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1991 (4) TMI 364 - AT - VAT and Sales TaxIMPORT SALE SALE BY COLLECTOR OF CUSTOMS OF CONFISCATED AND NON-CONFISCATED GOODS IS SALE BEFORE GOODS CROSSED CUSTOMS BARRIERS CASH MEMO ISSUED BY COLLECTOR NOT DOCUMENT OF TITLE NO TRANSFER OF TITLE TO GOODS SALES NOT SALES IN COURSE OF IMPORT.
Issues Involved:
1. Whether the Collector of Customs is a "dealer" within the meaning of section 2(c) of the Bengal Finance (Sales Tax) Act, 1941. 2. Whether sales of goods made by the Collector of Customs are exigible to sales tax under the 1941 Act. 3. Whether the sales made by the Collector of Customs are sales in the course of import and thus exempt from sales tax. 4. The impact of Article 285(1) of the Constitution on the applicability of sales tax to the sales made by the Collector of Customs. Issue-wise Detailed Analysis: 1. Whether the Collector of Customs is a "dealer" within the meaning of section 2(c) of the Bengal Finance (Sales Tax) Act, 1941: The Tribunal examined the definition of "dealer" under section 2(c) of the 1941 Act, both before and after the amendment in 1987. The amended definition includes the Central Government, a local authority, a statutory body, or any other body corporate, which sells, supplies, or distributes goods, whether or not in the course of business. The Tribunal concluded that the Collector of Customs falls within this definition as he sells goods, confiscated or otherwise, on a regular basis. The Tribunal also noted that the inclusive definition of "dealer" in the 1941 Act expands the meaning to cover entities like the Customs Department engaged in selling goods, even if not for profit. 2. Whether sales of goods made by the Collector of Customs are exigible to sales tax under the 1941 Act: The Tribunal held that sales made by the Collector of Customs, including both confiscated and non-confiscated goods, are sales within the meaning of section 2(g) of the 1941 Act. The sales are for cash or other valuable consideration, and the fact that these sales are made under statutory provisions does not exclude them from the purview of the Sales Tax Act. The Tribunal referred to several Supreme Court decisions, including the cases of District Controller of Stores, Northern Railway v. Assistant Commercial Taxation Officer and Member, Board of Revenue, West Bengal v. Controller of Stores, Eastern Railway, Calcutta, which supported the view that sales by government authorities could be subject to sales tax. 3. Whether the sales made by the Collector of Customs are sales in the course of import and thus exempt from sales tax: The Tribunal rejected the argument that sales by the Collector of Customs are sales in the course of import. It was argued that these sales are effected by a transfer of documents of title before the goods have crossed the customs frontiers of India. However, the Tribunal held that the issuance of a receipt or cash-memo by the customs authorities does not amount to a transfer of documents of title as contemplated in section 5(2) of the Central Sales Tax Act, 1956. Therefore, these sales do not qualify for exemption under the said provision. 4. The impact of Article 285(1) of the Constitution on the applicability of sales tax to the sales made by the Collector of Customs: The Tribunal considered the applicability of Article 285(1) of the Constitution, which exempts the property of the Union from all taxes imposed by a State. The Tribunal referred to the Supreme Court decision in State of Punjab v. Union of India, which held that sales tax is an indirect tax and not a tax on property. Consequently, the Union of India does not enjoy immunity from sales tax imposed by a State on sales of goods. The Tribunal also noted that non-confiscated goods sold by the Collector do not vest in the Central Government and are not the "property" of the Union of India as contemplated by Article 285(1). Therefore, the sales of such goods are subject to sales tax. Conclusion: The Tribunal concluded that the Collector of Customs is a "dealer" within the meaning of section 2(c) of the Bengal Finance (Sales Tax) Act, 1941, and that the sales made by him are exigible to sales tax under the 1941 Act. The sales are not exempt as sales in the course of import, and the Union of India does not enjoy immunity from sales tax under Article 285(1) of the Constitution. The writ petition was dismissed, and the interim orders were vacated.
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