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TMI Blog2005 (7) TMI 606X X X X Extracts X X X X X X X X Extracts X X X X ..... of law have been referred: "1. Whether on the facts and in the circumstances of the case and on the true and correct interpretation of section 2(4) of the Sale of Goods Act, was the Maharashtra Sales Tax Tribunal justified in law in holding that delivery orders issued by bankers to the respondents in pursuance of airways bills are documents of title to the goods, which are also negotiable? 2.. Whether on the facts and in the circumstances of the case and on a true and correct interpretation of section 5(2) of the Central Sales Tax Act, 1956, was the Tribunal justified in law in holding that the disputed transaction under sale invoice No. 16 dated April 9, 1987 was allowable under section 5(2) of the Central Sales Tax Act, 1956 on the ground that sales are effected by transfer of documents of title to the goods before the goods had crossed the customs frontier of India?" 2.. To decide the above question of law raised hereinabove, following provisions of law will be relevant. Section 2(4) of the Sale of Goods Act defines "document of title to the goods". document of title to goods' includes a bill of lading, dock-warrant, warehouse keeper's certificate, wharfinger's certifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Maharashtra. 6.. The respondents in order to facilitate import of goods from foreign exporters, had opened the letter of credit dated September 11, 1980 with the Grindlays Bank Limited, Bombay. Then, they placed purchase orders through Messers J.R. Sharma Company to PLIVA Pharmaceutical, Chemical, Food and Cosmetic Industry, Zagrab, Yugoslavia, to despatch 100 drums of Ocytetracycline Hydrochloride vide Sales Invoice dated October 15, 1980. At that time, the Bill of Exchange dated October 15, 1980 was also drawn on Grindlays Bank Limited, Bombay and the copy is endorsed to the respondents. The goods were then despatched by air through Jugo Transport, Zagrab, and in due course, Airway Bill dated October 15, 1980 was received by the bank and a copy of the same was also received by the respondent. Thereafter, on November 12, 1980, the respondent had written to the Assistant Collector of Customs, declaring sales of consignments to different parties on "highsea sales basis". The goods were then despatched by Air India and the respondent was informed of the cargo arrival, directing them to contact their agents, M/s. Airfreight (P) Ltd., for delivery thereof. The respondent deposite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, C.R. sheets, generators, picture tubes, etc. For the year 1983-84, the Sales Tax Officer disallowed the claim of the respondent under section 5(2) of the Central Act and raised the payment of Rs. 3,73,423. Aggrieved by the said assessment, the respondent filed an appeal before the learned Assistant Commissioner (Appeals) who by an order dated September 2, 1987 partly allowed the appeal and reduced the tax amount by Rs. 14,332. Being dissatisfied, the respondent filed second appeal before the Deputy Commissioner of Sales Tax (Appeals) who held that the delivery orders issued by the Canara Bank can be taken as a document of title to the goods and accordingly, allowed the appeal. The Additional Commissioner of Sales Tax reversed the above order on the ground that the delivery order is not a document of title to the goods. The respondent filed an appeal to the Maharashtra Sales Tax Tribunal who held that the delivery order issued by the Canara Bank is a document of title to the goods which is negotiable, and when it was endorsed by the importer in favour of the purchasing dealer. III. Sales Tax Reference No. 11 of 2000: 9.. In the Commissioner of Sales Tax v. K. Mohan Co. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act. After this, the Deputy Commissioner passed the impugned order raising demands at Rs. 42,824 and Rs. 29,498 under the Bombay Act and the Central Act respectively. 14.. Aggrieved thereby, the respondent had preferred an appeal to the Maharashtra Sales Tax Tribunal which has set aside the entire order of the Deputy Commissioner of Sales Tax and reduced the penalty under section 9(2A) of the Central Act read with section 36(2)(c) of the Bombay Act from Rs. 14,749 to Rs. 1,000. V. Sales Tax Reference No. 8 of 2001: 15.. In the Commissioner of Sales Tax v. Ashapura Minechem Private Limited case, the respondent M/s. Ashapura Minechem Private Limited are registered dealers under the Act and Central Act. They are importers and exporters in chemical, electronics and electrical goods. The respondents were assessed for the period July 1, 1986 to June 30, 1987 and they made claim of sales during the course of imports under section 5(2) of the Central Act and claim exemption. However, the Sales Tax Officer disallowed the claim in respect of invoice No. 19 dated April 9, 1987 amounting to Rs. 41,534 pertaining to the import of goods by air. These goods were allegedly sold to Or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or not." From the above, it is apparent that whether the airway bill is a document of title is not even an issue raised or not even considered and no finding has been given on the same. Over and above, such an issue has not been referred to this Court, hence, there is no question of deciding the same. 19.. Shri Surte, the learned counsel appearing on behalf of the respondent Crystaline Corporation in Sales Tax Reference No. 4 of 2000, very strongly contended under the facts and circumstances of the cases as we had enumerated hereinabove, delivery order would clearly be a document of title. He strongly relied on the judgment of the Supreme Court in Bayyana Bhimayya Sukhdevi Rathi v. Government of Andhra Pradesh [1961] 12 STC 147; AIR 1961 SC 1065 wherein the Supreme Court has clearly observed as under: "A delivery order is a document of title to goods and the possessor of such a document has the right not only to receive the goods but also to transfer it to another by endorsement or delivery." Thereafter, the learned counsel Shri Surte brought to our notice another judgment of the Bombay High Court in Chhaganlal Savchand v. Commissioner of Income-tax, Bombay [1966] 62 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e section 5(2) read with section 2(ab) of the Central Act. 21.. Shri Surte thereafter brought to our notice judgment of the Supreme Court in Ramalingam and Co. v. State of Madras [1962] 13 STC 335 wherein the Supreme Court has held: "The relation between the buyer and his issuing banker was not of principal and agent, nor was the relation between the issuing banker and the intermediary banker that of principal and agent. The two bankers were interposed for the protection of the seller as well as the buyer. The issuing banker did not purport to act as agent of the buyer and the intermediary banker accepted the general offer of the issuing banker by negotiating the draft. By so accepting the offer and by taking over the bill of lading, the insurance certificate and the invoice which represented title to the goods the intermediary banker did not act as an agent of the seller." 22.. Shri Surte contended that not only sale but even agreement to sell if takes place on the high sea, the same would also be covered. In the case of State of Maharashtra v. Embee Corporation [1997] 107 STC 196 wherein the Supreme Court has held as under: "The above definition of 'sale' in the Act shows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behalf of the Messers Ashapura Minechem Private Limited wholly adopted the arguments of Shri Surte and reiterated and contended that even in the case of her client, it is explicitly clear that all the documents tendered when the sale had taken place before the goods had crossed the customs frontiers of India and as such, the respondents are entitled to be exempted under section 5(2) of the Sales Tax Act. The learned counsel also referred to all the aforesaid judgments relied upon by Shri Surte. Over and above, Mrs. Badeka also pointed out the judgment of West Bengal Taxation Tribunal in the case of Satyanarayan Bagla v. Commissioner of Commercial Taxes, West Bengal [1992] 84 STC 368. In the said order, the Tribunal has held that: "A delivery order is a document of title to goods and the possessor of such document has the right not only to receive the goods but also to transfer it to another by endorsement or delivery. Mere transfer of pucca delivery orders does not amount to sale; it is only when the ultimate endorsee in the chain of transactions takes delivery of the goods that all the intermediate transactions fructify to sales and the ultimate delivery feeds back the title o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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