Flemingo Duty Free Shop (P) Ltd. vs State of Tamil Nadu

T.S. Sivagnanam, J. - Heard Mr. C. Manishankhar, learned counsel for the petitioner and Mr. V. Haribabu, learned Additional Government Pleader for the respondent.

The petitioner is a Private Limited Company having its registered Office at Navi Mumbai. The petitioner has set up duty free shops at various international airports and seaports in India and they offer to sell various internationally recognised brands of product. The petitioner has obtained the requisite licences and a Facilitation Licence has been issued to the petitioner on 29-4-2005 by the Deputy Commissioner of Customs to the Customs Airport, Trichy. It appears that the officials of the Enforcement Wing had inspected the place of business and issued impugned notice calling for certain particulars.

Firstly, the place of business of the petitioner is in the international airports, seaport and in their authorised warehouse. The goods are intended to be sold within the customs barrier and from the para-wise instruction given by the respondent it is seen that inspection was not conducted in the Trichy international airport or for that matter in any port or other international airports, hence, this could be safely presumed that inspection was conducted in the warehouse of the petitioner at Trichy. However, in the impugned proceedings there is no reason assigned as to why the documents listed therein were called for from the petitioner. Without disclosing the reasons thereof, the petitioner cannot have an opportunity to raise any objection to the impugned notice. The licence issued to the petitioner contains certain stringent conditions, where they have to maintain a stock register-commodity wise and separately for goods imported by sea, goods imported by air, goods imported by post, goods transferred from Central Excise bonded factory. Further, the Register has to be entered and updated immediately on receipt of the goods each time and signed by the petitioner, the bond Officer of the Department and Escort Officer immediately thereof. Further each item shall be separately stacked in the Main Bonded Wareshouse in the manner as necessary for easy identification. Stock-card (Bin Card) shall be maintained for each item separately for each receipt as per ''Annexure H'' and displayed in front of the stock. For the purpose of transporting the bonded goods from the Main Bonded Warehouse (MBWH) to the individual DFS, the petitioner shall make the application in triplicate to the Bond Officer of the Main Bonded Warehouse in the format prescribed at Annexure-III and the Bond Officer after verifying the correctness of the application and enter the details in the main Bond Register and permit removal of the goods. Apart from the above conditions, there are other conditions prescribed in the Facilitation licence granted to the petitioner. The impugned notice does not state that the Enforcement Wing Officer had tangible material to come to a prima facie conclusion that the petitioner has evaded tax. If such material was available, then the same should have been disclosed in the impugned notice. Without disclosing the same, the petitioner will not be in a position to adequately raise their defence.

In fact, the petitioner had filed a writ petition before this Court to quash the order passed under the Tamil Nadu General Sales Tax Act dated 8-11-2009 in W.P. No. 39814 of 2005. The Hon''ble Division Bench of this Court by order dated 8-10-2012, after taking into consideration the decision of the Hon''ble Supreme Court in the case of Indian Tourist Development Corporation Limited v. Assistant Commissioner of Commercial Taxes and Another reported in (2012) 2 SCC 204 held that the goods of the petitioner had not been brought into the Customs Frontier of India before the transaction of sales had taken place and therefore, the transaction had taken place beyond or outside the Customs Frontier of India and they are not taxable under the Tamil Nadu General Sales Tax Act. The above decision has become final as no appeal has been preferred by the respondent. The ratio laid down by the Hon''ble Supreme Court would be equally applicable to the present case also. Before the Karnataka High Court, the State of Karnataka had challenged the order passed by the Karnataka Appellate Tribunal under the Karnataka Sales Tax Act in a case relating to the petitioner and the said petition in S.T.R.P. No. 202 of 2011 was dismissed by the Hon''ble Division Bench of the Karnataka High Court once again placing reliance on the decision of the Hon''ble Supreme Court in the case of Indian Tourist Development Corporation Limited. As already pointed, there is nothing on record to show that there was some material available with the Officer to show that the petitioner had made domestic sales and goods have been removed in contravention of the Facilitation Licence. The para-wise comments given to the Additional Government Pleader do not state anything except that there is prima case of tax evasion.

In the light of the above, this writ petition is allowed and the impugned order dated 12-5-2015 is set aside as it has been passed with jurisdiction. No costs. Consequently, the connected miscellaneous petitions are closed.