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Judgment
V. Gopala Gowda, J.—Though this matter is listed today for dictating judgment we have heard Smt. Geetha Menon, learned Government
Advocate, with reference to the additional documents produced along with a memo dated 8.6.2009 by the learned Counsel for the Appellant and
the decision of the Supreme Court reported in the case of K. Gopinathan Nair and etc. Vs. State of Kerala, relied upon by the learned AGA in
justification of both the impugned orders passed by the learned single judge and assessing officer. The documents produced are:
A Xerox copy of the sample of the purchase order placed by ITDC on the foreign buyer namely M/s. UDV, M/s. DIAGEO Amsterdam,
Amsterdam, Netherland.
A Xerox copy of the office order of ITDC with respect to procurement of goods from foreign country for sale at duty free shops.
Shipping document and invoice raised by M/s. DIAGEO Amsterdam, Amsterdam, Netherland on ITDC.
This appeal is filed by Hotel Ashoka questioning the correctness of the order dated 11th February, 2009 passed in Writ Petition No. 10989/2008
(T-CST) urging various grounds.
Mr. Randhir Chawla, learned counsel appearing for Sri M.K. Shankare Gowda, on behalf of the appellant contended that the. learned Single
Judge erred in directing the appellant to avail alternative remedy of appeal and the same is bad in law. Further, the learned Single Judge failed to
take into consideration the admitted facts required to be examined in view of the provisions of Article 286(1)(b) of Constitution of India read with
Section 2(ab) of the Central Sales Tax Act. He submitted that the sales effected from the duty free shop, which is admittedly located beyond the
customs station at Banguluru International Airport, are not covered by the charging Section under the K.S.T., Act and not liable to tax under The
Central Act, Therefore, the learned Single Judge should have decided the question of law on merits instead of dismissing the writ petition with a
direction to the appellant to avail the alternative remedy. The learned Counsel Contended that the learned Single Judge has failed to note that the
order passed by the assessing authority is without jurisdiction as the transactions could not liable to tax unless they took place beyond the territorial
jurisdiction of India. In the instant case, the appellant did not admit that it was beyond the customs barriers of India as per the provisions of Section
2(ab) of CST Act. Therefore, the assessing officer had no jurisdiction to levy the sales tax as the transactions were admittedly beyond the Customs
Frontiers of India. Therefore, the writ petition should have been disposed of the case on merits by the learned single judge instead of directing the
appellant to avail alternative remedy of appeal. The legal issues required to be decided by the learned Single Judge are, whether the sales made are
in the course of import or export and the assessment order passed is within the jurisdiction of the assessing officer? Since, The learned Single
Judge failed to consider these legal aspects, the order is bad in law and liable to be set aside. Further, learned single judge failed to notice that the
assessment order passed by the Assessing officer is without jurisdiction under the provisions of Act and therefore, it is a nullity in the eye of law.
Hence, there was no head for the learned single judge to examine the facts and record the findings.
The learned counsel for the appellant placed reliance on the decisions of the Madras High Court and the Calcutta High Court and the Judgment
of the Supreme Court wherein Section 5(2) fell for consideration and it has been interpreted that the sale of goods within the customs frontiers In
India, are exempted from the sales tax in view of Section 5(2) of the CST Act. The learned counsel submitted that documents are produced by the
appellant-assessee before the assessing officer to show that the provisions of Section 5(2) of the Act are attracted to the facts of the case.
Therefore, the assessing officer had no jurisdiction to pass the assessment order. He also placed reliance upon the decisions of the Supreme Court
in the case of State of H.P. and Others Vs. Gujarat Ambuja Cement Ltd. and Another, and also in the case of Kiran Spinning Mills Vs. Collector
of Customs, to contend that additional customs duty is not leviable. The aforesaid decisions have not been considered by the learned Single Judge
and therefore, the impugned order is bad in law. Another contention urged by the learned counsel on behalf of the appellant is that the assessment
order is a nullity in the eye of law. The further contention urged is that it is purely a question of law that arose for consideration before the learned
Single Judge and the same should have been examined in detail.
The learned Additional Government Advocate Smt. Geetha Menon, placed reliance upon Section 5(2) of the Act with regard to the import of
goods within the custom frontiers of India by the appellant and the goods were stored in the bonded warehouse and sold in Duty Fee Shops
situated at International Airport, Devanahalli, Bangalore. According to her, the sales are not in conformity with the statutory provisions of the Act
and the law laid down by the Apex Court in the case of K. Gopinathan Nair and etc. Vs. State of Kerala, In the aforesaid decision, guidelines
have been laid down with reference to Section 5(2) of the CST Act at paragraph-12 after analysing the various decisions of the Constitution Bench
of the Supreme Court. The learned AGA further contended that the order is passed by the assessing officer after giving an opportunity to the
assessee and the same is subject to appeal. Therefore, the learned Single Judge rightly dismissed the writ petition giving liberty to the appellant to
avail alternative remedy of filing an appeal. She submitted that the impugned order does not warrant interference in view of the decision of the
Supreme Court referred to supra. The learned Single Judge rightly declined to exercise the discretionary power and directed the appellant to avail
alternative remedy which is perfectly justified in the facts & circumstances of the case.
We have carefully examined the rival legal contentions for the limited purpose to find out whether the learned Single Judge was right in dismissing
the writ petition directing the appellant to avail the alternative remedy. The same has to be answered against the appellant for the following
reasons:-
1) Section 5(2) of the Central Sales Tax Act fell for consideration before Constitution Bench of the Apex Court in the following decisions.
1) Coffee Board, Bangalore Vs. Joint Commercial Tax Officer, Madras and Another,
2) K.G. Khosla and Co. Vs. Deputy Commissioner of Commercial Taxes,
3) Binani Bros. (P) Ltd. Vs. Union of India (UOI) and Others, and
4) Serajuddin and Others Vs. The State of Orissa,
The Apex Court examined the constitutional provisions of article 286 of the Constitution and Sections 5 and (2ab) of the Central Sales Tax Act at
paragraph 12, in the decision referred to in the case of K. Gopinathan Nair and Etc Vs. State of Kerala. The law is laid down as under:-
In the fight of the aforesaid settled legal position emerging from the Constitution Bench decisions of this Court the following propositions clearly get
projected for deciding whether the concerned sale or purchase of goods can be deemed to take place in the course of import as laid down by
section 5(2) of the Central Sales Tax Act:
(1) The sale or purchase, as the case may be, must actually take place.
(2) Such sale or purchase in India must itself occasion such import and not vice versa i.e. import should not occasion such sale.
(3) The goods must have entered the import stream when they are subjected to sale or purchase.
(4) The import of the concerned goods must be effected as a direct result of the concerned sale or purchase transaction.
(5) The course of import can be taken to have continued till the imported goods reach the local users only if the import has commenced through the
agreement between foreign exporter and an intermediary who does not act on his own in the transaction with the foreign exporter and who in his
turn does not sell as principal the imported goods to the local users.
(6) There must be either a single sale which itself causes the import or is in the progress or process of import or though there may appear to be two
sale transactions they are so integrally inter-connected that they almost resemble one transaction so that the movement of goods from a foreign
country to India can be ascribed to such a composite well integrated transaction consisting of two transactions dovetailing into each other.
(7) A sale or purchase can be treated to be in the course of import if there is a direct privity of contract between the Indian Importer and the
foreign exporter and the intermediary through which such import is effected merely acts as an agent or a contractor for and on behalf of Indian
importer.
(8) The transaction in substance must be such that the canalising 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.
We have examined the documents produced by the appellant for the limited purpose to find out whether the appellant is entitled to the
exemption claimed u/s 5(2) of the Act and not liable to pay tax under the Act. After careful examination of the facts of the case and the guidelines
laid down by the Apex Court we are of the view that the learned single Judge is perfectly justified in holding that the order passed by the assessing
officer is not required to be interfered with and given liberty to avail the alternative remedy of filing an appeal against the order of assessment
before the appellate authority. In our considered view the said conclusion arrived at by the learned Single Judge is legal and valid. The decisions of
various High Courts and Judgments of the Supreme Court relied upon by the learned counsel for the appellant referred to Supra, do not apply to
the facts of this case to accept the legal contention urged on behalf of the appellant to hold that the assessment order is without jurisdiction and
Authority under the provisions of the Act. On the other hand, the Judgment relied upon by the learned Additional Government Advocate is
applicable to the facts & situation to hold that the Assessing officer had the jurisdiction to pass assessment order against the appellant. Therefore,
the order passed by the learned Single Judge does not call for interference in this appeal. The writ appeal is being devoid of merit and liable to be
dismissed. Accordingly, the appeal is dismissed.