TMI Blog2021 (1) TMI 501X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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. Having expounded on the legal position, the Court examined the facts of the case and held that the case fell under the fourth principle aforesaid when the petitioner, pursuant to the earlier contract with the Government, delivered the shipping documents including the bill of lading to the Government against payment when the goods were on high seas. Hence, it was held that the sales in question took place in the course of imports of goods into India. The Court also scrutinized the terms of contract to ascertain whether they disclosed any intention of the parties that notwithstanding the delivery of bills of lading against payment, the property in the goods should not pass to the Government and held, after scrutiny of all the terms of contract that they did not indicate any such intention. Though the scrutiny and analysis of the terms of contract relates to the facts of that case only but worthwhile it would be to reproduce the same to indicate that ultimately, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on could act on behalf of importer or owner but such a person cannot be treated as owner of the goods nor could be made liable for customs duty. If the appellant was merely acting as an agent, then bill of entry would have reflected the name of end-buyer as the importer and the appellant as an agent of the importer; and further to that, the said end-buyer would have been assessed for customs duty. It were not so. Though the definition of importer includes owner or any person holding out himself as the importer; and this definition of importer is not really relevant to the question of title but, that does not mean that a person who holds out himself to be the importer; and who files the bill of entry for home consumption; and who is assessed for customs duty; and whose suggestion about transfer of title to a third person is not established by any reference to any official record, the transfer on high seas may be presumed on mere suggestion about the alleged endorsement of bill of lading. The High Court was right in observing that once the appellant got released the goods after filing the bill of entry for home consumption, the import stream dried up and the goods got mixed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imilar nature form the subject matter of these appeals; one relating to the assessment for the year 2005-06 and others relating to the assessment for the year 2006-07. The common salient features of all these transactions had been that they were for supply of timber from a foreign country and were allegedly executed in a similar fashion thus: The supplier (party number 1) sold the goods in question to the first buyer (party number 2) and delivered them at the port of shipment. Thereafter, while the goods were in transit on high seas, party number 2 transferred the goods to the appellant (who was invariably party number 3 in these transactions) by endorsing the bill of lading in favour of the appellant. Further to this and while the goods were on high seas, the appellant allegedly transferred them to the end-buyer (party number 4) by endorsing the bill of lading in favour of the end-buyer. 2.1. However, in each of these transactions, when the goods in question reached the port at Visakhapatnam (also known as Vizag), the appellant carried out the proceedings envisaged by the Customs Act, 1962- Hereinafter referred to as the Customs Act and filed a bill of entry for warehousing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nged the decision of the High Court by way of these appeals on a variety of grounds as shall be noticed hereafter. 5. As noticed, the transactions involved in the present matters had been of similar nature. For appropriate dealing with the issues involved, we may take note of the facts relating to the assessment order dated 20.01.2010 pertaining to the tax period 2005-06 and the assessment order dated 18.05.2010 pertaining to the tax period 2006-07 in necessary details. Assessment Order dated 20.01.2010: relevant facts and background 6. The appellant M/s. Vellanki Frame Works is said to be a sole proprietary concern, engaged in the business of sale and purchase of logs, timber and wooden batons; and in the course of its business, the appellant also imports timber from other countries. 7. For the tax period 2005-06, in respect of inter-State sales falling within clause (a) of Section 3 of the CST Act, the appellant claimed payment of tax at the concessional rate of 4% covering a turnover of ₹ 55,23,233/- and in support thereof, furnished 9-Nos. of C-Forms; and also sought exemption from payment of tax on a turnover of ₹ 1,14,86,342/- on the ground that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the Customs Department, approached the appellant for help; that though the appellant had the requisite infrastructure facilities at Visakhapatnam Customs, but was not having the letter of credit facilities for import; that in the given circumstances, the appellant and Radha entered into a quadripartite agreement with the seller and Indus Tropics Ltd.- The first buyer, hereinafter also referred to as Indus whereby, it was agreed that Indus would purchase the goods and during the course of transit of the goods from the port of shipment, would sell them to the appellant; that the appellant would purchase the said goods from Indus as the agent of Radha and transfer the documents on high seas in favour of Radha for which, Radha would pay the appellant commission of 2% plus bank charges. 8.2. It was asserted by the appellant that pursuant to the said quadripartite agreement, Indus purchased the goods from WBT and the seller sent the consignment from the port of shipment with bill of lading dated 09.12.2005; that on 10.12.2005, Indus caused transfer of the bill of lading on high seas in favour of the appellant; and that on 12.12.2005, another high seas sale agreement was enter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s before bonding with the customs authorities, cannot be treated as inter-State sale in the State of Andhra Pradesh. 9. The contentions of the appellant were examined by the CTO in the impugned assessment order dated 20.01.2010. For their relevance, the observations and findings in this assessment order could be usefully noticed as follows: 9.1. The CTO summed up the stand of the appellant that the documents of title to the goods were transferred to Radha on high seas by virtue of the High Seas Sale Agreement dated 12.12.2005; that the transaction did not attain the character of an inter-State sale; and that filing of the bill of entry had no relevance in determining the nature of the transaction. The CTO observed that it was not the case of the appellant that the sale or purchase had occasioned the import falling under the first limb of Section 5(2) of the CST Act and the question which necessitated examination was as to whether there was a sale of goods by the appellant, or it had been a commission transaction as stated by the appellant. The CTO examined the computer printout of the Trading Account for the year 2005-2006 where the purchase was shown as purchase trading (hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CS of Myanmar Hardwood Gurjan Round Logs from Yangon (Myanmar) to Vizag (India) and the bill of lading No. 01/YGN-VZG dated 09.12.2005 was endorsed by the importer in favour of the appellant; (ii) on the strength of such endorsed documents, Sri Sanjiv Kumar Agarwal (sole proprietor of the appellant) presented the bill of entry No. 804116 dated 12.12.2005 for warehousing and customs duty was assessed on the appellant alone on this bill of entry for warehousing; and (iii) subsequently, the appellant filed the bill of entry for home consumption No. 804353 dated 28.12.2005 and customs duty was assessed on the appellant alone on this bill of entry. The CTO also referred to the debit note dated 12.01.2006 raised by the appellant on Radha for a sum of ₹ 1,14,86,342/- and observed that though the intention of the parties in High Seas Sale Agreement dated 12.12.2005 was to effect the transfer before the goods crossed the customs frontiers in India but, in fact, the said agreement did not come into operation and the sale took place on 12.01.2006, as shown in the debit note. 9.3. The CTO further held that the goods must be treated as having crossed the customs frontiers of India when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transactions as inter-State sales falling under Section 3(a) of the CST Act and carried out assessment accordingly, holding the appellant liable to pay balance tax to the tune of ₹ 14,35,793/-. Assessment Order dated 18.05.2010: relevant facts and background 10. Six other transactions of similar nature formed the subject matter of the assessment order dated 18.05.2010 relating to the tax period 2006-07. The CTO found that the appellant had claimed exemption from payment of tax, in respect of a turnover of ₹ 4,05,09,427/-, while contending that this turnover represented the sales effected by transfer of documents of title before the goods had crossed the customs frontiers of India but, had not filed any evidence to show that the said sales were effected in such a manner. Accordingly, a show-cause notice dated 26.11.2009 was issued. In response thereto, the appellant furnished certain documents relating to these six transactions of similar nature involving four parties, being the seller, the first buyer, the appellant, and the end-buyer respectively. 10.1. As regards first transaction, Master Agreement dated 01.04.2006 for supply of timber logs was enter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r fashion, the appellant filed the bills of entry on 19.10.2006 for warehousing and then, on 31.10.2006 for home consumption. 10.4. Again, the fifth and sixth transactions in this assessment had also been of the same nature wherein two Master Agreements dated 11.12.2006 and 15.12.2006 for supply of timber were asserted involving the said Wood Craft International Pte Ltd. (seller), M/s. G.K. Ganeriwala Sons (first buyer), Vellanki Frame Works (appellant) and M/s. Esskay Impex, New Delhi (end- buyer). These transactions involved two bills of lading, Nos. CON1206/VIZ-04 and CON1206/VIZ-05 dated 21.12.2006 which were similarly endorsed by the first buyer in favour of the appellant on 04.01.2007 and on the same date, the appellant endorsed the same in favour of the end-buyer. Thereafter, in the similar fashion, the appellant filed the bills of entry on 05.01.2007 for warehousing and then, on 18.01.2007 for home consumption. 10.5. In all these transactions and dealings, after filing of bills of entry, customs duty was assessed on Sri Sanjiv Kumar Agarwal, the proprietor of appellant firm. However, the appellant maintained that the said transactions had been of high seas sales to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined the character of sales of local goods. Therefore, in view of the above legal position and the facts of the case, it is to be treated that the goods had crossed customs frontiers of India when the bill of entry having been made, the goods were assessed to customs duty. Hence the sales effected by the assessee cant be said to be sales in the course of import or high sea sales in as much as the goods had crossed the customs frontiers. Further, when addressed the dealers at the other end requesting to confirm the purchase from the assessee - M/s Pine Exporters, New Delhi (sale reported at transaction No.3 ₹ 11057059/- and transaction No.4 ₹ 4124375/- total 15581434-00) the party replied that they do not know the referred party and have never received any Malaysian Round Logs from the said party which shows that the dealer s claim is not genuine. Further, the letter sent to M/s Esskay Impex, New Delhi requesting to confirm the purchase from the assessee in transaction No. 5 ₹ 8277263 and transaction No.6 ₹ 3454968 total = 11732231/-, was returned by the postal authorities with an endorsement No such firm at this place which also shows that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g authority to assess the appellant to tax under the CST Act. 14.2. As regards judicial review of assessment order in writ jurisdiction, the High Court took note of the extensive arguments on behalf of the appellant as regards nature of transaction with reference to quadripartite agreement and endorsement of bill of lading by the importer in favour of the appellant and subsequently by the appellant in favour of Radha (end-buyer) while the goods were on high seas as also the argument that there was no finding against genuineness of the endorsements on the bill of lading. The High Court observed that the appellant had invoked writ jurisdiction against the assessment order without availing the statutory remedy of appeal; and also pointed out that though certiorari was the appropriate remedy in challenge to a quasi-judicial order, the appellant had sought a writ of mandamus. The High Court further observed that it was not even the case of the appellant that the first respondent had failed to perform a statutory duty or that the appellant s legal rights were adversely affected and therefore, the appellant was not entitled to a writ of mandamus. The High Court, thereafter, pointed out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... includes any owner or any person holding himself out to be an importer and, as the bill of lading had been endorsed in his favour, the appellant was entitled to file the bill of entry as an importer; and that the department s contention, that payment of customs duty by the appellant was conclusive of the import having ended and any sale by the appellant thereafter could only be a domestic sale, was not flowing from the provisions of the Customs Act. On the other hand, it was contended on behalf of the department that the appellant alone was assessed to customs duty by virtue of his filing the bill of entry as the importer; that the system permitted only the appellant to file the bill of entry as his name alone was recorded in the Import General Manifest (IGM) as the importer; that the contents of the bill of entry made it clear that there was no high seas sale, subsequent to the high seas sale in favour of the appellant as the bill of entry was generated on the basis of the IGM; that Radha was not assessed to customs duty and if Radha was the last buyer during importation, IGM would have reflected the same; that the appellant was assessed to customs duty as being the last buyer/fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me consumption, they get mixed with the local goods and cease to be imported goods thereafter. The High Court also examined the inclusive definition of importer in Section 2(26) of the Customs Act and observed that any person who imports goods from a foreign country to India would undoubtedly be an importer; and the owner of the goods and a person holding himself out be an importer would also be an importer, but only during the period between the importation of the goods and the time they are cleared for home consumption, and not prior thereto or thereafter. The High Court observed that the expanded definition of importer could not be used to usurp the identity of an importer from the person who has filed the bill of entry; and as the bill of entry showed the goods to have been cleared by the appellant for home consumption, the appellant was the importer of the goods. The High Court also observed that if the appellant had sold the goods on high seas to Radha, it was only Radha who would be the importer and not the appellant and the very fact that the name of Radha was not reflected as the importer in the bill of entry for home consumption belied the contention of the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the importer of the goods. The person who holds himself out to be the importer of the goods must furnish proof of being the importer before the goods are cleared for home consumption. No doubt, Section 2(26) permits any one holding himself out to be the importer between the date of importation and clearance of the goods for home consumption. But here the petitioner, in whose name the goods have been manifested, has, by filing a Bill of Entry, already held himself out to be the importer. As shall be detailed hereinafter, the import manifest has not been amended, the petitioner has filed the Bill of Entry for clearance of the goods for home consumption, and has held himself out to be the importer. . It is evident, therefore, that, before its importation, it is only the person who imported the goods who would be the importer. If, as contended by the petitioner, they had sold the goods on high seas to Radha, it is only Radha who would be the importer and not the petitioner. The very fact that the name of Radha is not reflected as the importer in the bill of entry ex-bond (home consumption) belies the petitioners contention of a high sea sale by them to Radha Industries. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to further examine the effect of filing of bill of entry for home consumption by the appellant. In this regard, the High Court examined the scope and requirements of the provisions contained in the Customs Act relating to entry of goods on importation; clearance of goods for home consumption as also the requirements of the Bill of Entry (Electronic Declaration) Regulations, 1995. The High Court further examined the contents of one of the bills of entry, as placed on the record of W.P. No. 6258 of 2013 where the second party (first buyer) was Purbanchal Lumbers Pvt. Ltd. and found that the said bill of entry made no reference to Radha and held that this omission made it clear that the goods were imported by the appellant on a high seas sale effected in its favour by the said first buyer. The High Court, accordingly, concluded that the appellant had imported the goods; and the sale of goods by the appellant to Radha could have only been effected after the goods had been cleared for home consumption. The High Court, inter alia, observed and held as under:- ..It is evident, from the said Bill of Entry, that the goods were imported by the petitioner, and were cleared from customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he goods had been cleared for home consumption. *** *** *** Transfer of title to the goods on high seas would make the person, who purchased the goods on high seas, the importer of the goods and it is he who would be liable to be assessed to customs duty. As the Bill of Entry records the petitioners name as the importer, and as it is not in dispute that it was he who was assessed to customs duty, and not Radha, it is evident that the sale of goods by the petitioner to Radha is not a high seas sale. Such a sale could only have been effected after the petitioner was assessed to customs duty, and he had cleared the goods for home consumption. 14.4.6. With reference to a Division Bench decision of Andhra Pradesh High Court in the case of Minerals and Metals Trading Corporation of India Ltd. v. State of Andhra Pradesh: 1999 (106) ELT 23, an argument was advanced on behalf of the appellant that the name on the bill of entry was irrelevant because the name of the importer alone would be recorded in it, even if the transfer of title deeds was effected before filing of the bill of entry and assessment of duty. The High Court took note of the principal issue involved in the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Andhra Pradesh High Court in the case of Minerals and Metals and another decision of Madras High Court got tacit approval in the decision of this Court in the case of Hotel Ashoka (Indian Tourist Development Corporation Ltd.). v. Assistant Commissioner of Commercial Taxes and Anr.: (2012) 3 SCC 204. The High Court distinguished the said decision of this Court while pointing out that it related to the goods sold at duty-free shops which are beyond the customs frontier of India; the goods sold thereat must be said to have been sold before having crossed the customs frontiers of India; and consequently, the sale of goods thereat is in the course of import. 14.7. Having thus held that the sale in question was an inter-State sale, the High Court took note of the alternative prayer made on behalf of the appellant for an opportunity to submit C-Forms from the buyers and granted this prayer with reference to Rule 12(7) of the Central Sales Tax (Registration and Turnover) Rules, 1957. 14.8. With the aforesaid findings and liberty, the High Court proceeded to reject the challenge to the impugned assessment orders while granting three months time to the appellant to produce the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing) in favour of the appellant; and the appellant would then transfer the documents of title to the goods in favour of Radha before the goods cross the customs frontiers of India. The learned counsel would submit that the intention behind entering into a quadripartite agreement was that Indus enjoyed a 180- day line of credit with WBT while the appellant had the requisite infrastructure to undertake importation of goods but the agreement specifically identified Radha as final buyer of the goods and stipulated that the goods would move only after inspection and selection by Radha and hence, there was always a privity of contract between WBT (the seller) and Radha (the end-buyer). The learned counsel has further submitted that as per Schedule I to the agreement, the appellant was to act as an agent of Radha and to clear the goods from customs authorities where delivery of goods was to be completed once the appellant had issued a delivery note to Radha; and the responsibility of carriage of goods, after clearance, from the port to the factory premises in the State of Uttar Pradesh was that of Radha. 16.1. In the aforesaid backdrop, the learned counsel for the appellant has strenuo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from either one State to another or from outside India into India. 16.3. Learned counsel for the appellant has contended that to qualify under Section 5(2) of the CST Act, the essential ingredients of high sea sales would be of the transfer of document of title and transfer of goods to be made while the goods are on high seas. With reference to the definition of term crossing the customs frontiers of India , as occurring in Section 2(ab) of the CST Act, learned counsel has pointed out that this term means crossing the limits of the area of customs station in which imported goods or exported goods are ordinarily kept before clearance by customs authorities. Then, with reference to Section 2(4) of the Sale of Goods Act, 1930- Hereinafter referred to as the Sale of Goods Act and the decisions of this Court in J.V. Gokal Co. (Private) Ltd. v. Assistant Collector of Sales-Tax (Inspection) and Ors: (1960) 2 SCR 852 and Minerals Metals Trading Corporation of India Ltd. v. Sales Tax Officer and Ors: (1998) 7 SCC 19- Hereinafter this case of Minerals Metals has also been referred to as Orissa case , in order to maintain the distinction with the other decision of Andhra Prade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected in order to be taxed. 16.6. In another leg of principal submissions, learned counsel has contended that the High Court has fallen in error in using the bill of entry to determine the ownership of goods. Learned counsel would submit that the ownership of goods could only be determined under the Sale of Goods Act read with the Indian Contract Act; that the customs duty is collected from the person having possession of goods at the time of importation, who need not be the owner of good, as appearing from the definition of importer under the Customs Act, which includes owner and any other person ; that in distinction to the customs duty, sales tax is a tax on the transaction of sales or purchase when ownership of goods is transferred and the questions as to when does the sale take place and who is the owner of goods would be determined only under the Sale of Goods Act, and not under the Customs Act. With a strong reliance on the decision of this Court in the case of Union of India and Anr. v. Sampat Raj Dugar and Anr.: (1992) 2 SCC 66, learned counsel has submitted that the definition of importer in the Customs Act only indicates the person who is in possession of goods at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the customs frontier at Visakhapatnam could not have shown Radha as the real importer since the high seas sale agreement designated appellant as the buyer; and the customs frontier at Visakhapatnam was not called upon to even consider the agency agreement as the basis for the bill of entry. 17.1. Learned counsel for the respondent has emphatically argued that in the given set of facts and circumstances, while reading the agreements in question and the real intent behind them, coupled with filing of bill of entry by the appellant, the conclusion drawn by the High Court that the appellant alone was the importer remains unexceptionable. Learned counsel would also submit that the import was complete only by and through the appellant and until completion of importation, Radha was nowhere in picture; and the monetary transactions between the appellant and Radha are proof enough of the transaction of sale between them after the goods had crossed the customs frontiers of India. In other words, according to the learned counsel, delivery of goods to Radha by the appellant and their movement from Visakhapatnam (in the State of Andhra Pradesh) on way to Lucknow (in the State of Uttar Prades ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in question took place in the course of the import of the goods into the territory of India and qualify for exemption under Section 5(2) of the CST Act? Sale in the course of import: Connotations 20. For determination of the principal issue and variety of questions arising in this matter, at the outset, a brief insight into the constitutional and statutory provisions relating to the sale in the course of import shall be apposite. 20.1. Under Article 286 of the Constitution of India, restrictions have been placed on the power of the State as to imposition of tax on the specified category of sales and purchases. At the relevant point of time, Clauses (1) and (2) of Article 286 read as under- This Article 286 has undergone a few amendments later which need not be referred herein. :- 286. Restrictions as to imposition of tax on the sale or purchase of goods.- (1) No law of a State shall impose, or authorize the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place- (a) outside the State; or (b) in the course of the import of the goods into, or export of the goods out of, the territory of India. (2) Parli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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. In the present case, we are only concerned with sub-section (2) of Section 5 relating to the course of import and hence, may extract the relevant part of Section 5 of the CST Act as under:- 5. When is a sale or purchase of goods said to take place in the course of import or export. - xxx. xxx xxx (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. xxx xxx xxx 20.4. The definition/meaning of the expressions crossing the customs frontiers of India and sale , as occurring at the relevant time in Clauses (ab) and (g) of Section 2 of the CST Act may also be usefully noticed as under At the relevant time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds or a warehouse inserted at this place by Act 18 of 2017 and includes any area in which imported goods or export goods are ordinarily kept before clearance by Customs Authorities; (12) customs port means any port appointed under clause (a) of section 7 to be a customs port and includes a place appointed under clause (aa) of that section to be an inland container depot; (13) customs station means any customs port, customs airport- The words customs airport, international courier terminal, foreign post office substituted in place of customs airport at this place by Act 7 of 2017 or land customs station; (29) land customs station means any place appointed under clause (b) of section 7 to be a land customs station; 20.6. Having regard to the submissions made and the questions raised, we may also take note of the definition of the expression document of title to goods in Section 2(4) of the Sale of Goods Act as under:- (4) document of title to goods includes a bill of lading, dock- warrant, warehouse keeper s certificate, wharfingers certificate, railway receipt, multimodal transport document, warrant or order for the delivery of goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, on 31.01.1958, the Assistant Collector of Sales Tax issued notice to the petitioner, proposing to review the said assessment. The petitioner filed its objections contending, inter alia, that the sales had taken place in the course of import and therefore they were not liable to sales tax. The first respondent rejected the contentions of the petitioner and held that sales tax was payable in respect of said two transactions. The petitioner questioned the demand notice consequently issued against it by way of the petition in this Court. It was contented, inter alia, that the sales in question were not liable to sales tax inasmuch as they took place in course of import of the goods into the territory of India. This Court examined the questions as to what does the phrase in the course of the import of the goods into the territory of India convey and when could it be said that a sale has taken place in the course of import journey. This Court referred to various decisions including the opinions expressed in the case of Shanmugha Vilas Cashew Nut Factory (supra) and said as under:- 9 We respectfully agree with the aforesaid observations of the learned Judges. The course of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the shipping documents. But the learned Judge, Patanjali Sastri, C.J., expressing the majority view, considered the scope of the exemption in all its aspects and summarized the conclusions thus p. 69 : Our conclusion may be summed up as follows: (1) Sales by export and purchases by import fall within the exemption under article 286(1)(b) ...... (2) Purchases in the State by the exporter for the purpose of export as well as sales in the State by the importer after the goods have crossed the customs barrier are not within the exemption. (3) Sales in the State by the exporter or importer by transfer of shipping documents while the goods are beyond the customs barrier are within the exemption, assuming that the State power of taxation extends to such transactions. Das, J., as he then was, in his dissenting judgment, agreed with Patanjali Sastri, C.J., on the third conclusion with which we are now concerned. The learned Judge put forward his view at p. 94 thus: Such sales or purchases, by delivery of shipping documents while the goods are on the high seas on their import journey were and are well recognised species of transactions done every day on a large scale in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port. 22.1.2. Having expounded on the legal position, the Court examined the facts of the case and held that the case fell under the fourth principle aforesaid when the petitioner, pursuant to the earlier contract with the Government, delivered the shipping documents including the bill of lading to the Government against payment when the goods were on high seas. Hence, it was held that the sales in question took place in the course of imports of goods into India. The Court also scrutinized the terms of contract to ascertain whether they disclosed any intention of the parties that notwithstanding the delivery of bills of lading against payment, the property in the goods should not pass to the Government and held, after scrutiny of all the terms of contract that they did not indicate any such intention. Though the scrutiny and analysis of the terms of contract relates to the facts of that case only but worthwhile it would be to reproduce the same to indicate that ultimately, on the facts, the Court found that the sale took place in the course of import. The Court analysed and held as follows:- 13. Let us now scrutinize the terms of the contract to ascertain whether they dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n place in the course of the import into India and therefore they would be exempted from sales tax under Art. 286(1)(b) of the Constitution. 22.2. It does not appear necessary to dilate further on the decision in the case of Shanmugha Vilas Cashew Nut Factory (supra) which had been, as noticed, considered in detail in the case of J.V. Gokal Co. (supra). However, another decision cited on behalf of the appellant and relating to multiple transactions involving import, being the Orissa case of Minerals Metals (supra), need to be noticed. The fact situation in that case had been that the appellant, a Government of India undertaking, was functioning as a canalising agent for import and export of minerals and metals. On 31.03.1991, Steel Authority of India Limited (SAIL) requested appellant to register import of 15,000 MT of tin mill black plate coils. On 14.07.1991, SAIL opened a letter of credit directly in favour of the exporter, M/s. Samsung Co. Ltd., Seoul, South Korea. The consignee therein was shown as SAIL. On 02.08.1991, the appellant placed a purchase order with the exporter for and on behalf of SAIL. On 16.08.1991, the appellant wrote to SAIL enclosing a copy of its p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f SAIL while the consignment of the said coils was still upon the high seas. The sale, therefore, was a sale in the course of the import of the said coils into the territory of India; it was effected by transfer of the documents to the said coils before they had crossed the limits of the customs station at Paradeep Port. The position would be the same in respect of the goods sold to Paradeep Phosphates Ltd. 22.3. The appellants have cited the decision in the case of Embee Corporation (supra) to submit that the terms sale occasioning movement of goods and sale occasioning import of goods in Sections 3 and 5 of the CST Act carry the same meaning; and that the use of words sale of goods in Section 3 of the CST Act and the words contract of sale in Section 4(2) of the Sales Tax Act were assigned the same meaning, which is much wider than the meaning of sale in general law. In the said case, this Court examined the definition of sale as existing at the relevant time in Section 2(g) of the CST Act and held as under:- 6. On perusal of the aforesaid provisions of the Act, the question that arises for consideration herein is, what meaning should be given to the expression ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le and in that case, such movement of goods would be deemed to be occasioned by the sale. It is immaterial that actual sale does not take place at that time of movement of goods and takes place later on. This interpretation of Section 3(a) of the Act if applied to sub-section (2) of Section 5 of the Act, would mean that if an agreement for sale stipulates import of goods or import of goods is incident of contract of sale and goods have entered the import stream, such import would fall within the expression sale occasions import . In the present case, the import of Carbamite is direct result of the contract of sale and as such it can be safely held in the present case that sale has occasioned the import. 22.3.1. In the said case of Embee Corporation, the respondent/assessee, who was engaged in the business of buying and selling chemical, replied to the invitation of tender of Director General of Supplies and Disposal (DGS D) for the supply of Carbamite. The tender of the respondent was accepted by DGS D with a few conditions including the one that the contracted material shall be inspected by the Chief Inspector, C.I.M.E., Kirkee, Pune at Bombay Port and the General Manager, C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer directed the petitioner to submit a statement of sales from Jamshedpur for the period under assessment, documents relating to which were transferred in West Bengal or of any other sales that may have taken place in West Bengal under Section 3(b) of the Central Sales Tax Act, 1956 . The petitioner, by its letter dated 30.09.1959, informed the Tax Officer that the requisition for production of statement of sales made from Jamshedpur in the course of inter-State trade or commerce was without jurisdiction while contending that all the sales from Jamshedpur were of the type mentioned in Section 3(a) of the Central Sales Tax Act and at the same time, some of them also fell within the category mentioned in Section 3(b) of the Act ; that even if the sales were of the type mentioned in Section 3(b) of the Act, the appropriate State of the place where the sales take place or are effected alone had jurisdiction to assess such sales to Central sales tax ; and that in respect of inter-State sales from Jamshedpur, the situs of the sale was always the State of Bihar as the goods were in Bihar either at the time of the contract of sale or at the time of appropriation to the contract. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment discloses an error apparent on its face and a writ of certiorari must issue quashing the assessment. It will be for the Commercial Tax Officer of West Bengal to re-assess the company in respect of transactions of sale which are properly taxable within the State of West Bengal by the application of the test which we have already set out. 22.5. Learned counsel for the appellant has also attempted to rely upon the decision in the case of Hotel Ashoka (supra) which was rendered in the fact situation where the goods were kept in the bonded warehouse and were made available in the duty-free shops for sale. This Court opined that since the goods were supplied to the duty-free shops situated at the International Airport, Bengaluru for sale, it cannot be said that the said goods had crossed the customs frontiers of India. The Court finally answered the claim of the appellants therein on the finding that the liquor, cigarettes, perfumes and food articles were sold at the duty-free shops at the International Airport, Bengaluru, for which no tax was payable by the appellants as the goods sold at the duty-free shops were sold directly to the passengers and even the delivery of go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide for determination of the real questions involved in the present matter. Similarly, the observations in Embee Corporation (supra) to the effect that sale occasioning movement of goods and sale occasioning import of goods respectively in Section 3 and Section 5 of CST Act carry the same meaning are not of much dispute. The other observations, that for interpreting the expression sale occasions import occurring in Section 5(2) of the Act, it is not necessary that a completed sale should precede the import, shall have their implication only when the nature of dealings of the parties in the transactions in question and the effect of movement of goods are examined. 23.2. This takes us to the decisions of this Court in Minerals Metals (Orissa case) and in J. V. Gokal Co. (supra). 23.2.1. As noticed, in the case of Minerals Metals (Orissa case), the appellant, a Government of India undertaking, had been functioning as canalising agent for import and export of minerals. It was in such a capacity that the appellant was requested by SAIL to ensure import of the goods in question and the appellant took up the proceedings accordingly. The dealings of the parties made it cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in favour of the end-buyer by endorsement of bill of lading when the goods were on high seas. Coupled with these, another common feature had been that in both those cases, the goods in question, upon reaching the port of destination, were taken delivery of, and cleared by the end-buyer after paying the requisite customs duties. Those had not been the cases like the present one where the seller purportedly acted as an intermediary and even after alleged transfer of bill of lading when the goods were on high seas, filed the bill of entry for home consumption at the port of destination and got the goods cleared from the customs. 24. Apart from the decisions so cited, for taking into comprehension the nuances of sale in the course of import with involvement of an intermediary, we may take note of the case of K. Gopinathan Nair and Ors. v. State of Kerala: (1997) 10 SSC 1 wherein, after a detailed reference to various Constitution Bench decisions, this Court has expounded on the factors to be reckoned for determining as to whether a particular sale or purchase could be deemed to have taken place in the course of import. We may point out that the decision in this case of K. Gopinath ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the intermediary through which such import is effected merely acts as an agent or a contractor for and on behalf of the Indian importer. (8) The transaction in substance must be such that the canalizing agency or the intermediary agency through which the imports are effected into India so as to reach the ultimate local users appears only as a mere name lender through whom it is the local importer- cum-local user who masquerades. 25. The principles aforesaid would obviously apply to the present case; and if the factors so indicated are answered in favour of the appellant, it could be treated to be a matter of sale in the course of import. 26. In order to bring the case within the four-corners of the factors aforesaid, the appellant has suggested existence of quadripartite agreement whereby and whereunder, the supplier (party number 1) sold the goods in question to the first-buyer (party number 2) and delivered them at the port of shipment. Thereafter, while the goods were on high seas, party number 2 transferred them to the appellant (invariably party number 3 in these transactions), by endorsing the bill of lading in favour of the appellant. Further to this and whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fact situation in the case of J. V. Gokal Co. as also in Orissa case of Minerals Metals (supra). While examining the question pertinent if the appellant acted merely as an intermediary or name-lender through whom the import was effected and merely acted as an agent for and on behalf of the Indian importer that is, the end-buyer, the significant facts of the present case cannot be overlooked that in relation to the goods in question, only the appellant filed the bill of entry for warehousing as also the bill of entry for home consumption and was assessed to customs duty and further that before the customs authorities, there was no suggestion that the goods in question had already been transferred, on high seas, to the alleged real importer. Obviously, on the facts of the present case, the effect of dealings of the appellant before the customs authorities at Visakhapatnam with filing the bill of entry for home consumption need to be examined. Filing of bill of entry for home consumption by the appellant: Implication 27. As noticed, the High Court examined the contention of the appellant that while filing the bills of entry, the appellant had acted merely as an agent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt was assessed to customs duty and had cleared the goods for home consumption. 28. To get over the aforesaid findings of the High Court, learned counsel for the appellant has argued, with strong reliance on the decision of this Court in the case of Sampat Raj Dugar (supra), that the definition of importer in the Customs Act only indicates the person who is in possession of goods at the time of filing of bill of entry but does not indicate the title to the goods; and that the questions as to when does the sale take place and who is the owner of goods would be determined only under the Sale of Goods Act and not under the Customs Act. 29. For dealing with this part of submissions, we may usefully take note of the relevant definitions in Clauses (23), (24), (25) and (26) of Section 2 as also the other provisions in Sections 30 and 47 (1) of the Customs Act, as applicable and effective at the relevant point of time, as follows: - (23) import , with its grammatical variations and cognate expressions, means bringing into India from a place outside India; (24) import manifest The words arrival manifest or import manifest were substituted in place of the wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified by the Central Government, by notification in the Official Gazette, in this behalf shall, in the case of a vessel or an aircraft, deliver to the proper officer an arrival manifest or import manifest by presenting electronically prior to the arrival of the vessel or the aircraft, as the case may be, and in the case of a vehicle, an import report within twelve hours after its arrival in the customs station, in such form and manner as may be prescribed and if the arrival manifest or import manifest or the import report or any part thereof, is not delivered to the proper officer within the time specified in this sub-section and if the proper officer is satisfied that there was no sufficient cause for such delay, the person-in-charge or any other person referred to in this sub-section, who caused such delay, shall be liable to a penalty not exceeding fifty thousand rupees: Provided that the Principal Commissioner of Customs or Commissioner of Customs may, in cases where it is not feasible to deliver arrival manifest or import manifest by presenting electronically, allow the same to be delivered in any other manner. (2) The person delivering the arrival manifest or import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in whose name the bill of entry is filed does not cease to be an importer and, if that person claims to be not the owner or importer, the ouns would be heavy on him to establish that someone else is the owner or importer of goods. 31. As noticed, on the connotation of the term importer for the purpose of the Customs Act, learned counsel for the appellant has placed reliance upon the decision in Sampat Raj Dugar (supra). We may examine the facts and the ratio of the case of Sampat Raj Dugar, to appreciate the implication, if any, of the observations occurring therein on the questions involved in the present case. 31.1. In the case of Sampat Raj Dugar (supra), the relevant factual aspects had been that the second respondent Ms. Renu Pahilaj was doing business at Delhi in the name and style of Acquarius. whereas the first respondent, an Indian national resident abroad, was doing business at Hong Kong in the name and style of UNISILK. The second respondent obtained an advance import licence on 20.05.1985 for importing raw silk that was valid for 18 months. The import licence was granted subject to the condition that raw silk imported should be utilised for manufacturing garme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who had sent the goods from Hong Kong, filed a writ petition before the High Court. The case of the Collector of Customs and the Union of India was that the second respondent must be deemed to be the owner of the consignments by virtue of the definition of importer in Section 2 (26) of the Customs Act read with Clause 5(3)(ii) of the Imports (Control) Order, 1955. Reliance was also placed upon Para 26(iv) of the Imports and Exports Policy issued for the year 1985-86 and it was submitted that the goods were liable to be confiscated for the acts and defaults of respondent. It was also submitted that in view of non- compliance with the condition relating to export of garments manufactured out of the imported raw silk yarn, the second respondent had rendered all the goods covered by the import licence liable to confiscation. The High Court, however, allowed the writ petition and directed re-export of the goods to first respondent. Hence, the matter was in appeal before this Court. 31.3. A bare look at the relevant background aspects of the said case makes it clear that essentially, the effect of the conditions in the import licence and non-compliance thereof had been the subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9; in Section 2(26) of the Customs Act is not really relevant to the question of title. It only defines the expression 'importer'. Respondent 1 does not claim to be the importer. The provision upon which strong reliance is placed by the appellants in this behalf is the one contained in clause 5(3)(ii) of the Imports (Control) Order. Sub-clause (1) of clause 5 specifies conditions which can be attached to an import licence at the time of its grant. Sub-clause (2) says that a licence granted under the Order shall be subject to the conditions specified in Fifth Schedule to the Order. Sub-clause (3) sets out three other conditions mentioned as (i), (ii), and (iii) which shall attach to every import licence granted under the Order. First of these conditions says that the import licence shall be non-transferable except under the written permission of the licensing authority or other competent authority. Condition (ii) - which is the provision relevant herein - says that the goods for the import of which a licence is granted shall be the property of the licensee at the time of import and thereafter up to the time of clearance through customs. This condition, however, does not ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not he is the owner of such goods in law, the Imports (Control) Order creates a fiction that he shall be deemed to be the owner of the such goods from the time of their import till they are cleared through customs. This fiction is created for the proper and effective implementation of the said order and the Imports and Exports (Control) Act. The fiction however cannot be carried beyond that. It cannot be employed to attribute ownership of the imported goods to the importer even in a case where he abandons them, that is, in a situation where he does not pay for and receive the documents of title. It may be that for such act of abandonment, action may be taken against him for suspension/cancellation of licence. May be, some other proceedings can also be taken against him. But certainly he cannot be treated as the owner of the goods even in such a case. Holding otherwise would place the exporter in a very difficult position; he loses the goods without receiving the payment and his only remedy is to sue the importer for the price of goods and for such damage as he may have suffered. This would not be conducive to international trade. We can well imagine situations where for one or oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per the requirements of Regulation 3 (c) (iii) of Import Manifest (Vessels) Regulations, 1971, the import manifest has to consist, inter alia, of a cargo declaration in Form No. III. Such cargo declaration is required to carry, amongst others, particulars of bill of lading and the name of consignee/importer, if different . would have reflected the name of last high seas purchaser as importer and in other event, the IGM would have necessitated amendment because only the last purchaser of the goods on high seas would have been declared as consignee/importer in IGM. The fact that the name of Radha (and other end-buyers) was not mentioned in IGM as the importer/consignee nor the relevant IGM was amended, the suggestion about second high seas sale in favour of Radha (and other end-buyers) turns out to be only a self-serving suggestion of the appellant, which has no corroboration on the record; rather the official records totally belie the suggestion of the appellant. 32.1. The fact of the matter remains that even though the appellant has suggested that the bills of lading were endorsed in favour of Radha (and other end-buyers) when goods were on high seas but this bald ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded the name of the appellant as importer and the appellant alone was assessed to customs duty, the so called second high seas sale agreements never came into operation. Whether sale in question occasioned import of goods: 35. As noticed, the CTO specifically observed that it had not been the case of the appellant that the sale in question occasioned the import of goods into the country. However, an attempt was made before the High Court to suggest that the entire import was occasioned by ultimate sale in favour of Radha and, therefore, the matter would also be covered in the first part of sub-section (2) of Section 5 of the CST Act. The High Court noticed that such a plea could not have been raised for the first time in the writ petition for being a mixed question of facts and law. The High Court also observed that even such suggestion was belied by the fact that only the name of the appellant was reflected in the bill of entry as importer and not of Radha. It has been argued before us too that the quadripartite agreement triggered the movement of goods from foreign country to India and not merely from Andhra Pradesh to other States; that, in fact, the sales in ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pective Tax Tribunals as also by the respective High Courts. The common question for determination before this Court was as to whether the import of raw cashew nuts by CCI from African exporters was in the course of import and, therefore, eligible for exemption under Sections 5(2) of the CST Act. As noticed, the learned Judges of this Court differed in their views. In the majority decision, after delineating the determinative factors, the Court examined the facts of the case and the nature of transactions and dealings of the parties and observed that clearly, there were two transactions: one being of the import of raw cashew by CCI from foreign exporters; and the second being back-to-back sale by the canalising agency like CCI in favour of the local users for whom the goods were indented. The Court held that independent sale which may be based even on a prior agreement of sale by CCI to local users would remain an independent transaction between the importer CCI and the local purchaser but there was no privity of contract between the local users and the foreign exporter. Hence, this Court rejected the contention of the appellants that transaction of sale by CCI to actual users was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the local seller that the goods so imported by the local seller will be purchased by the local buyer. There is in such cases, a direct link between the local sale and the import. In fact it is this mutual understanding between the local buyer and the local seller which occasions the import. That is why the cases dealing with imports have not resorted to differentiating between one sale or two sales. They have applied the test as prescribed by Section 5: Whether the import is a result of understanding/contract between the local buyer and local seller? If it is, the local sale falls under Section 5. If it is not - as may well happen if the importer sells his goods after they arrive to the best available offeror in the market, then the sale is not covered by Section 5. That is why there has been no need to amend Section 5 to expressly cover a local sale following import. 49. Now, if we apply this test of inseverable link between the local sale and import to the transaction in the present case, it is clear that the local sale which is between the assessees and the Cashew Corporation of India is inextricably linked with the import of cashewnuts by the Cashew Corporation of Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the appellant got released the goods after filing the bill of entry for home consumption, the import stream dried up and the goods got mixed in the local goods. Any movement of the goods thereafter was bound to be a sale under Section 3(a) of the CST Act; and such movement being from the State of Andhra Pradesh to other State, it had been a matter of inter-State sale. The principle that actual sale may not necessarily precede the movement of goods, in its true effect, operates rather against the appellant in relation to the sale to end-buyers after the goods were cleared for home consumption. If any case for relegating the appellant to the remedy of appeal made out 40. This takes us to the alternative submission on behalf of the appellant that in view of the disputed questions of fact involved, the appellant may be relegated to the remedy of appeal. These submissions fail to impress even a bit. 40.1. The appellant, despite being aware of the availability of remedy of statutory appeal, consciously chose to file writ petitions against the assessment orders aforesaid and consciously contested the entire matter in the High Court. The High Court, even after noticing the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected the claim on the ground of insufficiency of material-a situation which might be susceptible of an irreconcilability with its view that disputed questions of fact could not be investigated in these proceedings. 5. We, therefore, permit the petitioner to lodge an appeal against the order of the Assistant Collector dated 30-5-1988 with the CEGAT insofar as and confined to the three 'Heads' of the deductions for the alleged post-manufacturing expenses, namely: (a) freight subsidy; (b) additional trade discount; and (c) cost of special packing. 40.3. The observations aforesaid and the course permitted in the given set of facts of the case of Star Paper Mills Ltd. (supra) cannot be employed in the present case because the findings against the appellant are not on the ground of insufficiency of material but are essentially the result of analysis of the material placed on record with reference to the law applicable. In our view, the extraordinary writ jurisdiction cannot be utilised by a litigant only to take chance and then to seek recourse to the other remedy after failing in its attempt on the basic merits of the case before the High Court. A litigation cannot be ..... 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