Case Note & Summary
The Commissioner of Sales Tax, Maharashtra State, filed two reference applications under Section 61 of the Bombay Sales Tax Act, 1959 read with Section 9(2) of the Central Sales Tax Act, 1956, against the order of the Maharashtra Sales Tax Tribunal dated 6th August, 2005. The respondent, Tata Iron and Steel Co. Ltd., a registered dealer under both Acts, had imported steel items and sold them to its customers during the assessment year 1992-1993. The respondent claimed that these sales were in the course of import under Section 5(2) of the Central Act and thus not liable to tax under Section 75 of the Bombay Act. The Assessing Officer, by order dated 30th March, 1996, rejected this claim, holding that the local and inter-state sales were neither covered under the first limb (sale occasioning import) nor the second limb (sale by transfer of documents of title before goods crossed customs frontiers) of Section 5(2). The first appellate authority dismissed the respondent's appeals on 3rd April, 2000. On second appeal, the Tribunal, by order dated 9th October, 2001, held that the sales were covered under both limbs of Section 5(2). The Commissioner then filed reference applications, arguing that the imported goods were unascertained goods under Section 18 of the Sale of Goods Act, 1930, and thus could not be sold on high sea sale basis. The High Court, after hearing the parties, dismissed the reference applications, upholding the Tribunal's finding that the sales were in the course of import and that the provisions of the Sale of Goods Act were not applicable in the facts of the case.
Headnote
A) Sales Tax - High Sea Sale - Sale in the Course of Import - Section 5(2) Central Sales Tax Act, 1956 - The court considered whether sales of imported steel effected before the goods crossed the customs frontiers of India were exempt from tax under Section 5(2) of the Central Act. The Tribunal had held that the sales were covered under both limbs of Section 5(2). The High Court upheld the Tribunal's finding, noting that the goods were ascertained at the time of sale and the sale was by transfer of documents of title before the goods crossed the customs frontiers. (Paras 1-5)
B) Sales Tax - Applicability of Sale of Goods Act - Section 18 Sale of Goods Act, 1930 - The Commissioner argued that the imported goods were unascertained goods under Section 18 of the Sale of Goods Act and thus could not be sold on high sea sale basis. The Tribunal held that the Sale of Goods Act provisions were not applicable. The High Court did not disturb this finding, as the facts showed the goods were ascertained. (Paras 4-5)
Issue of Consideration
Whether the sales of imported steel effected by the respondent before the goods crossed the customs frontiers of India are covered under Section 5(2) of the Central Sales Tax Act, 1956, and whether the provisions of the Sale of Goods Act, 1930 are applicable to determine the validity of high sea sales.
Final Decision
The High Court dismissed the reference applications, upholding the Tribunal's order that the sales were in the course of import under Section 5(2) of the Central Sales Tax Act, 1956.
Law Points
- High sea sale
- sale in the course of import
- Section 5(2) Central Sales Tax Act
- 1956
- ascertainment of goods
- Sale of Goods Act
- 1930
- Section 18
- Section 61 Bombay Sales Tax Act
- 1959
Case Details
2006 LawText (BOM) (12) 77
Sales Tax Application No.10 of 2006 in Reference Application No.3 of 2002 with Sales Tax Application No.11 of 2006 in Reference Application No.4 of 2002
H.L. Gokhale, J.P. Devadhar
Mr. Vinay Sonpal (AGP for applicant), Mr. G.S. Jetly (senior advocate with Mr. P.S. Jetly i/by Mulla & Mulla for respondent)
The Commissioner of Sales Tax, Maharashtra State, Mumbai
Tata Iron and Steel Co. Ltd.
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Nature of Litigation
Reference applications under Section 61 of the Bombay Sales Tax Act, 1959 read with Section 9(2) of the Central Sales Tax Act, 1956 against the order of the Maharashtra Sales Tax Tribunal.
Remedy Sought
The Commissioner of Sales Tax sought a ruling that the sales of imported steel were not exempt under Section 5(2) of the Central Act.
Filing Reason
The Commissioner challenged the Tribunal's order holding that the sales were in the course of import and not liable to tax.
Previous Decisions
The Assessing Officer (30th March, 1996) and first appellate authority (3rd April, 2000) held against the respondent; the Tribunal (9th October, 2001) held in favor of the respondent.
Issues
Whether the sales of imported steel were covered under Section 5(2) of the Central Sales Tax Act, 1956 as sales in the course of import.
Whether the provisions of the Sale of Goods Act, 1930, particularly Section 18, apply to determine the validity of high sea sales.
Submissions/Arguments
The Commissioner argued that the imported goods were unascertained goods under Section 18 of the Sale of Goods Act and thus could not be sold on high sea sale basis.
The respondent contended that the sales were covered under both limbs of Section 5(2) of the Central Act and the Sale of Goods Act provisions were not applicable.
Ratio Decidendi
The sales of imported steel effected before the goods crossed the customs frontiers of India are covered under Section 5(2) of the Central Sales Tax Act, 1956, and the provisions of the Sale of Goods Act, 1930 are not applicable to determine the validity of high sea sales in the facts of this case.
Judgment Excerpts
Heard.
These two reference applications are filed by the Commissioner of Sales Tax under Section 61 of the Bombay Sales Tax Act, 1959 read with Section 9(2) of the Central Sales Tax Act, 1956.
During the period relevant to Assessment Year 1992-1993, the respondent who was a registered dealer under the Bombay Act and the Central Act had imported and sold to its customers certain items of steel and claimed that the sales were in the course of import covered under Section 5 of the Central Act and consequently not liable to tax under Section 75 of the Bombay Act.
The Assessing Officer, however, by his order dated 30th March, 1996 held that the local sales and the inter state sales of iron and steel effected by the respondent were neither covered under the first limb (sale occasioning such import) nor under the second limb (sale by transfer of documents of title before the goods crossed the Customs Frontiers of India) of Section 5(2) of the Central Act.
On second appeals filed by the respondent, the Maharashtra Sales Tax Tribunal by its order dated 9th October, 2001 held that in the facts of the case, the sales were covered under both limbs of Section 5(2) of the Central Act.
Procedural History
The Assessing Officer passed an order on 30th March, 1996 rejecting the respondent's claim for exemption under Section 5(2) of the Central Act. The first appellate authority dismissed the respondent's appeals on 3rd April, 2000. The Maharashtra Sales Tax Tribunal, on second appeal, allowed the respondent's appeals on 9th October, 2001. The Commissioner then filed reference applications under Section 61 of the Bombay Act read with Section 9(2) of the Central Act, which were dismissed by the High Court on 1st December, 2006.
Acts & Sections
- Bombay Sales Tax Act, 1959: Section 61, Section 75
- Central Sales Tax Act, 1956: Section 5(2), Section 9(2)
- Sale of Goods Act, 1930: Section 18
