1977 (9) TMI 41 - HC - VAT and Sales Tax

Issues Involved:
1. Jurisdiction of the Deputy Commissioner under Section 52 of the Bombay Sales Tax Act, 1959.
2. Determination of whether the transaction constitutes a sale in the course of export.
3. Application of statutory provisions and judicial precedents to the transaction in question.

Issue-Wise Detailed Analysis:

1. Jurisdiction of the Deputy Commissioner under Section 52 of the Bombay Sales Tax Act, 1959:
The primary contention raised by Shri Deshpande was that under Section 52, the Deputy Commissioner had no jurisdiction to decide whether the transaction was a sale in the course of export. The Deputy Commissioner himself noted that he lacked jurisdiction to determine if the sale was in the course of inter-State trade or export. However, he confined his decision to whether the transaction was a sale within the State of Maharashtra. The Tribunal clarified that under Section 52(e), the Commissioner has the jurisdiction to decide whether any tax is payable in respect of a particular sale or purchase. The Deputy Commissioner's consideration of whether the transaction is a sale in the course of export was part of his reasoning to determine if the sale was within the State and thus taxable. Therefore, the contention that the Deputy Commissioner exceeded his jurisdiction was not upheld.

2. Determination of whether the transaction constitutes a sale in the course of export:
The appellant argued that sales made at the International Transit Lounge at Santacruz Airport, Bombay, to passengers bound for foreign travel, constituted sales in the course of export and were thus exempt from tax. The Tribunal examined various judicial pronouncements to elucidate the meaning of a sale in the course of export. The Supreme Court in Ben Gorm Nilgiri Plantations Co. case defined such a sale as one where there is an intention to export, an obligation to export, and an actual export. The Tribunal noted that the sale must occasion the movement of goods out of India, and this obligation could arise by statute, contract, or mutual understanding.

The Tribunal reviewed the statutory regulations and procedures, including the Import Trade Control Handbook, which mandated that sales to foreign tourists be made against foreign currency and recorded in a prescribed manner. The goods sold to transit passengers at the airport were intended to be taken out of India, thus satisfying the statutory obligation to export.

3. Application of statutory provisions and judicial precedents to the transaction in question:
The Tribunal examined the relevant statutory provisions, including the Import Trade Control Act, 1947, and the procedures outlined in the Import Trade Control Handbook. The appellant complied with the statutory requirements, including obtaining necessary permissions, maintaining records, and ensuring that sales were made only to transit passengers who paid in foreign currency. The Tribunal also considered various judicial precedents, including decisions from the Supreme Court and High Courts, which emphasized that a sale in the course of export must involve an inextricable link between the sale and the export.

The Tribunal concluded that the appellant's sales to transit passengers at the airport, under the prescribed statutory regulations, constituted sales in the course of export. Therefore, these sales were not taxable within the State of Maharashtra.

Conclusion:
The Tribunal held that the sale in question was a sale in the course of export and not a sale within the State of Maharashtra. Consequently, the order of the Deputy Commissioner, which held that the sale was within the State and liable to tax, was set aside. The appeal was allowed, and it was determined that the transaction was not taxable under the Bombay Sales Tax Act, 1959.

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