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TMI Blog1998 (3) TMI 644X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of import of sulphur and rock phosphate falls under the second limb of section 5(2) of the CST Act, 1956 (hereinafter referred to as the Act ). The plea of the petitioner is that it has imported goods from foreign parties and as it has transferred the bills of lading in favour of the local buyers before the customs clearance of goods was effected, they are sales in the course of import under second limb of section 5(2) read with section 2(ab) of the Act which defines crossing the customs frontiers of India as crossing limits of customs station in which the imported goods or exported goods are ordinarily kept before clearance by customs authorities . The Commercial Tax Officer disallowed the exemption holding that the crucial date for the purpose of determining the exemption is the date of arrival of the vessel and even in the cases where date of arrival of the vessel is subsequent to the date of transfer of documents, he rejected the plea on the ground that the original statement of facts issued by the Master of the ship was not filed. The petitioner filed before the authorities below the certificates issued by the customs authorities indicating the time of customs cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods have crossed the customs frontiers of India. Section 2(ab) of CST Act reads as follows: Crossing the customs frontiers of India means crossing the limits of the area of a customs station in which imported goods or export goods are ordinarily kept before clearance by customs authorities. Section 38 of the APGST Act reads as follows: 38. Act not to apply to sales or purchases outside the State, in the course of import or export, etc.-Nothing contained in this Act shall be deemed to impose or authorise the imposition of a tax on the sale or purchase of any goods, where such sale or purchase takes place,- (i) outside the State; or (ii) in the course of the import of the goods into, or export of the goods out of the territory of India; or (iii) in the course of inter-State trade or commerce. 6.. A reading of section 5(2) makes it clear that if the sale is effected by a transfer of documents of the goods before the goods have crossed the customs frontiers of India then a sale or purchase of goods is deemed to have taken place in the course of import of the goods into the Indian territory. Crossing the customs frontiers is defined under section 2(ab) accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents of title to goods were actually transferred. We doubt whether such matters can be satisfactorily determined by any court or Tribunal. Though difficulties in the way of working an Act should not affect the plain meaning of the statutory language, they have a bearing when there is at least a doubt regarding its true meaning. In our opinion, it would be proper to construe the words customs frontiers as customs barriers in the Central Act. The learned Judges further held keeping in view Wadeyar s case [1960] 11 STC 757 that: There is hardly any justification for holding that the Supreme Court has taken the view in Wadeyar s case [1960] 11 STC 757 that the customs barrier itself should be deemed to be located at the end of the six nautical miles limit of the President s notification. It would be illogical to assume, and we see no basis for it, that though the property in the goods did not pass to the buyer at any point of time before shipment, as the contracts were FOB and there was no special agreement, the Supreme Court yet held that the sales were in the course of export. It is quite manifest that the Supreme Court equated the expression frontier to barrier and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it follows that the claim made by the assessees that the sales in question were sales in the course of import has been rightly rejected by the assessing authority. Unfortunately, though various aspects seem to have been pressed before the High Court by the State of Madras, this notification of August 6, 1955, issued by the Government of India, defining the customs frontiers of India, was not brought to the notice of the High Court. In other words according to the Supreme Court the customs frontiers means six nautical miles notified by the President of India by the proclamation under section 3-A dated August 6, 1955. It is unfortunate that though the notification dated August 6, 1955 was considered by the Madras High Court, the Supreme Court observed that the said notification was not placed before the High Court. 10.. In order to get over the judgment of the Supreme Court the amendment in section 2(ab) is made. On the basis of the report submitted by the Law Commission recommending amendment to section 2 of CST to get over the difficulty to actually ascertain the point of time when a ship crosses the territorial waters of India. 11.. We have already referred to section 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oms Act, 1962. 12.. In the light of the above, the argument of the learned counsel for the Revenue that the transfer of title deeds should take place before the entry into the port cannot be sustained, as it would amount to retaining the position as laid down by the Supreme Court referred to above, reversing the judgment of the Madras High Court in spite of the subsequent amendment. It is pointed out that the effect of the amendment by defining crossing the customs frontiers of India under section 2(ab) is to get over the difficulty in determining the point of time at which the goods have entered the territorial water as per the judgment of the honourable Supreme Court in State of Madras v. Davar and Co. [1969] 24 STC 481. Further if the intention of the legislation is to say that the transfer should be effected before the goods enter the port, then they would have provided section 2(ab) in the following manner: Before entering the goods into the limits of the area of a custom station in which imported goods or export goods are ordinarily kept before clearance by the customs authorities. 13.. In view of the above, the TRCs are remanded to the assessing authority for the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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