TMI Blog2011 (2) TMI 1248X X X X Extracts X X X X X X X X Extracts X X X X ..... e Central Sales Tax is not included in any of these Schedules. Whether in view the various duties, namely, basic custom duties, under Customs Act, 1962, counter-veiling duties, additional duties, anti dumping duties, safeguard duties levied under the Customs Tariff Act, 1935 on the importer of the goods of domestic tariff area from the units situate in SEZ, the sale in question is purely a sale in the course of import; since these duties are leviable only on the import of the goods from outside the customs territory of India – Held that:- no substance in the contention that the sales from SEZ unit to unit in DTA shall be deemed to be imports. No such presumption can be drawn from Section 5 (2) of the Central Sales Tax Act or any of the provisions of the SEZ Act of 2005, deeming provision is not to be inferred in law. It has to be either provided by legislation validly elected and competent to declare such deeming provision with its consequences. There can be no inference drawn from deeming provisions from the provisions of any Act. The deeming provision also cannot be inferred from the analogy drawn from different Acts, writ petition is dismissed - Civil Misc. Writ Petition No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et aside the Circular No. 708052 dated 17.7.2007, and Circular No. 789 dated 9.8.2007 as well as the impugned Assessment Order dated 30.3.3009 passed by the respondent No. 3. The petitioner has also prayed for writ of mandamus directing the respondents to treat the sales made from SEZ to DTA in the course of import, not liable to sales tax. 5. Shri Bharat Ji Agrawal has formulated following questions to be decided by the Court:- "1. Whether Central Sales Tax can be levied on the sales made by the petitioner from SEZ unit which is deemed to be a territory outside the territory of India u/s 53 (1) of SEZ Act, to DTA in view of Article 286 of the Constitution of India? 2. Whether in view the various duties, namely, basic custom duties, under Customs Act, 1962, counter-veiling duties, additional duties, anti dumping duties, safeguard duties levied under the Customs Tariff Act, 1935 on the importer of the goods of domestic tariff area from the units situate in SEZ, the sale in question is purely a sale in the course of import; since these duties are leviable only on the import of the goods from outside the customs territory of India?" 6. Shri Bharat Ji Agrawal submits th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is required, vide Associated Cement Companies Ltd. vs. State of Bihar and Ors., (2004) 7 SCC 642 (paras 17, 18 and 19). (ii) Rule 47 (1) of the SEZ Rules requires buyer of DTA to submit import license and Rule 47 (4) provides for valuation and assessment of goods cleared for DTA to be made in accordance with Customs Act and Rules; Rule 48 (1) requires the buyer of DTA to file a Bill of Entry for home consumption applicable to goods imported into India and Rule 48 (2) provides for valuation of goods for customs duty in accordance with the provisions of the Customs Act. The territory of SEZ under these Rules shall be deemed to be territory outside the territory of India and thus any goods removed from SEZ to DTA shall be deemed to be goods imported from outside the territory of India. Section 5 (2) of the Central Sales Tax Act deems sale and purchase of goods in the course of import only if the sale and purchase either occasions such import or is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India. The customs frontiers of India under Section 2 (ab) of the Central Sales Tax Act means crossing the limits of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales tax, VAT and other local taxes. The charging of Central Sales Tax on sales from SEZ to DTA will, therefore, cause multiple taxation avoided by SEZ Act. (ix) The impugned circulars dated 17.7.2007 and 19.8.2007 have been issued by the Commissioner, Trade Tax, U.P. to give effect to the notification dated 17.1.2007, which is completely outside the jurisdiction of the State Government. (x) The petitioner is challenging the validity of notification dated 17.1.2007 and the consequent circulars, which are binding upon the assessing authority and thus alternative remedy of statutory appeal is not a bar to the filing of the writ petition. 8. Shri S.P. Kesarwani, Addl. Chief Standing Counsel refers the notification dated 5.5.2006 and the impugned notification dated 17.1.2007. These notifications are quoted as below:- "[1] Exemption on sale to units in SEZ NOTIFICATION KA.NI.-2-770/XI-9 (820)/92-U.P.Act-15-48-Order (07) 2006 Lucknow:Dated: May 05 2006 In exercise of the powers under section 22 of the Uttar Pradesh Special Economic Zone Development Authority Act, 2002 (U.P. Act No. 10 of 2002) and section 50 of the Special Economic Zone Act, 2005 (Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion regarding treating sale from Special Economic Zone to Domestic Tariff Area as "import" for payment of Central and State taxes shall not continue, shall be substituted. By order, (K. Chandramouli) Pramukh Sachiv" 9. Shri Kesarwani submits that SEZ Act provides for exemption, wherever deemed necessary. The petitioner's sales from SEZ to DTA are not covered under these provisions. Section 7 of the SEZ Act provides:- "7. Exemption from taxes, duties or cess- Any goods or services exported out of, or imported into, or procured from the Domestic Tariff Area by- (i) a Unit in a Special Economic Zone; or (ii) a Developer,shall, subject to such terms, conditions and limitations, as may be prescribed, be exempt from the payment of taxes, duties or cess under all enactments specified in the First Schedule." 10. Shri Kesarwani submits that Section 7 of the SEZ Act of 2005, provides for exemptions from tax, duties or cess on any goods or services exported out of or imported into or procured from DTA by a unit in SEZ or a developer subject to such terms, conditions and limitations as may be prescribed to be exempted from payment of tax, duties and cess spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealer selling such goods furnishes to the Prescribed Authority referred to in sub-section (4) a declaration in the prescribed manner or on the prescribed form obtained form the authorities specified by the Central Government under sub-section (6) duly filled in and signed by the registered dealer to whom such goods are sold. Section 8 (1), (6) and (8) of the Central Sales Tax Act, 1956 are quoted as below:- "8. Rates of tax on sales in the course of inter-State trade or commerce (1) Every dealer, who in the course of inter-State trade or commerce, sells to a registered dealer goods of the description referred to in sub-section (3), shall be liable to pay tax under this Act, which shall be [two percent] of his turnover or at the rate applicable to the sale or purchase of such goods inside the appropriate State under the sales tax law of that State, whichever is lower. Provided that the Central Government may, by notification in the Official Gazette, reduce the rate of tax under this sub-section. (6) Notwithstanding anything contained in this section, no tax under this Act shall be payable by any dealer in respect of sale of any goods made by such dealer, in the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xport or is effect by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India. (2) A sale or purchase of goods shall be deemed to take place in the course of the import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India." 13. Shri Kesarwani submits that under Section 5 (2) of the Central Sales Tax Act, sale or purchase of goods shall be deemed to take place in the course of import of the goods into territory of India, only if sale or purchase either occasions such import or is affected by transfer of documents of title to the goods before the goods have crossed customs frontiers of India. He submits that relevant words are 'territory of India' and not 'customs station' or 'port' as suggested by the petitioner. 14. Shri Kesarwani submits that the assessing authority has rejected the books of accounts of the assessee and in such case the Court should not interfere, even if notification is under challenge, and which may affect a part of liability. Where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wo ways as suggested in State of Travencore vs. Shanmugha Vilas Cashewnut Factory, AIR 1953 SC 333, where a sale or purchase occasions and import into or an export out of territory of India; and where a sale or purchase by transfer of shifting documents takes place before or after (as the case may be) the goods have crossed the customs frontiers of India. The expression 'export or import' implies that the moment of goods across the border, caused by a covenant in a contract or in other words the contract itself involves such movement; but it is not necessary that the sale should have preceded the import in order to hold that it has occasioned the import. The sale or purchase by transfer of documents of title is effected within the State by the exporter or importer by transfer of shifting documents while the goods are beyond the customs frontier. In Wadeyar, B.K. vs. Daulatram Rameshwar Lal, AIR 1961 SC 311 it was held that the reason is that the expression 'in the course of' implies a movement and includes transactions taking place while the goods are in transit or movement in the course of export or import. This movement in the course of export out of or import into the territory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntitlements; (ii) matters relating to requirements for setting up of off-shore banking units and units in International Financial Service Center in Special Economic Zone, including fiscal regime governing the operation of such units; (iii) the fiscal regime for developers of Special Economic Zones and units set up therein; (iv) single window clearance mechanism at the Zone level; (v) establishment of an Authority for each Special Economic Zone set up by the Central Government to impart greater administrative autonomy; and (vi) designation of special courts and single enforcement agency to ensure speedy trial and investigation of notified offences committed in Special Economic Zones. 4. The Bill seeks to achieve the aforesaid objects." 20. We do not find any substance in the argument of Shri Bharat Ji Agrawal that the Central Sales Tax cannot be levied on the sales made by the petitioner from SEZ unit to a unit in DTA. The SEZ Unit under the SEZ Act, 2005 is deemed to be territory outside the territory of India under Section 51, 53 (1) for a limited purpose; Sub-section (2) provides that SEZ shall with effect from the date of notification by the Central G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation where he does not pay and receive the documents of title. 25. In Bengal Immunity Co. Ltd. vs. State of Bihar, AIR 1955 SC 661 (p.680) Justice S.R. Das said that the legal fictions are created only for some definite purpose. A legal fiction is to be limited to that purpose for which it was created and should not be extended beyond that legitimate field. It was held in modification to the view expressed in United Motor's case, AIR 1953 SC 252 that the Explanation to Article 286 (1) (a) of the Constitution (As it stood before the Constitution Sixth Amendment Act) could not be extended to Article 286 (2) either as an exception or as a proviso thereto so as to convert inter-State transactions into intra-State transactions qua the delivery State. The Explanation on its true construction was for the purpose of explaining an outside sale referred to in sub-clause (a) of Article 286 (1) and the fiction created by it could not be extended beyond that purpose. 26. The arguments that since SEZ is deemed to be outside the customs territory of India, the sale from SEZ to DTA has to be treated as import, is not born out from the provisions of either SEZ Act, 2005 or Central Sales Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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