1983 (8) TMI 238 - HC - VAT and Sales Tax

PURCHASE OF BATTERIES BY ASSESSEE FROM CALCUTTA AND SALE TO BUYER AT MADRAS BEFORE GOODS WERE DELIVERED BY CARRIER SALE, WHETHER INTER-STATE SALE AND EXEMPT EXPORT OR IMPORT SALE IN THE COURSE OF IMPORT ASSESSEE PURCHASING GOODS FROM ENGLAND IN CONSIGNMENTS BY POST PARCEL INTIMATION FROM POST OFFICE TO ASSESSEE ABOUT RECEIPT OF GOODS ENDORSEMENT BY ASSESSEE ON INTIMATION IN FAVOUR OF BUYER

Summary

Issues Involved:
1. Taxability of turnover of Rs. 1,34,027 claimed as exempt under Section 6(2) of the Central Sales Tax Act.
2. Taxability of Rs. 27,722 claimed as exempt on the ground that the goods were imported through post parcel from England.
3. Taxability of Rs. 87,096 representing sale in the course of import of goods by ship.

Issue-Wise Detailed Analysis:

Issue 1: Taxability of Turnover of Rs. 1,34,027

The assessee purchased batteries from Lucas Indian Service Ltd., Calcutta, and sold them to Lucas Indian Service Ltd., Madras, before the goods were delivered by the carrier. The assessee claimed exemption under Section 6(2) of the Central Sales Tax Act, arguing that the sale was effected by transferring the documents of title during the inter-State movement of goods.

The assessing authority and the Appellate Assistant Commissioner rejected this claim, considering it an intra-State sale due to the relationship between the assessee and Lucas Indian Service Ltd. and the door delivery agreement by the carrier. The Tribunal upheld this view, noting the absence of a purchase order or contract and finding no valid transfer of documents of title during the inter-State movement.

However, the High Court disagreed, stating that the facts indicated a transfer of documents of title during the inter-State movement. The sale bill issued on January 7, 1975, and the delivery taken by the buyer on January 9, 1975, supported this conclusion. The Court emphasized that the movement of goods terminated only upon delivery and that the sale occurred during the inter-State movement. Citing Section 3(b) of the Central Sales Tax Act and the Supreme Court's ruling in Tata Iron and Steel Co. Ltd. v. S.R. Sarkar, the Court concluded that the turnover of Rs. 1,34,029.98 was exempt under Section 6(2).

Issue 2: Taxability of Rs. 27,722 for Goods Imported Through Post Parcel

The assessee imported goods from Lucas Service Overseas Ltd., England, by post parcel and endorsed the postal intimation to Lucas Indian Service Ltd., who took delivery. The assessing officer and the Appellate Assistant Commissioner held that the endorsement occurred after the goods arrived in Madras, and thus the transfer of title took place post-import.

The Tribunal held that the postal intimation was not a document of title and that the assessee remained the owner until customs clearance. The High Court agreed, stating that the postal intimation did not qualify as a document of title under Section 2(4) of the Sale of Goods Act. The endorsement was considered an agency action rather than a transfer of ownership. The Court concluded that the sale was intra-State and not in the course of import.

Issue 3: Taxability of Rs. 87,096 for Sale in the Course of Import by Ship

The assessee received goods by ship from Lucas Service Overseas Ltd., England, with the bill of lading transferred to the buyer on October 18, 1974. The Tribunal found that the import licence expired on August 31, 1974, and the extension was granted only after November 2, 1974, when the goods had crossed the customs frontier.

The High Court noted that the customs barrier at the time was the territorial waters. The transfer of the bill of lading on October 18, 1974, was invalid as the assessee had no valid import licence. The subsequent extension of the licence did not retroactively confer title to the buyer. The Court agreed with the Tribunal that the turnover represented intra-State sales, as the legal transfer of title occurred only after the goods crossed the customs frontier.

Conclusion:
The tax case was partly allowed for the first item, granting exemption under Section 6(2) of the Central Sales Tax Act. The claims for the second and third items were dismissed, affirming their taxability as intra-State sales. There was no order as to costs.