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TMI Blog1956 (12) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... internal combustion engine, having a flashpoint below 76 degrees Farenheit. Under section 4(4), sale of motor spirit for the purpose of aviation had been excluded. By virtue of an amendment introduced by section 2 of the Bengal Motor Spirit Sales Taxation (Second Amendment) Act, (Act XXXII of 1954), the tax can now be levied in respect of motor spirit for the purposes of aviation. Under section 2(a)(i) of the Bengal Motor Spirit Sales Taxation (Second Amendment) Act, 1954, motor spirit for aviation purposes is taxable without any distinction as to whether the aircraft is operating within Indian territory or proceeding beyond Indian territorial limits. On or about the 9th October, 1954, the petitioner-company wrote a letter to the Commissioner of Commercial Taxes, West Bengal, enquiring as to whether motor spirit supplied for aviation purposes to foreign-bound aircraft would be taxable under the Bengal Motor Spirit Sales Taxation Act as amended. It was urged that under Article 286(1)(b) of the Constitution, such supplies were not taxable. It was pointed out by letter dated the 23rd April, 1954, written by the Collector of Sales Tax, Bombay State, to the petitioner, that sales of goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aragraph (1) of Article 286, the sale of the aviation spirit should be deemed to have taken place outside the State, and as such was exempted by Article 286(1)(a). Secondly, he says that no such law is valid by reason of the provisions of Article 286(1)(b), because the sales were in the course of export of goods out of the territory of India. Before we deal with the actual points of law involved, it may be necessary to consider a few facts. Under section 16 of the Indian Aircraft Act, 1934 (Act XXII of 1934) the Central Government has been given the power by notification in the Official Gazette to declare that any or all the provisions of the Sea Customs Act, 1878, shall with such modification and adaptation as may be specified, apply to the import and export of goods by air. Rules have been framed known as the Indian Aircraft Rules, 1920, Part IX whereof relates to aircraft arriving in or departing from British India. Under rule 63, the provisions of the Sea Customs Act have been made applicable to the import or export of goods by aircraft into or from India. Under rule 53, the Governor-General in Council is authorised to declare any aerodrome to be a Customs aerodrome. By Notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are countersigned by the Customs Authorities and are sent to the petitioner's office who proceed to file claims on the Customs at Calcutta who thereupon refund the customs duty paid by the petitioner. It is clear, therefore, that so far as the Customs Authorities are concerned the aviation spirit or lubricating oils which are delivered to the aircraft for consumption are considered as exportation. In fact, the "shipping bill" as it has been called, contains headings under which details must be given of the aircraft, its master or agents, the port at which goods are to be discharged, the next port of call, and the country of final destination. The whole thing is treated as if it was an uplift of goods by the aircraft in the course of export. There is nothing to show in the shipping bill that the aviation spirit or lubricating oil so uplifted was meant for consumption by the aircraft itself. I do not think that it is at all necessary for me in this application to consider as to whether the aviation spirit uplifted and utilised for consumption is entitled to be treated as free goods by the Customs Authorities, or whether the petitioner is rightly claiming or receiving draw-backs. Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State. (2) Except in so far as Parliament may by law otherwise provide, no law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of any goods where such sale or purchase takes place in the course of inter-State trade or commerce:* * * *" The way that Mr. Das formulated his first point is as follows: He says that the Explanation to Article 286(1)(a) determines the situs of a sale, and determines whether it is inside or outside a particular State. In order to determine the situs, the goods must have been actually delivered as a direct result of such sale for the purpose of consumption in that State. He argues that in the present case the goods have been delivered for the purpose of consumption outside the State, and therefore must be considered as an outside sale, so far as the State of West Bengal is concerned. If it is an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other States, it continues to consume part of the goods delivered. But this cannot bring it within the term of the Explanation. It has not been delivered in any other State for consumption in that State. It has been pointed out that the Explanation creates a legal fiction. The learned Judge (at page 68) states as follows: "Whichever view is taken of the Explanation it should be limited to the purpose the Constitution-makers had in view when they incorporated it in clause (1). It is quite obvious that it created a legal fiction. Legal fictions are created only for some definite purpose. Here the avowed purpose of the Explanation is to explain what an outside sale referred to in sub-clause (a) is. The judicial decisions referred to in the dissenting judgment in State of Travancore-Cochin v. Shanmugha Vilas Cashew-nut Factory [1953] 4 S.T.C. 205; A.I.R. [1953] S.C. 333 at pages 342 and 343. and the case of East End Dwellings Co. Ltd. v. Finsbury Borough Council [1952] A.C. 109 at page 132. , clearly indicate that a legal fiction is to be limited to the purpose for which it was created and should not be extended beyond that legitimate field. It should further be remembered that the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 286(1)(b) are also not easy to explain and have been the subject matter of many decisions. Particular reference has been made to the case of State of Travancore-Cochin and Others v. Shanmugha Vilas Cashew-nut Factory and Others[1953] 4 S.T.C. 205; A.I.R. 1953 S.C. 233. It has been held by the majority judgment in that case that(i) Sales and purchases which by themselves occasion the export or import of goods, as the case may be, out of or into the territory of India come within Article 286(1)(b) and are exempt from taxation; (ii) Purchases in the State by the exporter for the purpose of export, as well as sales in the State by the importer after the goods have passed the customs barrier, are not within the exemption. It was further held that the word "course" etymologically denotes movement from one point to another and the expression "in the course of" in Article 286(1)(b) not only implies a period of time during which the movement is in progress but postulates also a connected relation. Secondly, a sale in the course of the export out of the country should be understood in the context of Article 286(1)(b) as meaning a sale taking place not only during the activities directed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is impossible to connect the petitionercompany with these actions. In order that there can be an export in the real sense of the term, there must be a seller in India, a buyer outside India and goods are to be sent from India to places outside India. It is only such transactions that are protected. Once the sale is complete inside India, I do not think that the seller is concerned with, or can claim, the protection of Article 286 by virtue of what happens afterwards. Take a simple case. Suppose a motorist is travelling by road throughout the world. He might arrive at Calcutta, go to a fuelling station and fill up the tank. Surely the supplier is not concerned with what use the motorist is going to make of the oil. The motorist might utilise it within the State or might proceed to a neighbouring State or proceed to a foreign country like Eastern Pakistan. That is not the concern of the seller of the fuel. Suppose again a customer is going out of India to a cold country and goes to a shop and buys a warm blanket. He informs the shop-keeper that he intends to use it in England where he is going or in fact uses it for that purpose. Can it be said that the shop-keeper who sells the bla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the course of such export. Therefore, so far as its actions are concerned, no protection can be derived from the provisions of Article 286(1)(b). It is argued that the protection under Article 286 is on the goods and not on the seller or the purchaser. Even so, it is of no avail to the petitioner. As I have said above, and as has been explained in the Travancore-Cochin case [1953] 4 S.T.C. 205; A.I.R. 1953 S.C. 233. mentioned above, the sale of goods to, or the purchase of goods by, a party for the purpose of export is not necessarily a sale or purchase of the goods in the course of export. Such a transaction is not necessarily to be considered as entering the stream of export at that stage. Consequently there is no exemption. It is true that the Bombay Authorities have decided to grant exemption, but that is not a judicial decision and cannot affect my judgment. For the reasons aforesaid, I am of the opinion that the petitioners have made out no grounds for avoiding the tax which is sought to be levied on them and no grounds have been made for interference of this Court. The application, therefore, fails. The Rule is discharged and all interim orders are vacated. Regard being ..... X X X X Extracts X X X X X X X X Extracts X X X X
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