2001 (10) TMI 123 - HC - VAT and Sales Tax

Summary

Issues involved:
The judgment deals with the assessment of sales tax on goods imported by the State Trading Corporation of India and sold to newspapers in Tamil Nadu, where the sales were considered to be in the course of import. The issue revolves around whether the sales were exempt from assessment under the Tamil Nadu General Sales Tax Act.

Summary:

1. The petitioner, State Trading Corporation of India, imported newsprint for newspapers in Tamil Nadu and sold it to publishers without collecting sales tax, considering the sales as part of the import process.

2. The claim for exemption from tax assessment under the Tamil Nadu General Sales Tax Act was rejected by all authorities, leading to a challenge before the High Court.

3. The matter is governed by the Central Sales Tax Act, specifically Section 5(2) which deals with sales in the course of import.

4. Section 5(2) states that a sale in the course of import occurs when the sale is made before the goods cross the customs frontiers of India, either by occasioning the import or by transferring documents of title.

5. The key question is whether the sale, through the transfer of title documents, occurred before the goods crossed the customs frontiers of India.

6. The definition of "crossing customs frontier of India" equates it to the limits of a customs station where imported goods are stored before clearance by customs authorities.

7. The Customs Act defines "customs station" as any customs port, airport, or land customs station, with a customs port including inland container depots.

8. It is acknowledged that the Port at Chennai is a notified customs port where the imported newsprint was stored before clearance.

9. The crucial event for determining a sale in the course of import is the crossing of the customs station's limits.

10. A precedent from Andhra Pradesh regarding the assessment of duty and crossing of customs barriers is discussed but not subscribed to by the High Court.

11. The interpretation of Section 5(2) and Section 2(ab) of the Central Sales Tax Act is emphasized over previous judgments.

12. The Supreme Court's ruling in a related case highlights that the taxable event is the crossing of customs barriers, not just the arrival of goods in India.

13. Goods are considered not to have crossed the customs barrier until duty is paid and they are brought out of the customs station.

14. The clearance of warehoused goods for home consumption under Section 68 of the Customs Act is crucial, with duty paid by the buyers after the transfer of title.

15. The Tribunal's reliance on a Supreme Court decision is critiqued for not considering the specific circumstances of the case.

16. The clearance of goods for home consumption after the transfer of title signifies a sale in the course of import.

17. The Tribunal's decision denying exemption to the dealer is overturned, and the sales are deemed to be in the course of import, warranting exemption from tax assessment.