B K WADEYAR SALES TAX OFFICER IV DIVISION LICENCE CIRCLE BOMBAY Vs. DAULATRAM RAMESHWARLAL
SUPREME COURT OF INDIA (FROM: BOMBAY)
DAULATRAM RAMESHWARLAL,B.K.WADEYAR,SALES TAX OFFICER,IV DIVISION LICENCE CIRCLE,BOMBAY
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Das Gupta, J. -
(1.)M/s. Daulatram Rameshwarlal, a firm registered under the Indian Partnership Act (referred to later in this judgment as "sellers") are registered dealers under S. 11 of the Bombay Sales Tax Act. In their return of turnover for the period from April 1, 1954, to March 31, 1955, they claimed exemption from Sales Tax in respect of sales of cotton of the total value of Rs. 68,493-2-6 and sales of castor oil of the total value of Rs. 6,47,509-1-6 on the ground that these sales were on FOB contracts, under which they continued to be the owners of the goods till the goods had crossed the customs barrier and thus entered the export stream, and so no tax was realisable on these sales in view of the provisions of Art. 286 (1) (b).
(2.)The Sales Tax Officer rejected this claim for exemption and assessed them to Sales Tax on a taxable turnover including these sales. He also assessed them to purchase tax under S. 10(b) of the Bombay Sales Tax Act on their purchase of castor oil which they later sold for the sum of Rs. 6,47,509-1-6 as mentioned above. The notice of demand for the total Sales Tax and the purchase tax assessed was served on the sellers on September 30, 1956. The sellers thereupon moved the Bombay High Court under Art. 226 of the Constitution for the issue of appropriate writs for quashing the order of assessment and the notice of demand and for prohibiting the Sales Tax Officer from taking any steps pursuant to the order or the notice. The learned Judge, who heard the petition rejected the sellers' contention that the goods remained their property till these crossed the customs frontier and therefore held that the sellers were not entitled to the benefit of Art. 286(1)(b) of the Constitution. As regards the assessment to purchase tax also he rejected the sellers' contention that the assessment in question was illegal. In this view the learned Judge dismissed the application under Art. 226.
(3.)Against this decision the sellers appealed. The learned Judges who heard the appeal held, disagreeing with the Trial Judge, that the goods remained the seller's property till the goods had been brought on board the ship and so the sales were exempted from tax under Art. 286(1)(b) of the Constitution. They however agreed with the Trial Judge that the sellers were liable to pay purchase tax under S. 10 (b) of the Bombay Sales Tax Act. Accordingly they directed the Sales Tax Officer not to enforce the demand for payment of sales tax with regard to the sale of cotton for Rs. 68,493-2-6 and sale of castor oil of the total value of Rs. 6,47,509-1-6.
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