2016 (1) TMI 284 - HC - VAT and Sales Tax

Claim of exemption from sales tax against Sale of goods through duty free shop to in-transit passengers located at Sahar International Airport - Held that - The operative order and while remanding the case for the period 1993-94 and 1994-95 to the assessing authority directs that authority to verify whether the sale of goods from dutyfree shops located at Sahar International Airport in the Arrival Lounge are made to in-transit passengers and, therefore, entitled to exemption or all sales from that shop should be exempted because they are necessarily made to in-transit passengers. That verification and scrutiny will have to be done in terms of the operative order. However, it is clear that if the sale is to in-transit passengers and all the terms and conditions of the exemption notification are fulfilled, then, such sales are exempt from tax. Therefore, we do not see any confusion nor would the assessing officer deal with all sales as if they are made to in-transit passengers necessarily. - The transactions with such passengers who are termed as in-transit passengers and within the meaning of the said exemption notification have been referred to by the Tribunal. It is on the understanding that the Tribunal has interpreted the words in-transit passengers . That is neither stretching the definition so as to extend the benefit of the exemption notification to any passenger or customer nor does it take away the benefit of the same by reading it as narrowly as was suggested before it. In such circumstances, the Tribunal s understanding of the exemption notification and reflected in its judgment does not raise any question of law. - Decided against Revenue.

Summary

Issues: Interpretation of exemption under Bombay Sales Tax Act, 1959 for sales at duty-free shop to in-transit passengers.

Analysis:
The High Court, comprising of S C Dharmadhikari and B P Colabawalla, JJ., considered the appeal regarding the interpretation of the exemption available under the Bombay Sales Tax Act, 1959, specifically for sales at a duty-free shop to in-transit passengers. The Court examined the order passed by the Maharashtra Sales Tax Tribunal and concluded that no question of law necessitated a reference to the Court. The Tribunal's decision to reject the Reference Applications was upheld by the High Court, indicating that the Tribunal's interpretation was correct.

The main issue revolved around the scope of the exemption notification under the Act. The Court deliberated on whether the exemption applied only to sales from the duty-free shop to in-transit passengers or encompassed all sales from the shop, irrespective of the buyer. Mr. Sonpal, representing the Revenue, argued that the Tribunal's orders implied a blanket exemption for all sales from the shop, regardless of the buyer. However, the Court emphasized the need to analyze the orders comprehensively along with the exemption notification's interpretation.

Upon thorough examination, the Court clarified that the Tribunal's directive to the assessing authority was to verify if sales to in-transit passengers met the exemption criteria. The Court highlighted that if sales were indeed to in-transit passengers and met all exemption conditions, they would be tax-exempt. The Court dismissed the notion of confusion in the Tribunal's interpretation and rejected the argument that the exemption was construed liberally, stating that the Tribunal's understanding aligned with the exemption notification's intent.

Furthermore, the Court affirmed that the Tribunal's interpretation of the term "in-transit passengers" did not extend the exemption unfairly to any passenger or customer. The Court found no merit in the contention that the Tribunal's interpretation raised legal questions. Ultimately, the High Court dismissed the applications, upholding the Tribunal's understanding of the exemption notification and its application to sales at duty-free shops to in-transit passengers.