SUBBA RAO, -
(1.)THE following Judgment of the court wasdelivered by :
(2.)THIS is a petition under Art. 32 of theConstitution for quashing the order of the first respondentdated 9/02/1959, setting aside the order of thesecond respondent allowing a deduction of an amount of Rs.1,86,42,730-15-0 from the Petitioners sales tax turnover onthe ground that the said amount was not liable to tax byvirtue of s. 46 of the bombay Sales Tax Act, 1953 (Act IIIof 1953), (hereinafter called the Act).
The material facts are not in dispute and they may bebriefly stated The petitioner is a private company withinthe meaning of the Companies Act, 1956 and has itsregistered office at Kasturi Buildings, Bombay -1 on 24/03/1954 and 15/04/1954, into two contracts withthe government of India for selling to the latter twoconsignements of sugar-one of 9500 Long Tons of sugar ofPeruvian orgin and the other of 25000 metrice Tons of sugarof continental origin. To fulfil the terms of thecontracts, the petitioner placed order with dealers inforeign countries. The following are the particularsrelating to the first contract dated 24/03/1954, for the supply of 9500 Long Tons of sugar:
The corresponding details pertaining to the second contract are as follows:
The foregoing particulars disclose that some weeks beforethe vessel arrived at the Bombay harbour, i.e., when thevessels were on the high seas, the government of Indiareceived the documents of title, including bills of lading,pertaining to the sugar purchased by them and paid the priceto the petitioner. Indeed after the goods reached the port,they were unloaded, taken delivery of, and cleared by theGovernment ofIndia after paying the requisite customs duties to theauthorities concerned.
For the assessment year 1954-55 i.e., 1/04/1954 to March 31, 1955, the petitioner was assessed tosales tax by the Sales Tax Officer, Licence Circle,Division 1, Bombay. In calculating the turn-over of thepetitioner, the Sales Tax Officer deducted the price of thesaid two sales from the petitioner's turn-over. On 31/01/1958, the first respondent, the Assistant Collector ofSales Tax, issued a notice to the petitioner under s. 31 ofthe Act proposing to review the said assessment order passedby the Sales Tax Officer. In due course the petitionerfiled objections and made his representations. Thepetitioner contended before the first respondent that thenotice should have been issued, if at all, under s. 15 andnot under s. 31 of the Act inasmuch as the sales had beendisclosed to the Sales Tax Officer and the deduction of thesame had been allowed by him. it was also pleaded that inany event the sales had taken place in the course of importand therefore they were not liable to sales tax. The firstrespondent rejected both the contentions and held that salestax was payable in respect of the said two transactions. Hereassessed the petitioner to a total amount of sales tax andgeneral tax of Rs.10,22,850-12-0 less Rs. 315-3-0 alreadypaid by the petitioner, i.e., a sum of Rs. 10,22,535-9-0 anddirected the second respondent, the Sales Tax Officer, toissue a notice of demand for the said amount. Pursuant tothat order, the second respondent issued a notice dated 14/02/1959. The petitioner has filed the presentpetition for the issue of a writ of certiorari cancellingthe demand notice issued by the second respondent.
The learned Solicitor-General intervened on behalf of theUnion government and Mr. Palkbivala intervened forinterveners 1 to 3, and both of them supported thepetitioner.
(3.)MR. Purshottam Tricumdas, appearing for the petitioner,raised before us the following contentions: (1) Under Art.286(1)(b) of the Constitution, as it stood before theConstitution (Sixth Amendment) Act, 1956, the sales inquestion were not liable to sales tax inasmuch as they tookplace in the course of import of thegoods into the territory of India; (2) the said sales wereexempted from sales tax by the Bombay State under theexplanation to Art. 286(1) of the Constitution, as the goodswere delivered for the purpose of consumption in Statesother than Bombay; (3) the sales were effected outside theState of Bombay i.e., New Delhi, and therefore they werealso exempted under Art. 286(1)(a) of the Constitution; and(4) the first respondent could have only interfered with theearlier order of assessment under s. 15 of the Act withinthree years from the end of the assessment year 1954- 55,i.e., 31/03/1955, and that the said period havingelapsed, he had no power to interfere in revision under s.31 of the Act.
The first point is the most substantial one in the case andif the petitioner succeeds on that point, no other questionwould arise for consideration.
The first question turns upon the interpretation of Art.286(1)(b) of the Constitution before it was amended by theConstitution (Sixth Amendment) Act, 1956. The said Articleread;' (1) No law of a State shall impose, or authorise theimposition of, a tax on the sale or purchase of goods wheresuch sale or purchase takes place-(b) in the course of the import of goods into, or export ofthe goods out of, the territory of India. ' Under thisArticle, if the sales by the petitioner to the government ofIndia took place in the course of the import. of the goodsinto the territory of India, the Bombay State would have nopower to impose sales tax on the said sales.