1977 (6) TMI 84 - HC - VAT and Sales Tax

SALE OF GOODS SPECIFIC OR ASCERTAINED GOODS TERRITORIAL WATERS INTER-STATE SALE GOODS IMPORTED FROM ABROAD AND KEPT IN BONDED WAREHOUSE SUPPLIED TO FOREIGN GOING SHIPS UNDER SUPERVISION OF CUSTOMS AUTHORITIES WHETHER INTER-STATE SALE OR LOCAL SALE.

Summary

Issues:
Interpretation of territorial waters for taxation purposes under the Tamil Nadu General Sales Tax Act.
Determining whether sales took place within the State of Madras and were subject to taxation.
Application of section 4(2)(b) of the Central Sales Tax Act and section 2(n), explanation (3), of the Tamil Nadu General Sales Tax Act.

Analysis:
The case involved tax revision cases arising from an order of the Sales Tax Appellate Tribunal regarding the assessment years 1968-69 to 1971-72. The assessee, a dealer in ship's stores, imported goods for supply to foreign vessels or diplomatic personnel, with goods received in a customs bonded warehouse. The issue was whether the sales were taxable under the Tamil Nadu General Sales Tax Act, as contended by the assessing authority. Appeals to the Appellate Assistant Commissioner and the Tribunal were unsuccessful, leading to the present revision proceedings.

The primary issue was whether the sales took place within the State of Madras, making them subject to taxation under the Tamil Nadu General Sales Tax Act. The counsel for the revision petitioners argued that the sales occurred outside the State or were inter-State sales, thus not liable to tax. The Additional Government Pleader asserted that the sales fell within the Act's scope. The critical consideration was whether the sales met the criteria of section 3 of the Central Sales Tax Act to determine if they were inter-State sales.

Section 3 of the Central Sales Tax Act outlines conditions for sales to be deemed in the course of inter-State trade or commerce. The argument centered on whether the movement of goods from one State to another was triggered by the sales. The Court emphasized the need for a connection between the sale and the movement of goods across States to classify them as inter-State sales, which was not evident in this case.

Regarding the interpretation of territorial waters, the Court examined precedents suggesting that territorial waters could be considered part of the State of Madras. However, the judgment focused on the specific provisions of section 4(2)(b) of the Central Sales Tax Act and section 2(n), explanation (3), of the Tamil Nadu General Sales Tax Act to determine the taxability of the sales. The Court concluded that the sales were local sales under these provisions, making them taxable under the State Act.

Additionally, a decision of the Andhra Pradesh High Court in a similar case was referenced, highlighting the applicability of section 4(2)(a) of the Central Sales Tax Act. However, the Court distinguished the circumstances of the present case, emphasizing the appropriation of unascertained goods in a bonded warehouse, aligning the sales with section 4(2)(b) rather than section 4(2)(a).

Ultimately, the Court dismissed the tax revision cases, upholding the assessment under the Tamil Nadu General Sales Tax Act based on the specific provisions and interpretations discussed, with costs awarded to the respondent.