TMI Blog1960 (1) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 (Attorney General of India) [Judgment per : Subba Rao, J.]. This is a petition under Article 32 of the Constitution for quashing the order of the first respondent dated February 9, 1959, setting aside the order of the second respondent allowing a deduction of an amount of Rs. 1,86,42,730-15-0 from the petitioner s sales tax turn-over on the ground that the said amount was not liable to tax by virtue of Section 46 of the Bombay Sales Tax Act, 1953 (Act III of 1953), (hereinafter called the Act). 2. The material facts are not in dispute and they may be briefly stated : The petitioner is a private company within the meaning of the Companies Act, 1956, and has its registered office at Kasturi Buildings, Bombay-1. On March 24, 1954 and April 15, 1954, the petitioner entered into two contracts with the Government of India for selling to the latter two consignments of sugar - one of 9,500 Long Tons of sugar of Peruvian origin and the other of 25,000 Metric Tons of sugar of continental origin. To fulfil the terms of the contracts, the petitioner placed order with dealers in foreign countries. The following are the particulars relating to the first contract dated March 24, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neral (Food Rehabilitation) New Delhi. ................................................... (v) 26th July, 1954. 18th August, 1954. 19th August, 1954. Payment made to the petitioner s Bankers by the Government of India against delivery of Invoices and Bills of Lading. (vi) 12th Aug.,1954. 3rd Sept., 1954. 9th Sept., 1954. Date of arrival of Vessel at Bombay Harbour. 3. The foregoing particulars disclose that some weeks before the vessel arrived at the Bombay Harbour, i.e., when the vessels were on the high seas, the Government of India received the documents of title, including bills of lading, pertaining to the sugar purchased by them and paid the price to the petitioner. Indeed after the goods reached the port, they were unloaded, taken delivery of, and cleared by the Government of India after paying the requisite customs duties to the authorities concerned. 4. For the assessment year 1954-55, i.e., April 1, 1954 to March 31, 1955, the petitioner was assessed to sales tax by the Sales Tax Officer, Licence Circle, Division 1, Bombay. In calculating the turn-over of the petitioner, the Sales Tax O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly interfered with the earlier order of assessment under Section 15 of the Act within three years from the end of the assessment year 1954-55, i.e., March 31, 1955, and that the said period having elapsed, he had no power to interfere in revision under Section 31 of the Act. 7. The first point is the most substantial one in the case and if the petitioner succeeds on that point, no other question would arise for consideration. 8. The first question turns upon the interpretation of Article 286(1)(b) of the Constitution before it was amended by the Constitution (Sixth Amendment) Act, 1956. The said Article read ; (1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place - ........................................................................................................................ (b) in the course of the import of goods into, or export of the goods out of, the territory of India." Under this Article, if the sales by the petitioner to the Government of India took place in the course of the import of the goods into the territory of India, the Bombay State would have no power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d end when they cross the customs barrier of the importing country. 10. The next question is, when can it be said that a sale takes place in the course of import journey? This Court in State of Travancore-Cochin v. The Bombay Co. Ltd. - (1952) SCR 1112 held that a sale which occasioned the export was a sale that took place in the course of export of the goods. If A, a merchant in India, sells his goods to a merchant in London and puts through the transaction by transporting the goods by a ship to London, the said sale which occasioned the export is exempted under Article 286(1)(b) of the Constitution from the levy of sales tax. The same principle applies to a converse case of goods which occasioned the import of the goods into India. This Court again in State of Travancore-Cochin v. Shanmugha Vilas Cashew Nut Factory - (1954) SCR 53 extended the doctrine to a case of sale or a purchase of goods effected within the State by transfer of shipping documents while the goods were in the course of transit. The decision dealt with three types of purchases, viz., (i) purchases made in the local market; (ii) purchases made in the neighbouring districts of an adjacent State; and (iii) impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade. To hold that these sales or purchases do not take place in the course of" import or export but are to be regarded as purely ordinary local or home transactions distinct from foreign trade, is to ignore the realities of the situation. Such a construction will permit the imposition of tax by a State over and above the customs duty or export duty levied by Parliament. Such double taxation on the same lot of goods will increase the price of the goods and, in the case of export, may prevent the exporters from competing in the world market and, in the case of import, will put a greater burden on the consumers. This will eventually hamper and prejudically affect our foreign trade and will bring about precisely that calamity which it is the intention and purpose of our Constitution to prevent." The learned Judge also in his judgment elaborately considered the great hardship that would be caused to an Indian importer if he was not permitted to sell the goods which were on the high seas by delivery of shipping documents against payment. Though that case dealt with a different situation, we agree with the learned Judge s observations that an importer can, if he receives the shipping d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and voyage, the bill of lading by the law merchant is universally recognised as its symbol, and the endorsement and delivery of the bill of lading operates as a symbolical delivery of cargo. Property in the goods passes by such endorsement and delivery of the bill of lading, whenever it is the intention of the parties that the property should pass just as under similar circumstances the property would pass by an actual delivery of the goods. And for the purpose of passing such property in the goods and completing the title of the endorsee to full possession thereof, the bill of lading, until complete delivery of the cargo has been made on shore to some one rightfully claiming under it, remains in force as a symbol, and carries with it not only the full ownership of the goods, but also all rights created by the contract of carriage between the shipper and the shipowner. It is a key which in the hands of a rightful owner is intended to unlock the door of the warehouse, floating or fixed, in which the goods may chance to be. We have quoted the passage in extenso as it clearly and fully states the law on the subject. It is not disputed that the law in India is also similar to that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recover any sum as liquidated damages, and/or by way of penalty upto a prescribed amount. Clause 9 authorises the Government, in the event of the sellers failing to observe or perform any provisions of the contract, to terminate the contract forthwith. Clause II under the heading Force Majeure confers on the Government, in case delivery in whole or in part is prevented or delayed directly or indirectly by any cause of Force Majeure, war, strikes, rebellion, insurrection, political disturbances, civil commotion, fire or flood, on account of plague or other epidemics, the right to cancel the contract for the quantities so prevented or delayed. After the sellers entered into the contracts, they obtained the requisite licences from the Government, opened letters of credit, placed orders with foreign companies, engaged a steamer on charter terms, took delivery of the goods from the foreign firms and, when the goods were on the high seas, delivered the documents of title to the Central Government against payment and the said Government, taking the licence from the sellers, cleared the goods at the Bombay Harbour. 13. Let us now scrutinize the terms of the contract to ascertain whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and the buyer is empowered to cancel the whole of the contract or a part of it. This also applies to a point of time before the property in the goods has passed to the buyer. If, on the other hand, the seller delivers the shipping documents against payment and thereafter if he does not deliver the goods at the port, the buyer may have other remedies for the recovery of damages etc. But that right is not covered by either Clause (9) or Clause (11) of the contract. A scrutiny of all the terms of the contract does not indicate the intention that the property in the goods shall not pass to the buyer notwithstanding delivery of shipping documents against payment. 14. Apart from the terms of the contract, reliance is also placed by the learned Counsel for the respondents on the following circumstances : (i) the seller himself chartered the ship; and (ii) the licence issued by the Government was made non-transferable. We do not see how these two facts indicate the contrary intention. If the seller himself chartered a steamer, when the goods he purchased were loaded in the ship, the property in the goods passed to him and therefore he was in a position to sell the same to the Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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