale or purchase of goods 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.
(2) A sale or purchase of goods shall be deemed to take place in the course of the import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India.
(3) Notwithstanding anything contained in sub-section (1) the last sale or purchase of any goods preceding the sale or purchase occasioning the export of those goods out of the territory of India shall also be deemed to be in the course of such export, if such last sale or purchase took place after and was for the purpose of complying with, the agreement or order for or in relation to such export.”
10. The claim of the petitioner is that the statutory presumption applies to his case as the sates have occasioned in export. According to the petitioner, the imported spares were kept in the bonded warehouse in the port and as and when orders are received, spares are supplied, which were delivered on board through the customs authorities. Hence, they are sales occasioned in the course of export. A perusal of the
assessment order for 1994-95 shows that the Assessing Officer recorded the following finding :
“The dealers have supplied spares imported from outside the State as well as from other States, to the skipper in Visakhapatnam Fishing Harbour to the trawlers. It is evident that all the sales made by the dealers are sales made within the State and the sales turnover shown against export sales and high sea sales are conducted as 1st sales in the State.”
11. Basing on the above finding the claim of the petitioner was rejected by the Appellate Deputy Commissioner as well as by the Sales Tax Appellate Tribunal. In order to prove that a sale had occasioned in the course of export, one has to prove not only that the goods have moved from a place inside India to outside, but to a place outside India. Mere taking of the goods out of India does not amount to export of the goods. In the present case, spares sold by the petitioner to the trawlers were taken to the high seas by the trawlers for their use during the course of operation. Such transaction cannot be treated as sales in the course of export.
12. The learned Counsel relied upon the decision in the case of Sun Industries. In that case, the respondent shipped certain goods at Calcutta intended for delivery at Colombo. The ship proceeded on the voyage leaving the Indian territorial waters, but developed engine trouble, returned and ran aground in Indian territorial waters at Paradeep port. The Assistant Collector of Customs rejected the respondent’s claim for drawback on the ground that the goods could not be deemed to have been exported. The Tribunal accepted the claim. On appeal, the Apex Court held affirming the view ofthe Tribunal that when the ship got clearance and moved out of the Indian territorial waters the export was complete and the title in the goods passed to the purchasers. When goods are taken beyond the territorial waters of India, they can be said to have been “taken to a place outside India” within the meaning of Section 2(18) of the Customs Act, 1962. The fact that the ship was brought back to India because of engine trouble, did not affect the position. The export was complete and the respondent was entitled to the benefit of drawback. The decision relied upon by the petitioner is not of any assistance to it. In the above case, admittedly, the destination of the goods is to Colombo, a place outside India. Such a destination is conspicuously absent in the present case. The claim of the petitioner is that the goods were taken out of the Indian territory waters, but there is no place of destination outside India.
13. The decisions relied upon by the learned Government Pleader are as under:
The earliest decision in the case of Burmah Shell Company Limited v. Commercial Tax Officer (supra). In this case, the Apex Court considered a similar case as to the exemption claimed under Article 286 of the Constitution of India. The appellants dealers were dealing in petroleum and petroleum products at Calcutta. They maintained depots at Dum Dum Airport from which aviation spirit was sold and delivered to aircraft proceeding abroad for their consumption. The question was whether these supplies to the aircraft which proceeded to foreign countries were liable to sales tax under the Bengal Motor Spirit Sales Taxation Act, 1941. The appellants contended that such sales were made in the course of export of such aviation spirit out of the territory of India, that they took place outside the State of West Bengal, that inasmuch as aviation spirit was delivered for consumption outside West Bengal, the sales could not fall
within the Explanation to clause (I)(a) of Article 286 and that unless they could be said to become “Explanation sales”, the power to tax did not exist. It was held that:
(1) that to exclude the powers of taxation of the State of West Bengal, the appellants must be able to point out some other State where the goods could be said to have been delivered as a direct result of the sale for the purpose of consumption in that other State and as the appellants had not done so they could not invoke the Explanation to Article 286(I)(a).
(2) that aviation spirit loaded on board an aircraft for consumption, though taken out of India, was not exported since it had no destination, where it could be said to be imported and so long as it did not satisfy this test it could not be said that the sale was in the course of export. Moreover, aviation spirit was sold for the use of the aircraft and the sale was not even for the purpose of export. The sale therefore did not come within Article 286(I)(b).
(3) that all the elements of sale including delivery and payment of price took place within the State of West Bengal and the sales were thus completely within the territory of that State. The sales were therefore liable to be taxed under the Bengal Motor Spirit Sales Taxation Act, 1941.
The Customs barrier does not set a terminal limit to the territory of West Bengal for sales tax purposes. The sale beyond the customs barrier is still a sale, in fact, in the Sate of West Bengal.
The Explanation to Article 286(I)(a) is only a key to find out which of the States is competent to tax and which are not, and is by no means a definition of an “outside sale”. It is an Explanation, which determines which State out of these connected with the transaction of sale can tax it.
Any State claiming to tax a sale of goods on the ground that it was completed by the passing of property in the goods in that State could not do so, if the goods as a direct result of the sale were delivered for the purpose of consumption in another State. The Explanation creates a fiction that the sale must be deemed to have taken place in the latter State and not in the State where the sale was completed by reason of passing of property. Where more than one State is involved, any State claiming to tax the sale by reason of something anterior to the passing of property would not be able to claim that the sale took place there unless it was also the State of delivery, because the sale is complete only on the passing of property, and till the sale is complete, liability to tax does not arise. Once the sale is complete, the delivery State gets the right to tax the sale by the fiction introduced.
The next decision is in the case of Madras Marine Company v. State of A.P. (supra). A Division Bench of this Court considered the provisions of Section 5(1) of Central Sales Tax Act with reference to the Article 286 of the Constitution of India. In this case the assessee was a dealer in bonded stores and ship chandlers. It imported liquor from outside India and supplied them to foreign vessels. The goods imported were kept in a bonded warehouse under the supervision of customs authorities. No customs duty was paid. On receipt of orders from a ship’s Master, bills were prepared and goods were released. The Customs Officer accompanied the goods, kept them in a locker of the ship under the customs seal with an understanding that the seals would be opened and the goods made available for consumption only after the
vessel travelled beyond the territorial waters of India. The assessee contended that the sale did not take place within the Stale and the sale was in the course of export and as such was not exigible to tax. Negativing the contention of the dealer, this Court held, on the facts and circumstances of the case, that the sale took place within the State and the sale was not in the course of export and was exigible to tax.
The next decision is in the case of the same assessee i.e., Madras Marine and Company v. Stale of Madras (supra), which was rendered by the Apex Court. The assessee, who is a dealer in stores, was doing business in the ship chandlers, imported goods from foreign countries on the undertaking to supply them only to foreign going vessels and/or to diplomatic personnel and to receive the goods in customs bonded warehouses. After import of the goods the company kept them in bonded warehouses in the State of Tamil Nadu. On receipt of an order from the captain of a foreign bound ship requiring ship stores, the company supplied the goods on board the ship. The company contended that no sales tax was payable on such sales under the Tamil Nadu General Sales Tax Act, 1959, because (i) the goods were all intended for re-export only and were at all times in a bonded warehouse, the delivery was on board a foreign going ship and the goods were to be consumed on the high seas; the property in the goods passed only after the goods had crossed the customs frontiers and did not pass in Tamil Nadu, and the sales were, therefore, in the course of export; and (ii) the sales took place in territorial waters of India within the jurisdiction of the Union of India and outside Tamil Nadu. The sales tax authorities held that the sales took place in Tamil Nadu where appropriation of the goods took place and imposed sales tax. For the year 1964-65 the Tribunal held that the sales could not be deemed to have taken place within Tamil Nadu. On revision the High Court held that the sales took place in Tamil Nadu and the assessment to tax was valid. There were similar decisions of the High Court upholding the assessment to tax for the years 1968-69, 1970-71, 1978-79 and 1979-80. The company preferred the appeal to the Supreme Court.
The Apex Court, affirming the decisions of the High Court and dismissing the writ petition and special leave petitions, held that as the goods were in bonded warehouses within the State of Tamil Nadu in the case of ascertained goods at the time when the contract of sale was made and in the case of unascertained goods at the time of their appropriation to the contract by the company, the sales must be deemed to be within the State of Tamil Nadu under Section 4(2) of the Central Sales Tax Act, 1956. Delivery on board the foreign bound ship within the territorial waters did not make the sale one outside the State of Tamil Nadu. This was not a case of export as there was no destination for the goods in a foreign country. The customs barrier does not set a terminal limit to the territory of the States for sales tax purpose. A sale, therefore, beyond the customs barrier may still be a sale within the State.
14. From the above it is clear that though the petitioner claimed that the sales claimed by him were affected in the course of exports, there is no place of destination j outside India to treat the sales affected by the petitioner as sales in the course of export. The sales were affected to the customers residing at Visakhapatnam for the fishing trawlers, which may have incidentally, taken the goods to the high seas for their consumption, during the course of fishing operations. By that itself, it could not be considered that the sales were affected in the course of exports. The facts clearly show that the petitioner/dealer failed to show that there is any destination to a place
outside India as contemplated in the above considered judgments of the Apex Court as well as the decisions of this Court. When a place of destination outside India is absent, the sales even assuming that the goods were taken to the high seas does not amount to sales in the course of export.
15. Under the above circumstances, we do not find any merit in the petitioner contentions and accordingly the tax revision cases are dismissed. No costs.