TMI Blog2015 (1) TMI 545X X X X Extracts X X X X X X X X Extracts X X X X ..... ntry was made and the goods were assessed to customs duty; the sale, effected by the petitioner, could not be said to be sales in the course of import or high sea sales in as much as the goods had crossed the customs frontiers; the second high sea sale agreement had not come into operation when the sale took place; there was no case for claiming that the transfer of documents was effected by virtue of the said agreement itself. Does the territorial assessing authority, before whom the dealer files his returns under the CST Act, have jurisdiction to pass an assessment order in the absence of authorisation from the Deputy Commissioner - Held that:- Section 9(2) of the CST Act provides that the authorities empowered to assess, reassess, collect and enforce payment of tax under the general sales tax law of the appropriate State, shall assess, re-assess, collect and enforce payment of tax under the CST Act as if the tax payable by such a dealer under the CST Act is a tax payable under the general sales tax law of the State. The said section further provides that, for this purpose, the authorities under the general sales tax law of the State may exercise all or any of the powers they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the powers conferred under Section 2(1)(b) of the APGST Act, is the Commercial Tax Officer of the concerned circle. As neither Section 2(4) of VAT Act, nor the Commissioner under Section 3-A thereof, have specified who an assessing authority is, the assessing authority under G.O.Ms. No.728 dated 14.07.1970 continues to remain the assessing authority even after the VAT Act came info force in view of the proviso to Section 80 thereof. Contention, urged on behalf of the petitioner, that the Commercial Tax Officer of the circle, before whom the petitioner files his monthly returns, lacks jurisdiction to pass the impugned assessment orders does not merit acceptance - Suffice it to make it clear that the Commercial Tax Officer of the Circle, before whom a dealer files his CST returns, is empowered to assess him to tax under the CST Act. Does filing of a bill of entry by the petitioner, and their being assessed to customs duty, make the sale to Radha Industries an inter-state sale? - Held that:- goods would not be thought to have been imported if they were carried through the territorial waters of the Indian coast by a ship which did not put them into an Indian port. Importatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of the Customs Act nor is it supported by any reason. These observations are, therefore, not a declaration of law binding on a co-ordinate bench. The assessing authority is, therefore, justified in holding that sale of goods by the petitioner to Radha Industries is not a sale in the course of import, but an inter-state sale liable to tax under the CST Act. Did the sale in favour of Radha Industries, Lucknow occasion movement of goods into the country? - Held that:- The petitioners case before the assessing authority was that the documents of title to the goods were transferred on high seas i.e., during the movement of goods from the country of export to India. It is for the first time before this Court, in proceedings under Article 226 of the Constitution of India, has this plea, of the sale of goods to M/s. Radha Industries having occasioned the import of goods, been taken placing reliance on certain clauses of the agreements. This Court would not, in proceedings under Article 226 of the Constitution of India, either re-appreciate the evidence on record or don the robes of the assessing authority to examine disputed questions of fact or interpret the clauses of the agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... state sale of goods, shall be paid by them forthwith, the respondents shall not take coercive steps for recovery of the balance tax for a period of three months from today. In case the petitioner produces C-Forms within the aforesaid three month period, they shall be extended the benefit of concessional rate of tax to the extent for which C-Forms are produced. It is made clear that, in case the petitioner fails to submit the C-Forms within three months from today, it is open to the respondents thereafter to proceed and recover the balance tax due from them in accordance with law. - Decided against the assessee. However,assessee granted three months period to produce the prescribed C-forms to avail benefit of concessional rate of tax. - Writ Petition Nos. 4552 of 2013 - - - Dated:- 18-12-2014 - Ramesh Ranganathan And M. M. Satyanarayana Murthy,JJ. For the Petitioner : Sri Ch Pushyam Kiran For the Respondent : Sri P. Balaji Varma, Ld Special Standing Counsel JUDGMENT (Per Honble Sri Justice Ramesh Ranganathan) 1. These two Writ Petitions are filed by the petitioner questioning the validity of the assessment orders dated 20.1.2010 and 18.5.2010 passed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Radha; in turn Radha agreed to pay the petitioner commission of 2% plus bank charges; the petitioner paid the entire amount to Indus without retaining a penny as commission; it was a friendly transaction arranged by the petitioner in favour of Radha; a quadri-partite agreement was entered into between Indus, the petitioner, Radha and World Best Trading Co. (L.L.C.); pursuant thereto, Indus purchased the goods and caused transfer of the bill of lading on high seas on 10.12.2005; on 12.12.2005, another high seas sale agreement was entered into between the petitioner and Radha whereby the bill of lading was sold in favour of Radha; the expression sold, as used in the said agreement, is a misnomer; what the parties meant was only transfer of the bill of lading in favour of Radha; on and from 12.12.2005, the petitioner did not have control over the bill of lading dated 09.12.2005, as they had parted with it in favour of Radha by then; since Radha did not have the customs facility at Visakhapatnam customs port, the petitioner had extended its help by filing a bill of entry in their name for the purpose of customs bonding, as well as customs clearance; the circumstance of filing a bill o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was whether there was a sale of goods by the petitioner, or whether it constituted a commission transaction as stated by them; and in the computer print out of the petitioners trading account, for the year 2005-06, the purchase was shown as purchase trading (high seas), and the relevant sale was shown as sales trading (high seas). After referring to a few other details, the assessing authority noted the contents of the high seas sale agreement dated 10.12.2005 entered into between M/s. Indus Tropics Ltd and the petitioner wherein the latter was described as the buyer; the second high seas sales agreement dated 12.12.2005, entered into between the petitioner and M/s. Radha Industries, wherein the parties were described as the seller and the buyer respectively; and the letter of the assessee dated 25.11.2009 wherein, while submitting certain documents like the sales invoice, the bill of lading, high sea sale agreement, bill of entry for warehousing and the bill of entry of ex-bond, the petitioner had stated that they had claimed exemption from payment of tax on the ground that the said sales were effected by transfer of documents of title to the goods before the goods had crossed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Supreme Court, in Tata Iron Steel Co. Ltd., Bombay v. S.R. Sarkar AIR 1961 SC SC 61 = 11 STC 655, had held that the sale would be reckoned as a sale on completion of such sale, and a mere contract of sale is not a sale within the definition of sale; the sale had not taken place in the manner contemplated in the agreement; the sale, in fact, took place only after customs clearance; and the contention urged by the petitioner was devoid of merits. 6. In his assessment order dated 18.05.2010, the Commercial Tax Officer, Chinnawaltair circle, Visakhapatnam held that the petitioner had claimed exemption from payment of tax, in respect of a turnover of ₹ 4,05,09,427/-, contending that this turnover represented sales effected by transfer of documents of title before the goods had crossed the customs frontiers of India; along with their returns, they did not file any evidence to show that the said sales were effected in such a manner; a show-cause notice dated 26.11.2009 was issued; pursuant thereto the assessee had furnished certain documents; these documents revealed that M/s.Porbunchal Lumbers (P) Ltd, Gujarat had imported 155 PCS of Myanmar Hardwood Gurjan Round logs from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... local goods exigible to tax; the transactions, which the assessee had claimed exemption as high sea sales, were liable to be treated as inter-state sales falling under Section 3(a) of the CST Act; as is ascertainable from the bills of entry for warehousing and ex-bond, transfer of title had not taken place before filing of the bills of entry, and assessment of customs duty; the sale took place after the assessment was made on the assessee, and on his filing the Bills of Entry; the said sales had, thus, attained the character of sale of local goods; the goods must be treated as having crossed the customs frontiers of India, after the bill of entry had been made and the goods were assessed to customs duty; the sales effected by the assessee cannot be said to be sales in the course of import or high sea sales in as much as the goods had crossed the customs frontiers; the letter addressed to M/s.Pine Exporters, New Delhi, showed that they never received any Malaysian round logs from the petitioner, which established that their claim was not genuine; the letter sent to M/s.Esskay Impex, New Delhi, was returned with the postal endorsement no such firm at this place which also showed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndment of Rule 59(4)(ii)(b); the Commercial Tax Officer cannot, therefore, assume jurisdiction merely because he receives the returns under the VAT Act, unless he has been authorized by the Deputy Commissioner; in the present case, both the assessment orders were passed under the CST Act; the CST Act does not define assessing authority; the CST (Andhra Pradesh) Rules, 1957 (AP Rules for short) prescribes the procedure for assessment; though the words appropriate assessing authority is defined in Rule 2[c] of the AP Rules, this expression is not found anywhere else in the Rules; Rule 14-A of the AP Rules refers only to the assessing authority, and not the appropriate assessing authority; the procedural provisions, applicable under the VAT Act, automatically apply to the CST Act in view of Section 9(2) of the CST Act; as the petitioners are liable to pay tax under the general sales tax law of the State (VAT Act), the assessing authority, for the purpose of the CST Act, would be the assessing authority under the VAT Act; the authority who is competent to assess, based on the authorization issued by the competent authority, is the assessing authority under the VAT Act; in the present c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orial officer can assess in case of non-filing or incomplete returns; the power of the territorial authority, for the purpose of assessment, gets clouded/suspended only when a specific authorisation is given to some one else; and, as such, he also becomes the assessing authority under the CST Act. 11. Section 9(2) of the CST Act provides that the authorities empowered to assess, reassess, collect and enforce payment of tax under the general sales tax law of the appropriate State, shall assess, re-assess, collect and enforce payment of tax under the CST Act as if the tax payable by such a dealer under the CST Act is a tax payable under the general sales tax law of the State. The said section further provides that, for this purpose, the authorities under the general sales tax law of the State may exercise all or any of the powers they have under the general sales tax law of the State and the provisions of such law, including provisions relating to returns etc, shall apply accordingly. The last limb of Section 9(2) of the CST Act, viz. and the provisions of such law........ shall apply accordingly , mean that the provisions of the State Act are applicable for the purpose of assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he exercise of the powers conferred by Section 13(3), (4) and (5) of the CST Act, the Central Sales Tax (Andhra Pradesh) Rules, 1957 were made and notified in G.O.Ms.No.302 Revenue dated 23.02.1957. Rule 1 thereof stipulates that these rules may be called the Central Sales Tax (Andhra Pradesh) Rules, 1957. Rule 2[c] of the AP Rules defines appropriate assessing authority to mean, in the case of a dealer who is liable to pay tax under the general sales tax law of the State, the assessing authority under the said law. Rule 14- A(1)(a) requires every dealer registered under Section 7 of the CST Act, and every dealer liable to pay tax under the CST Act, to submit, so as to reach the assessing authority on or before the 20th of every month, a return in Form CST VI showing the total and net turnover of his transactions including those in the course of inter- State trade or commerce during the preceding month, and the amount or amounts collected by way of tax. The return is required to be accompanied by a receipt from a government treasury or a crossed demand draft in favour of the assessing authority for the full amount of tax payable for the month to which the return relates. Rule 14-A( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(24) of the VAT Act defines prescribed to mean prescribed by Rules made under the Act. Section 2(27) defines rules to mean rules made under the Act. Section 20 of the VAT Act relates to returns and self-assessments. Under sub-section (1) thereof, every dealer registered under Section 17 of the Act shall submit such return or returns, along with proof of payment of tax, in such manner, within such time, and to such authority as may be prescribed. Chapter IV of the VAT Rules relates to returns, payments and assessments. Rule 23 relates to tax returns and, under sub-rule (1) thereof, a return to be filed by a VAT dealer under Section 20 shall be in Form VAT 200, and it shall be filed within 20 days after the end of the tax period. The returns shall be complete in duplicate and one copy, with the proof of receipt, shall be retained by the VAT dealer. Form VAT 200 contains, among others, the particulars of the circle and the division. The returns which are required to be submitted, under Section 20(1) of the VAT Act, is to such authority as may be prescribed. Rule 59 of the VAT Rules stipulates that the authorities specified in Column 3 of the table thereunder shall be the authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perform such functions, within such area or areas or the whole of the State of Andhra Pradesh, as the Government, or any authority or officer empowered by them in this behalf, may assign to them. Thus, if either the Government or the authority empowered by the Government assign the functions of assessment on any of the officers referred to in Section 3-A, such officers would be required to perform the said function of making assessment within the specified area or areas. In the exercise of the powers conferred under Section 3-A of the A.P. VAT Act, G.O.Ms. No.1163 dated 14.08.2006 was issued conferring power on the Commissioner of Commercial Taxes to require any officer, working under his control, to exercise any powers under the State Act within such area or areas or the whole of the State of A.P. Under the proviso thereto where any officer, in the exercise of the powers delegated to him by the Commissioner of Commercial Taxes in pursuance of the above orders, undertakes the assessment of any dealer, the assessing authority of the area, having jurisdiction to assess such dealer, shall not exercise such jurisdiction for the relevant period. The said G.O. came into force with retro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the Court, while interpreting the machinery provisions of a taxing statute, to give effect to its manifest purpose having a full view of it. A common sense interpretation should be given to the machinery sections so that the charge does not fall. While charging provisions are construed strictly, machinery sections are not generally subject to a rigorous construction. Courts are expected to construe the machinery sections in such a manner that a charge to tax is not defeated. (Sri Balaji Flour Mills2; Whitney v IRC (1926) AC 37; Commissioner of Income Tax v Mahaliram Ramjidas AIR 1940 PC 124, A.C.C.Limited v CTO AIR 1981 SC 1887). 17. Section 2 (1)(b) of the APGST Act defined assessing authority to mean any person authorized by the State Government, or by any other authority empowered in this behalf, to make any assessment, in such area or areas or the whole of the State of Andhra Pradesh, under the APGST Act. Section 14 thereof empowered the assessing authority to undertake assessment if a return submitted was found to be incorrect. In the exercise of the powers conferred by Section 2(1)(b) of the APGST Act, the Governor of Andhra Pradesh issued G.O.Ms.No.728 Revenue dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of assessment on the assessing authority which, in terms of GO Ms.No.728 dated 14.07.1970 issued in the exercise of the powers conferred under Section 2(1)(b) of the APGST Act, is the Commercial Tax Officer of the concerned circle. As neither Section 2(4) of VAT Act, nor the Commissioner under Section 3-A thereof, have specified who an assessing authority is, the assessing authority under G.O.Ms. No.728 dated 14.07.1970 continues to remain the assessing authority even after the VAT Act came info force in view of the proviso to Section 80 thereof. 19. Viewed from any angle the contention, urged on behalf of the petitioner, that the Commercial Tax Officer of the circle, before whom the petitioner files his monthly returns, lacks jurisdiction to pass the impugned assessment orders does not merit acceptance. It is made clear that this Court has not examined whether the prescribed authority under Rule 59 of the VAT Rules, who is empowered to make assessment under the VAT Act, can also assess a dealer to tax under the CST Act, as this question does not fall for consideration in these cases. Suffice it to make it clear that the Commercial Tax Officer of the Circle, before whom a deal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bill of lading was issued by the shipping line; the ultimate purchaser of the goods, i.e., Radha Industries, was identified even at that stage; the sale, by the Petitioner to Radha Industries, was effected by endorsement of the Bill of Lading in favour of Radha Industries while the goods were still in the customs station as defined in Section 2(13) of the Customs Act, 1962; and, in view of Section 2(ab) of the CST Act, 1956 read with Section 5(2) thereof, as long as the endorsement, and the consequent transfer of title of the goods, had taken place before the goods left the customs station, the sale would be in the course of import. Learned Senior Counsel has referred to the preamble and the provisions of the Indian Bills of Lading Act, 1856, and places reliance on British India Steam Navigation Co. Ltd. v. Shanmughavilas Cashew Industries (1990) 3 SCC 481 in this regard. 21. The petitioner has invoked the jurisdiction of this Court, under Article 226 of the Constitution of India, against the assessment order passed by the first respondent without availing the statutory remedy of appeal. The tax authorities, entrusted with the power to make assessment of tax, discharge quasi-jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acting in violation of principles of natural justice where there is no procedure specified, and thereby occasioning failure of justice. (Surya Dev Rai v. Ram Chander Rai AIR 1962 SC 1183). In granting a writ of certiorari the superior Court does not exercise the powers of an appellate Tribunal. It does not review or reweigh the evidence upon which the determination of the inferior Tribunal purports to be based. It does not take upon itself the task of examining the correctness of the decision or decide what is the proper view to be taken and the order which should be made. It demolishes the order which it considers to be without jurisdiction or palpably erroneous but does not substitute its own views for those of the inferior Tribunal. (T.C. Basappa v. T. Nagappa (2003) 6 SCC 675; Rex v. Northumberland Compensation Appellate Tribunal AIR 1954 SC 440; Veerappa Pillai 23). The court, issuing a writ of certiorari, acts in the exercise of a supervisory and not an appellate jurisdiction. The court will not review findings of fact reached by the inferior court or tribunal, even if they be erroneous. It is a manifest error apparent on the face of the proceedings, e.g., when it is based o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reciation of documentary evidence or affidavits, errors in drawing inferences or omission to draw inference or in other words errors which a court, sitting as a court of appeal, could only have examined, there is no case for the exercise of the jurisdiction under Article 226. (Surya Dev Rai24; Nagendra Nath Bora. v. Commissioner of Hills Division and Appeals, Assam (1958) SCR 1240). It is within this limited parameters can the validity of the impugned assessment orders be examined. 27. By the impugned orders of assessment, the assessing authority subjected the turnover to tax as inter-state sales under the CST Act holding that in the computer print out of the petitioners trading account, for the year 2005-06, the purchase was shown as purchase trading (high seas), and the relevant sales as sales trading (high seas); in the high sea sales agreement dated 10.12.2005, the petitioner was shown as the buyer; in the subsequent high sea sales agreement dated 12.12.2005 the petitioner was described as the seller; in their letter dated 25.11.2009 the petitioner had claimed exemption on the ground that the sales were effected by transfer of documents of title before the goods had crossed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessing authority being directed to consider the other documents relied upon by the petitioner. III. DOES FILING OF A BILL OF ENTRY BY THE PETITIONER, AND THEIR BEING ASSESSED TO CUSTOMS DUTY, MAKE THE SALE TO RADHA INDUSTRIES AN INTER-STATE SALE? 29. Sri S. Ravi, Learned Senior Counsel, would submit that the contention of the respondents, that transit ends upon payment of customs duty by the petitioner, and any sale by the petitioner thereafter can only be a sale in India, is erroneous; there is no prohibition under the Customs Act, or the Rules or Regulations made thereunder, for clearance of goods by the holder of an authorization by the endorsee of the Bill of Lading; even otherwise an importer under the Customs Act includes any owner or any person holding himself out to be an importer; as the Bill of lading had been endorsed in his favour, the Petitioner was entitled to and had, in fact, filed the Bill of Entry as an importer; the documents reveal that there were three importers in the present case i.e., Indus Tropics Limited, being the consignee in the Bill of Lading, was the first importer; the Petitioner, as the first endorsee, was the second importer; and Radha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s was the ultimate buyer before the goods crossed the customs frontier, after Purbanchal the original importer, and the Petitioner the subsequent high sea sale purchaser; if Radha Industries was the last buyer during importation, the Import General Manifest (IGM) would have reflected the same; only if the IGM had reflected the name of Radha Industries would they have been entitled to file the bill of entry; only the last buyer i.e., the last importer is liable to be assessed to customs duty; the customs duty is the value of the goods when the vessel enters Indian waters i.e, the value of the goods in the hands of the last buyer i.e, Radha Industries; and the Bill of Entry would then have shown Radha Industries as the importer, and the petitioner as one of the importers along with the names of the original importer i.e, Purbanchal and the export seller M/s. Alkemal; the contention regarding second high sales, to Radha Industries, are not true; the name of Radha Industries is not reflected in the Bill of Entry; Radha Industries was, admittedly, not assessed to customs duty; the value of the goods (even if notional) paid by Radha Industries to the petitioner was not assessed to custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India. The words crossing the customs frontiers of India is defined, in Section 2 (ab) of the CST Act, to mean crossing the limits of the area of a customs station in which the imported goods or exported goods are ordinarily kept before clearance by customs authorities. Under the Explanation thereto, for the purposes of Section 2(ab), customs station and customs authorities shall have the same meaning as in the Customs Act, 1962. The Customs frontier, for the purpose of the CST Act, is thus equated to the limits of the area of the customs station in which the goods are stored, crossing of such station being regarded as amounting to crossing the customs frontiers of India. The 'customs station' referred to in Section 2(ab) of the CST Act is the one which is defined under Section 2(13) of the Customs Act to mean any customs port, customs airport or land customs station. Customs Port is defined in Section 2(12) of the Customs Act to mean any port appointed under Section 7(a) thereof to be a customs port and includes a place appointed under clause (aa) of that Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lson v. Chambers Co. Ply. Ltd.(1926) 38 C.L.R. 131). Unless the goods, brought into the country for the purpose of use, enjoyment, consumption, sale or distribution, are incorporated in and get mixed up with the totality of the property in the country, they cannot be said to have been imported. (Shri Ramlinga Mills Pvt. Ltd.30; The Central India Spinning and Weaving and Manufacturing Co., Ltd, The Empress Mills, Nagpur v. The Municipal Committee, Wardha AIR 1958 SC 341; K.R. Ahmed Shah v. Additional Collector of Customs, Madras (1981 E.L.T. 153 (Madras HC). 34. The scheme of the Customs Act is to control the due importation of goods by channelling shipping through proclaimed ports having defined limits, and through bearing stations within the port to appropriate wharfage. The inward cargo is to be reported, the goods are to be unshipped immediately upon importation and, upon the passing of the entry, to be forthwith dealt with in accordance with the terms of the entry. In order to secure due importation, all goods from importation until passed into home consumption or until exportation abroad are subject to customs control. Goods in transit, not intended to be landed, are also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tle against payment or otherwise, to a third party by a similar process is also a sale in the course of import. (J.B. Trading Corporation v. Union of India 1990 (45) ELT 9). 36. In view of the definition of the term import in Section 2(23) of the Customs Act, and imported goods under Section 2(25), an importer is, ordinarily, the person who brings into India goods from any place outside India. Section 2(26) of the Customs Act does not lay down the statutory meaning of the word importer. The word importer has been defined in Section 2(26) to include, in relation to any goods at any time between their importation and the time when they are cleared for home consumption, any owner or any person who holds himself out to be the importer. What does the word include, in the context of Section 2(26) of the Customs Act, mean? The word include is generally used in interpretation clauses in order to enlarge the meaning of the words or phrases occurring in the body of the statute; and when it is so used those words or phrases must be construed as comprehending, not only such things as they signify according to their natural import, but also those things which the interpretation clause decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e customs barrier. But for the expanded definition of importer in Section 2(26), ordinarily, after completion of importation, there cannot be another importer for the very same goods. (J.B. Trading Corporation 37). In view of the expanded definition of importer in Section 2(26), while any person who imports goods from a foreign country to India would undoubtedly be an importer, the owner of the goods and a person holding himself out be an importer would also be an importer, however only during the period between the importation of the goods and the time they are cleared for home consumption, and not prior thereto or thereafter. This period is when the goods are warehoused after importation, and are cleared from such warehouse by a person other than the person who actually imported the goods. That limb of the definition of importer, in Section 2(26) of the Customs Act, is designed to protect the interests of the owner or the exporter where the goods have not been claimed or redeemed by the designated importer in India. The definition cannot be used to usurp the identity of an importer from the person who filed the bill of entry. As Section 2(26) is an inclusive definition, the perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IMPORT GENERAL MANIFEST WOULD REFLECT THE NAME OF THE IMPORTER: 39. To regulate and have effective control on imports, the Customs Act enjoins certain liabilities on the carriers. They are required to bring in the imported cargo into the country for unloading only at the notified ports/airports/Land Customs Stations (Section 29); and furnish detailed information to Customs about the goods brought in for unloading at that particular port. The cargo must be declared in terms of an Import General Manifest (IGM) prior to arrival of the vessel/aircraft at the Customs station (Section 30). Ordinarily, unloading of cargo cannot be undertaken from any vessel unless the IGM is furnished in the prescribed form. After the IGM is delivered, unloading takes place under the supervision of Customs Officers. 40. Section 2(24) of the Customs Act defines import manifest to mean the manifest required to be delivered under Section 30. Chapter-VI of the Customs Act contains provisions relating to the conveyance carrying imported goods. Section 30(1) requires the person-in-charge of the vessel carrying imported goods to deliver to the proper officer an import manifest prior to the arrival of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of each of the categories of cargo, viz, the cargo to be landed. The cargo declaration form contains, among others, the name of the ship, the port of loading, the bill of lading number, the number and kinds of packages, description of goods, name of the consignee/importer, the date of presentation of the bill of entry, the name of the customs house agent etc. 42. As shall be referred to in detail hereinafter, the bill of entry submitted by the petitioner, in terms of the Bill of Entry (Electronic Declaration) Regulations, 1995, records the Import General Manifest number and date as 423/2006 dated 13.04.2006. The Import General Manifest contains a cargo declaration wherein, among others, the name of the importer, the importers code number, IGM number and date are required to be detailed. It is not even the petitioners case that his name is not reflected as the importer in the Import General Manifest. If, as is now contended by him, the goods had been sold on the high seas, the Import General Manifest should have reflected the name of the last high sea sale purchaser as the importer. Otherwise, the Import General Manifest would have necessitated amendment as it is only the las ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , on the application of the importer, that the goods cannot be cleared within a reasonable time, the goods may, pending clearance, be permitted to be in a warehouse, but such goods shall not be deemed to be warehoused goods for the purposes of the Act and, accordingly, the provisions of Chapter-IX shall not apply to such goods. Section 68 relates to clearance of warehoused goods for home consumption and, thereunder, the importer of any warehoused goods may clear them for home consumption if (a) a bill of entry for home consumption in respect of such goods has been presented in the prescribed form; (b) the import duty levibale on such goods and all penalties, rent, interest and other charges payable in respect of such goods have been paid; and (c) an order for clearance of such goods for home consumption has been made by the proper officer. 45. For clearance of the goods, offloaded at the port, the importer has the option either to clear the goods for home consumption after payment of customs duties, or to clear them for warehousing, without immediate discharge of customs duties, in terms of the warehousing provisions of the Customs Act. For this purpose every importer is require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 5 stipulates that the data entry shall be deemed to be complete when the option to lodge the electronic declaration in the Customs Computer System is exercised, and the declaration is accepted by the System. Regulation 8 requires the authorised person, after completion of assessment of the bill of entry, to obtain three copies of the print-out of the assessed bill of entry from the service centre. Such person is required to sign the copies of the print-out, indicating his name and designation at the space provided for the purpose affirming the truth of the contents recorded on the assessed bill of entry. He is required, thereafter, to present the same along with copies of challans evidencing payment of duty, and other supporting import documents in original, relating to the goods referred to in the bill of entry, for the examination of the said goods by the proper officer and for the issue of the order permitting clearance of the said goods for home consumption or warehousing. Regulation 10 requires the authorised person to obtain a declaration from the importer affirming the truth of the contents of documents relating to the imported goods sought to be cleared in duplicate, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appendix-A and to present various documents as stipulated in the Bill of Entry (Electronic Declaration) Regulations, 1995, is either the clearing house agent or the importer and none else. In terms of Regulation 2(a) thereof, the Clearing House Agent must have a permanent licence and the importer a valid Importer-Export Code number. Both of them are also required to be authorized by the Commissioner of Customs with an user identification. The user identification number is required for the importer to obtain clearance of the goods imported by him. It is evident, therefore, that it is either the Clearing House Agent or the Importer who alone can clear the imported goods for home consumption. In this context, it is useful to refer to the contents of one of the Bills of Entry enclosed along with W.P.No.6258 of 2010. The head of the said Bill of Entry refers to Indian Customs EDI System. Under the column importer details, the Code No. is stated as 2605001091 and the PAN No. as ABMPA8919R. The name of the importer is shown therein as Sanjay Kumar Agarwal, Vellanki Frame Works. The IGM number and date are recorded as 423/2006 dated 13.04.2006. The port of loading is shown as Yangon and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the goods shall also be liable as if the thing had been done by himself. The reference to the agent under Section 147 of the Customs Act is to the agent of the Principal i.e. power of attorney holder of the importer and where the relationship of master and servant comes into play. In such cases the act of an agent is held to be the act of the Principal. The CHA acts under separate Regulations and his function, under the licence, is only to present papers for clearance of imported goods under a Bill of Entry and not to act as an contemplated under Section 147 of the Act. (Collector of Customs, Cochin v. Trivandrum Rubber Works Ltd 1999 (106) ELT 9 (SC)). The provisions of Section 147 of the Customs Act are attracted where anything which the Act requires to be done by an importer or owner is done by any other person at his instance. The procedure relating to clearance of the goods, including production of a valid licence for clearance, are required to be complied with by the importer. The word owner is used, both in Section 2(26) and Section 147 of the Customs Act, since the owner of the imported goods is required to perform certain acts under the Customs Act. Section 63 ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RTER OF THE GOODS AND NOT HIS AGENT: 53. Duties, according to the practice of most commercial nations, are charged only on those articles which are intended for sale or consumption in the country. Thus goods imported and re- exported in the same vessel, but not for sale, are exempt from the payment of duties. Sale is the object of importation, and is an essential ingredient of that intercourse, of which importation constitutes a part. It is as essential an ingredient as importation itself. Import is not merely the bringing into, but comprises something more i.e. incorporating and mixing up of the goods imported with the mass of the property in the local area. (Brown35; The Central India Spinning and Weaving and Manufacturing Co., Ltd.33). Though customs duties are levied with reference to goods, the taxable event is the import of goods within the customs barriers. The imposition of an import duty, by and large, results in a condition which must be fulfilled before the goods can be brought inside the customs barriers i.e. before they form part of the mass of goods within the country. (Shri Ramlinga Mills Pvt. Ltd.30; In re : Sea Customs Act (1878) A.I.R. 1963 S.C. 1760). 54. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , who would the last purchaser before the goods were cleared for home consumption; and it is on the value of such sale, and on such a purchaser who imported the goods, would customs duty have been levied under the Customs Act. While the goods can also be cleared by a customs house agent, or by the agent of the principal, it is only the importer who can be assessed to customs duty. No sooner than the goods become imported goods, they become chargeable to duty. Upto the moment they are cleared for home consumption, they constitute imported goods for the purpose of the Customs Act. As soon as they are cleared for home consumption, they cease to be imported goods. (Apar Pvt Ltd. v. Union of India (1985) 22 ELT 644 (Bombay HC F.B); Associated Forest Products (P) Ltd. v. Asst. Collector of Customs 1992 (59) E.L.T. 264 (Cal); S.K. Gupta v. K.P. Jain (1979) 3 SCC 54). Transfer of title to the goods on high seas would make the person, who purchased the goods on high seas, the importer of the goods and it is he who would be liable to be assessed to customs duty. As the Bill of Entry records the petitioners name as the importer, and as it is not in dispute that it was he who was assessed to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learance of the goods. On further appeal, the Tribunal held that it was enough if the goods had crossed the outer limit of the customs clearance, and it was not necessary that it had to cross the inner limit also. Aggrieved thereby the petitioner filed T.R.Cs before the High Court contending that the goods were transferred by transferring the bills of lading in favour of the respective purchasers; and, since the transfer was effected before clearance of the goods, the provisions of the APGST Act were not applicable, by virtue of Section 38 of the Act, as it was a sale occasioned in the course of import of the goods into the territory of India, by transfer of documents of title before the goods had crossed the customs frontiers of India. On the other hand the case of the Revenue was that, since the transfer was effected after the goods had crossed the limits of the area of the customs authorities in which the imported goods were ordinarily kept before clearance by the customs authorities, the transaction fell outside Section 5(2) read with Section 2(ab) of the CST Act. It is in this context that the Division Bench held:- ..A reading of Section 5 (2) makes it clear that if the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with the general mass of goods and merchandize of the country. The goods get the eligibility to be declared as local goods after clearance, even though they are not physically removed from the harbour premises. They attain the character of local goods and cease to be foreign goods. Therefore, the relevant point of time for determining as to whether the sale of goods is in the course of import by a transfer of title deeds is the transfer by title deeds before filing the bill of entry and the assessment of duty irrespective of the fact whether the goods are physically cleared from the harbour or not and whether duty is paid or not. As pointed out in the earlier paras after the filing of the bill of entry the assessment of the duty the import stream dries up and ceases to flow after the customs department levies the duty declaring the eligibility of the goods to be cleared and mingles with the general mass of goods and merchandise in the country. Once the duty is levied the import is at an end and the national customs barrier is supposed to have been crossed. The reason being it is difficult to ascertain the point of time or the place at which the goods have entered the limits of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be deemed to be a law declared to have a binding effect. That which escapes in the judgment without any occasion is not the ratio decidendi. A decision is binding not because of its conclusions but in regard to its ratio, and the principles laid down therein. Any declaration or conclusion arrived without application of mind or preceded without any reason cannot be deemed to be the declaration of law or authority of a general nature binding as a precedent. (Jaisri Sahu v. Rajdewan Dubey AIR 1962 SC 83; Municipal Corporation of Delhi v. Gurnam Kaur (1989)1 SCC 101; B. Shama Rao v. Union Territory of Pondicherry AIR 1967 SC 1480; State of U.P. v. Synthetics and Chemicals Ltd. (1991) 4 SCC 139). Any declaration or conclusion arrived at without being preceded by any reason, cannot be deemed to be the declaration of law or authority of a general nature binding as a precedent. (Synthetics and Chemicals Ltd.,60; B. Shama Rao59). A mere direction of the Court without considering the legal position is not a precedent. (Vishnu Dutt Sharma v. Manju Sharma (2009) 6 SCC 379). The view, if any, expressed without analysing the statutory provision cannot be treated as a binding precedent. (N. Bhar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions, whether the name on the bill of entry is relevant or not, and whether or not the name of the importer alone will be recorded in the Bill of Entry even if transfer by title deeds is effected before filing the bill of entry and assessment of duty under Section 28 of the Customs Act, did not arise for consideration in Minerals and Metals Trading Corporation54. The observations of the Division bench in this regard are not preceded by an analysis of the relevant provisions of the Customs Act nor is it supported by any reason. These observations are, therefore, not a declaration of law binding on a co-ordinate bench. The assessing authority is, therefore, justified in holding that sale of goods by the petitioner to Radha Industries is not a sale in the course of import, but an inter-state sale liable to tax under the CST Act. IV. DID THE SALE IN FAVOUR OF RADHA INDUSTRIES, LUCKNOW OCCASION MOVEMENT OF GOODS INTO THE COUNTRY? 63. Sri S. Ravi, Learned Senior Counsel appearing on behalf of the petitioner, would submit that the entire import of the goods was occasioned by the ultimate sale in favour of Radha Industries by the Petitioner; although the documents executed referred t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of India. 66. The petitioners case before the assessing authority was that the documents of title to the goods were transferred on high seas i.e., during the movement of goods from the country of export to India. It is for the first time before this Court, in proceedings under Article 226 of the Constitution of India, has this plea, of the sale of goods to M/s. Radha Industries having occasioned the import of goods, been taken placing reliance on certain clauses of the agreements. This Court would not, in proceedings under Article 226 of the Constitution of India, either re-appreciate the evidence on record or don the robes of the assessing authority to examine disputed questions of fact or interpret the clauses of the agreements. As this contention is not a pure question of law and, at best, is a mixed question of facts and law, this Court would be loathe to undertake such an exercise. Even otherwise, the submission that the sale to Radha Industries occasioned the import of goods is belied by the fact that it is the name of the petitioner which is reflected in the Bill of Entry as the importer of the goods, and not Radha Industries. The submission of Sri S. Ravi, Learned Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had taken place, the transactions must be held to have taken place beyond or outside the custom frontiers of India. The goods are cleared from customs, and are brought into the country after crossing the customs frontiers. Goods lying in bonded warehouses are deemed to have been kept outside the customs frontiers of the country. As duty free shops, situated at International Airports, are beyond the customs frontiers of India, the goods sold thereat must be said to have been sold before the goods have crossed the customs frontiers of India. Transfer of documents of title to the goods is one of the methods whereby delivery of the goods is effected. Delivery may be physical also. Sales effected by physical delivery of the goods, at the duty free shops, are not taxable under the CST Act. (Hotel Ashoka (Indian Tour. Dev. Cor. Ltd).71). 69. Duty free shops are, in law, taken as being located beyond the customs frontiers and, consequently, the sale of goods at the duty free shops is in the course of import. Reliance placed by the petitioner on Hotel Ashoka (Indian Tour. Dev. Cor. Ltd)71, to contend that the goods sold to Radha Industries is in the course of import, is therefore of no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted from the branch office to the buyer; the registered office and the branch office were separately registered as dealers under the Sales Tax law; the transactions effected by the branch office should not be identified with the transactions effected by the registered office; and the movement of the goods from Hyderabad to the branch office was only for the purpose of enabling the sale by the branch office and was not in the course of fulfillment of the contract of sale. While expressing their inability to agree, the Supreme Court held:- .. Even if, as in the present case, the buyer places an order with the branch office and the branch office communicates the terms and specifications of the orders to the registered office and the branch office itself is concerned with the sales despatching, billing and receiving of the sale price, the conclusion must be that the order placed by the buyer is an order placed with the Company, and for the purpose of fulfilling that order the manufactured goods commence their journey from the registered office within the State of Andhra Pradesh to the branch office outside the State for delivery of the goods to the buyer. We must not forget that bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble opportunity to the appellant-company, to collect C Forms and furnish them, before making an assessment in respect of such transactions. In the present case also the petitioner has, all through, been contending that sale of goods to Radha Industries is a sale in the course of import under Section 5(2) of the CST Act and is, therefore, exempt from tax. The Assessing Authority has held for the first time, by way of impugned assessment orders, that it is an inter-state sale liable to tax under Section 3(a) of the CST Act. 73. Rule 12(7) of the Central Sales Tax (Registration and Turnover) Rules, 1957 stipulates that the declaration in Form C shall be furnished to the prescribed authority within three months after the end of the period to which the declaration or the certificate relates. Under the proviso thereto, if the prescribed authority is satisfied that the person concerned was prevented by sufficient cause, from furnishing such declaration or certificate within the aforesaid time, he is empowered to allow such declaration or certificate to be furnished within such prescribed time as he may permit. 74. In Rajeswari Stone Polishers v. State of Andhra Pradesh (1983) 52 STC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Division Bench of this Court, following its earlier judgment in Rajeswari Stone Polishers73 and the judgment of the Supreme Court in Hyderabad Asbestos Cement Production74, held that Rule 12(7) conferred power on the assessing authority to receive C forms where sufficient cause was shown by the dealer for not filing them upto the time of assessment; there is no limitation, as such, provided for receiving the C forms; they can be received at any time, after the order of assessment, provided sufficient cause is shown; the making of assessment itself cannot be postponed at the instance of a dealer, in order to enable the dealer to produce such C forms, if such postponement results in the bar of limitation in making the assessment; if an assessment can be postponed, and such postponement is not hit by limitation, time can always be extended by the assessing authority to enable the dealer to produce the C forms; and, in case such C forms are not produced, it does not take away the right of the dealer to produce them even after making of the assessment order, provided sufficient cause is shown. 77. As noted hereinabove Rule 12(7) enables the assessing authority, on sufficient cause ..... X X X X Extracts X X X X X X X X Extracts X X X X
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