TMI Blog2012 (2) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... R. Dave, JJ. JUDGMENT Anil R. Dave, J Civil Appeal No. 2560 of 2010 1. In this appeal, an order dated 9th June, 2009 passed by the High Court of Karnataka, in Writ Appeal No. 881 of 2009 (T-CST) is challenged by the appellant, who is an assessee and registered as a dealer under the provisions of the Karnataka Value Added Tax Act, 2003 (hereinafter referred to as the Act'). Facts giving rise to the present litigation in a nutshell are as under: 2. The appellant, M/s Hotel Ashoka, is managed by India Tourism Development Corporation Limited (hereinafter referred to as the Corporation'). The Corporation is having its duty free shops at all major International Airports in India. At the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chase of goods where such sale or purchase takes place outside the State or in the course of the import of the goods into or export of the goods out of the territory of India. 7. He further submitted that in the instant case, all sales had taken place at the duty free shops of the appellant before the goods had crossed the customs frontiers of India. He stated that the goods, which are the subject matter of the present litigation were brought in India and had been kept at bonded warehouses and thereafter they were transported to duty free shops which were outside the customs frontiers of India. 8. He further submitted that till the goods cross the customs frontiers of India, technically the goods 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion, the learned counsel relied upon several judgments including the judgments delivered in the cases of State of Travancore-Cochin and others v. Bombay Company Ltd. Alleppey [AIR 1952 SC 366], State of Travancore-Cochin and others v. Shanmugha Vilas Cashewnut Factory Quilon [AIR 1953 SC 333], J.V. Gokal and Co. (Private) Ltd. v. Assistant Collector of Sales Tax (Inspection) and Others [AIR 1960 SC 595] and in Kiran Spinning Mills v. Collector of Customs [AIR 2000 SC 3448]. 12. On the other hand, learned senior counsel Shri Bhat and Shri Sharma, assisted by learned counsel Shri Qadri appearing for the respondent-State, mainly submitted that the orders passed by the learned Single Judge 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sa [(1975) 2 SCC 47]. 15. In the circumstances, they submitted that the appeal be dismissed with costs and the stay granted by this Court be vacated. 16. We heard the learned counsel at length and considered the impugned order of assessment as well as the orders passed by the High Court of Karnataka and the judgments referred to by the learned counsel. 17. In our opinion, the facts stated by the counsel are not much in dispute. 18. It is an admitted fact that the goods which had been brought from foreign countries by the appellant had been kept in bonded warehouses and they were transferred to duty free shops situated at International Airport of Bengaluru 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 86 of the Constitution, the State of Karnataka has no right to tax any such transaction which takes place at the duty free shops owned by the appellant which are not within the customs frontiers of India. 25. Looking to the aforestated simple and factual legal position, in our opinion, it would not be much useful to discuss the judgments which have been referred to by the learned counsel appearing for the appellant. In our opinion, the legal position is so clear that it was not necessary for the learned counsel to refer to any judgment and merely by showing the aforestated factual aspects and legal provisions to the concerned authority, the appellant 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 appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the goods are absolutely irrelevant. 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. In the instant case, at the duty free shops, which are admittedly outside the customs frontiers of our country, the goods had been sold to the customers by giving physical delivery. It is not disputed that the goods were sold by giving physical possession at the duty free shops to the customers. Simply because the sales had not been effected by transfer of documents of title to the goods and the sales were effected by giving physical possession of the goods to the customers, it would not mean that the sales were taxable under the Act. Thus, we do not agree with the aforestated submissions made by the learned counsel appearing for the Revenue. 32. Looking to the aforestated clear and settled legal position, we allow the appeal and quash the order of assessment so far as the transactions which are the subject matter of this litigation are concerned. There shall be no order as to cost. Civil Appeal Nos. 10404-10412 of 2010 33. As issues involved in the aforestated appeals and in Civil Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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