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TMI Blog2012 (2) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... said duty free shops, the appellant sells several articles including liquor to foreigners and also to Indians, who are going abroad or coming to India by air. We are concerned with a duty free shops situated at an International Airport at Bengaluru. The appellant is registered as a dealer under the Act as well as under the Central Sales Tax Act, 1956 (hereinafter referred to as the Central Act'). In the return filed under the Act as well as under the Central Act for the relevant period, the appellant had stated that though liquor, cigarettes, perfumes and food articles were sold at the duty free shops at the Bengaluru International Airport, no tax was payable by the appellant as the goods which had been sold at the duty free shops were sold directly to the passengers and even the delivery of goods at the duty free shops was made before importing the goods or before the goods had crossed the customs frontiers of India. 3. According to the appellant, no tax can be levied under the Act or under the Central Act when the goods are sold in the course of import or before the goods have crossed the customs frontier of India as per the provisions of Section 5 of the Central Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are considered to have remained outside India and once the sale or purchase of the goods which takes place in the course of import or export or outside the concerned State, according to the provisions of Article 286 of the Constitution, no State can impose any tax on such a sale or purchase. As the duty free shops of the appellant are outside the customs frontiers of India, as per legal fiction, the sale of goods cannot be said to be in any State but technically such a sale would be considered to be in the course of import of the goods and, therefore, the sale effected at the duty free shops of the appellant cannot be taxed under the Act. 9. He further submitted that all the duty free shops of the appellant are in customs area as defined under Section 2(11) of the Customs Act, 1962 (in short the Customs Act'). According to the said definition, customs area' is the area of a customs station and it includes any area in which imported goods or export goods are ordinarily kept before clearance by Customs Authorities. According to him, the goods can be said to have been imported only after sale of the goods at duty free shop to a passenger, if the passenger brings the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as by the Division Bench of the High Court are just and proper. They submitted that the High Court rightly did not entertain the petition as the appellant had not challenged the validity of the order before the appellate authority appointed under the Act. They submitted that the Act has set up appellate authorities and according to the provisions of the Act, an order passed by the assessing officer should be first challenged before the first appellate authority and only after all the remedies under the Act are exhausted, the appellant should have approached the High Court. As the statutory remedies had not been exhausted by the appellant, according to the learned counsel, the High Court had rightly dismissed the appeal by confirming the order passed by the learned Single Judge. 13. On merits they submitted that purchase of the goods at the duty free shops of the appellant would be taxable under the provisions of the Act. They submitted that after purchase of the goods at the duty free shops, passengers enter the country by crossing the customs frontiers. The goods were actually delivered to the customers and sales were not effected by transfer of documents of title ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as and when the stock of goods lying at the duty free shops was exhausted. It is also an admitted fact that the appellant had executed bonds and the goods, which had been brought from foreign countries, had been kept in bonded warehouses by the appellant. When the goods are kept in the bonded warehouses, it cannot be said that the said goods had crossed the customs frontiers. The goods are not cleared from the customs till they are brought in India by crossing the customs frontiers. When the goods are lying in the bonded warehouses, they are deemed to have been kept outside the customs frontiers of the country and as stated by the learned senior counsel appearing for the appellant, the appellant was selling the goods from the duty free shops owned by it at Bengaluru International Airport before the said goods had crossed the customs frontiers. 19. Thus, before the goods were imported in the country, they had been sold at the duty free shops of the appellant. 20. In view of the aforestated factual position and in the light of the legal position stated hereinabove, it is very clear that no tax on the sale or purchase of goods can be imposed by any State when the trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant could have convinced the concerned authority that the sale effected at the duty free shops of the appellant could not have been taxed by the State of Karnataka. 26. Learned counsel appearing for the respondent-Authorities had vehemently submitted that the appellant had not exhausted equally efficacious alternative statutory remedy and, therefore, the Single Judge of the High Court had rightly not entertained the petition filed by the appellant. 27. According to them, the Division Bench had also rightly dismissed the appeal for the same reason. According to them, this Court also should not entertain this appeal. 28. It is true that the appellant had rushed to the High Court without exhausting equally efficacious alternative statutory remedy. In our opinion, the learned Single Judge of the High Court was also right when he directed the appellant to move the statutory appellate authority. In normal circumstances, even we would have expressed the same opinion but looking to the fact that the special leave petition has already been admitted and the matter pertains to the assessment year 2004-2005, it would not be in the interest of the justice to relegate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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