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TMI Blog2015 (3) TMI 1168X X X X Extracts X X X X X X X X Extracts X X X X ..... ontiers of India. It was for the said reason that they were retained in warehoused condition by the Department of Customs and Central Excise under bond. The goods would become exigible to tax under either the CST Act or the KGST Act only after they cross the customs frontiers of India. In other words the goods would become taxable under the domestic enactments only after they are released for home consumption by the Customs authorities after payment of Customs Duty. As the said eventuality not having taken place yet, it is held that the goods have not become liable to tax under the Act that is relied upon. It is also worth noticing that the Special Economic Zones Act, 2005 is given an overriding effect over other enactments. In view of the provisions of law as well as the terms of the Export - Import Policy, there cannot be any doubt regarding the fact that the goods are not liable to tax under the Sales Tax Act of our country. Also the said taxable event of the goods clearing the customs barriers has not occurred in the case of the capital goods of the petitioner, in this case. Therefore the goods have not come into the territory of India. For the said reason they are not liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h respondent on the strength of Bills of Entry for warehousing. However, when the goods reached the Walayar Check Post, they were detained by the third respondent on 15.6.2004, alleging that the goods were taxable under the Central Sales Tax Act (CST Act for short). The petitioner was thereafter issued with notices under Section 29A(2) of the Kerala General Sales Tax Act, 1963 ('KGST' Act for short). The said notices are Ext.P11. Ext.P11 notices were followed up with Ext.P12 alleging that Sales Tax under the CST Act was payable in respect of the goods. 4. The petitioner thereupon challenged the said proceedings before this Court in WPC 19871/2004. As per Ext.P13 judgment dated 7.7.2004 this Court directed the second respondent to pass final orders in the matter under Section 29A of the KGST Act. Accordingly, the matter was considered by the second respondent and Ext.P15 order has been passed holding that, the petitioner is liable to pay Sales Tax under the CST Act in respect of the goods that were detained. As per Ext.P16 proceedings dated 21.7.2004 the petitioner was also directed to produce the warehousing certificate in respect of the machinery that was detained. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed. 7. The Special Govt. Pleader (Taxes) appears for respondents 2 and 3. According to the learned Special Govt. Pleader, the petitioner is not a unit set up in Special Economic Zone and the sale of machinery items cannot be treated as sale of capital goods from the unit. Permission of the Development Commissioner is necessary for such transfer. Therefore, according to the learned Special Govt. Pleader the writ petition is only to be dismissed. 8. Heard. A perusal of Ext.P1 shows that the petitioner had been granted permission to set up a unit at the CSEZ for manufacture and export of PVC Free Foam Sheets. Ext.P2 is a copy of the green card issued to the petitioner approving it as a 100% export oriented unit entitled to top priority treatment from all the concerned Central and State Government departments and every organisation in relation to the project. It is not in dispute that, the petitioner had imported machinery for the purpose of use in their unit for the manufacture of their products. Ext.P3 shows that, the goods are under bond with the Customs Department. Ext.P3 has been executed in favour of the Deputy Commissioner, Customs and Central Excise at CSEZ. The bond sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Special Economic Zone is treated to be a foreign territory for the purposes of trade operations, duties and tariffs. Units like that of the petitioner are permitted to import capital goods without paying Customs Duty to the Special Economic Zone for the purpose of manufacture of their products. Such capital goods are also permitted to be transferred to other units located in similar Special Economic Zones with the permission of the fifth respondent. The petitioner has obtained Ext.P7 permission from the fifth respondent permitting such transfer. Ext.P5 is the agreement pursuant to which, the goods were being transported. Therefore, the goods that were exported to the Special Economic Zone which is to be treated as a foreign territory for the purposes of trade and tariffs, had not crossed the customs frontiers of India. It was for the said reason that they were retained in warehoused condition by the Department of Customs and Central Excise under Ext.P3 bond. The goods would become exigible to tax under either the CST Act or the KGST Act only after they cross the customs frontiers of India. In other words the goods would become taxable under the domestic enactments only after they ..... X X X X Extracts X X X X X X X X Extracts X X X X
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