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TMI Blog1976 (6) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... ntry as per specifications given in those contracts. The goods were also, according to the petitioner, inspected by the representatives of the railways. The respective authorities had to carry out inspection at the works of the foreign supplier situated in west Germany and after such inspection the goods were stamped with Government markings and special certificates were given to the petitioner on the basis of which instalment payments were received. After these steps were completed, goods were shipped to the Indian Ports through the shipping agencies named by the petitioner and delivered to the consignees named by the railways and other licensees. According to the petitioner, final payments were received on final acceptance of the goods by the consignees. The petitioner states that the obligation to procure import licence was of the railways and but for the discharge of the said obligation, which was done by procuring import licences, these contracts could not have been executed at all. The petitioner further states that the goods required by the railways were specific goods and were never kept in stock by the petitioner. In the case of supplies to customers, other than the ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cked at random on production of papers maintained by the dealer. The dealer files a statement of sales in the course of imports. A claim can be allowed under section 5(2) as a sale in the course of imports if these are proved to be incidental to the contract of sale as laid down in the case of K.G. Khosla Co. (P.) Ltd.(1) Except in few cases the dealer produces orders to show that these may be allowed under section 5(2) of the Act in pursuance of the decision in the case of K.G. Khosla Co. (P.) Ltd.(1) These orders are checked at random. Characteristics of these orders cannot be detailed here in full. In a nutshell, it may be said that the facts of these contracts are not identical to those of K.G. Khosla Co. (P.) Ltd.(1) Again, the Additional Member, Board of Revenue, has held in the case of Associated Electricals that a sale may be treated as incidental to the contract of sale if the contract included the provision for importing goods from abroad by the petitioner on behalf of the purchaser in India. This decision laid down by the Board of Revenue as the criterion is lacking in many contracts. Therefore, the claim under section 5(2) for sales in the course of imports are di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the goods to India. The contracts (some of the specimen copies have been filed) themselves stipulated that the goods were to be manufactured by Siemens in West Germany. The contracts provide for payment of the customs duty as an extra and there were provisions for escalation of price. The orders placed by the railways and the D.G.S. D. also stipulate for submission of the foreign supplier's invoice, banker's certificate and certificate of remittance in foreign exchange and evidence of shipment. The goods ordered by the railway administration and the D.G.S. D. were to be inspected in London. In all cases, except the D.G.S. D. and the railways, the imports were said to have been made under the actual user's licence. In the case of orders placed by the D.G.S. D. and the railways, the appellant was asked to apply through them to the Joint Controller of Imports for obtaining the import licence. These buyers recommended the issue of licences quoting the relevant Government sanction for releasing foreign exchange. As these material details have not been examined in the impugned assessment, it would be necessary to cause fresh examination to ascertain if the materials were manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealer's principal in West Germany. It appears that the dealer had the total claim under this head, Rs. 47,46,773.69 (excluding sales tax realised), most of the sales to Government parties and other dealers being supported by necessary declaration forms. The amounts which were disallowed in the original assessment was charged to tax as follows: @ 1% ... Rs. 14,50,439.27 @ 2% ... Rs. 31,87,213.08 @ 7% ... Rs. 63,791.84 @ 10% ... Rs. 45,329.50 ---------------- Rs. 47,46,773.69 ---------------- Thus the abovenoted amounts are allowed as claimed by the dealer, being the sales in the course of import to India, referring the decision of the Honourable Supreme Court in the case of K.G. Khosla Co. (P.) Ltd. v. Deputy Commissioner of Commercial Taxes[1966] 17 S.T.C. 473 (S.C.)." Thereafter, between 2nd February, 1973, and April, 1974, the petitioner wrote several letters and made several representations claiming refund of tax paid. It is not necessary to set out in detail these letters. On 6th May, 1974, a notice in form IX was issued under rule 79 of the Bengal Sales Tax Rules, 1941, informing the petitioner that the Commercial Tax Officer proposes to revise his orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s representative appeared and submitted a petition stating that their Tax Adviser, Mr. C.N. Gurbaxani, is at Calcutta today (24th June, 1974) and it would be beneficial to them if the case would be taken up on 24th June, 1974, instead of on 27th June, 1974. On that request I agreed to hear the case on 24th June, 1974. The dealer's representative stated that the sales to the extent of Rs. 47,46,773.69, which was allowed in the order of reassessment on 19th January, 1973, as sales in the course of import could not be disallowed now referring to the judgment of the Supreme Court in the case of Binani Bros. (P.) Ltd.[1974] 33 S.T.C. 254 (S.C.). I have heard the dealer's representative on the point as stated in their letter dated 22nd June, 1974, submitted on 24th June, 1974, and other points raised during hearing. After the decision of the Supreme Court in the case of Binani Bros. (P.) Ltd.[1974] 33 S.T.C. 254 (S.C.)., it appears to me that the transactions claimed for deduction under this head should not be allowed under section 5(2) of the Central S.T. Act, 1956. It appears that each transaction claimed for deduction under section 5(2) of the C.S.T. Act, 1956, consists of two dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son adversely he shall send to such person a notice in form IX, fixing a place and time, ordinarily not earlier than fifteen days for hearing any representation which such person may wish to make. Under the Rules, the order can be reviewed within a period of four years from the date of the order. Therefore, in terms of sub-section (4) of section 20, according to the rules as prescribed, an order can be reviewed provided-firstly, that opportunity has been given to the person to be adversely affected, secondly, that the order is within a period of four years from the date of the original order and, thirdly, that the authority passing the order of review states his reason for passing the said order. Apart from the aforesaid, there are no other limitations, engrafted in the express provision of sub-section (4) of section 20 of the Bengal Finance (Sales Tax) Act, 1941. My attention was drawn to several decisions either under rule 1 of Order 47 of the Code of Civil Procedure or other provisions of the sales tax laws of other States which give the power of review either on sufficient cause or on mistake apparent on the face of the record. Counsel on behalf of the petitioner relied on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aced on the decision of the Supreme Court in the case of Ram Kanai Pal v. Board of Revenue[1976] 38 S.T.C. 1 (S.C.); A.I.R. 1976 S.C. 1545. It was then contended that in this case the order passed on 19th November, 1973, by the Commercial Tax Officer was passed at the direction of the Assistant Commissioner and, therefore, the Commercial Tax Officer was not competent to pass the impugned order dated 24th June, 1974, in the manner he has done ignoring the directions given by the Assistant Commissioner in his order dated 4th February, 1969. It was contended that the Assistant Commissioner in his order dated 4th February, 1969, had held that the sales in respect of which exemptions were claimed by the petitioner were sales in the course of import on the ratio of the decision of the Supreme Court in the case of K.G. Khosla Co. (P.) Ltd. v. Deputy Commissioner of Commercial Taxes[1966] 17 S.T.C. 473 (S.C.)., and the Commercial Tax Officer was merely directed to find out the details of the transactions. It was, therefore, urged that the Commercial Tax Officer by the process of review could not set aside the directions given by the Assistant Commissioner of Commercial Taxes and re-exami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court. As a matter of fact, in the order dated 19th January, 1973, the Commercial Tax Officer did re-examine the transaction in the light of the ratio of the Supreme Court decision. I have set out the relevant portion of the said order of the Commercial Tax Officer. In that view of the matter, in my opinion, it is not possible to accept the contention urged in support of this application that inasmuch as the order dated 19th November, 1973, was an order passed by the Commercial Tax Officer on the direction of the Assistant Commissioner of Commercial Taxes, the Commercial Tax Officer could not go into the question whether the transactions of sales claimed by the petitioner to be exempt were in fact sales in the course of import. The second contention urged in support of this application, therefore, must also be rejected. The next contention urged in support of this application is that the impugned order was invalid and the sales in question were actual sales in the course of import and the Commercial Tax Officer was in error in holding that the sales were not sales in the course of import. This contention raises the question as to how far and to what extent this court in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al authority had jurisdiction to decide a matter, it did not lose its jurisdiction by coming to a wrong conclusion, whether it was wrong in law or in fact. The question whether a tribunal had jurisdiction depended not on the truth or falsehood of the facts into which it had to enquire, or upon the correctness of its findings on these facts, but upon their very nature, and it was determinable, 'at the commencement, and not at the conclusion, of the enquiry'. The jurisdiction of an inferior tribunal might depend upon the fulfilment of some condition precedent or upon the existence of some particular fact. Such a fact is collateral to the actual matter which the tribunal has to try and the determination whether it exists or not is logically prior to the determination of the actual question which the tribunal has to try. The tribunal must itself decide as to the collateral fact: when at the inception of an enquiry by a tribunal of limited jurisdiction, a challenge is made to its jurisdiction, the tribunal has to make up its mind whether it will act or not, and for that purpose to arrive at some decision on whether it has jurisdiction or not." In this case it is true that the liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion[1969] 2 A.C. 147.: "The effect of the dicta in that case is to reduce the difference between jurisdictional error and error of law within jurisdiction almost to vanishing point." The practical effect of the decision is that any error of law can be reckoned as jurisdictional, and the Supreme Court observed this was perilously close to saying that there was jurisdiction if the decision was right in law but none if it was wrong. Though the dividing line between lack of jurisdiction and erroneous exercise of it has become thin it cannot be said that the same has been completely wiped out. There is difficulty in formulating exhaustive rules to tell when there is lack of jurisdiction and when there is erroneous exercise of jurisdiction. The problem of deciding the concept of jurisdiction for the purpose of judicial review is one of public policy rather than one of logic. In an application under article 226 of the Constitution this court is not exercising appellate jurisdiction. Therefore, unless the competent authority has acted in excess of jurisdiction or has committed an error which amounts to jurisdictional error or there is an error of law apparent on the face of the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the sale the goods were imported or prior to the importation there was specification by the buyer or use of the actual user's licence of the buyer are not decisive of the matter. The important factor to be determined is whether the importation and the sale formed an integrated transaction. That requires detailed examination of the transactions in question. In the impugned order the Commercial Tax Officer has observed: "It appears that each transaction claimed for deduction under section 5(2) of the Central Sales Tax Act, 1956, consisted of two distinction sales". The Commercial Tax Officer has not discussed the evidence on record and how he has come to the conclusion. He has further gone on to observe that one transaction was the purchase of the dealer from the foreign supplier. Then after taking delivery of the goods in India there was another sale being sale by the dealer to the customer. He has not considered whether these two operations formed an integrated transaction. Judged from that point of view, in my opinion, he has not applied the correct principles as laid down in the latest judgment of the Supreme Court in the case of Mod. Serajuddin v. State of Orissa[1975] 36 S.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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