COMMERCIAL TAXES OFFICER versus M/S. BOMBAY MACHINERY STORE

Citation: [2020] 6 S.C.R. 521 · Decided: 27-04-2020 · Supreme Court of India · Bench: DEEPAK GUPTA · Disposal: Dismissed

Judgment (excerpt)

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COMMERCIAL TAXES OFFICER
v.
M/S. BOMBAY MACHINERY STORE
(Civil Appeal No. 2217 of 2011)
APRIL 27, 2020
[DEEPAK GUPTA AND ANIRUDDHA BOSE, JJ.]
Central Sales Tax Act, 1956 – First explanation to s.3; s.6 –
Inter-State sale – Benefit of exemption u/s.6(2) – Goods delivered
to carrier for transmission – If a timeframe can be imposed for
delivery of goods to be taken therefrom – Circulars in question inter
alia treated retention of goods beyond 30 days (as per the later
Circular) in transporters’ godown as cut-off period – After that
date, assessee was deemed to have had taken constructive delivery
of goods and sale beyond that period within the State was held to
be local sales and subjected to sales tax under the State Act – In
first set of appeals (C.A No.2217 of 2011 & C.A No.2220 of 2011),
High Court quashed the two circulars – In another set of appeals
also (C.A No.10000 of 2011 and C.A No.10001 of 2011) following
the aforesaid judgment, High Court quashed the orders of statutory
authorities imposing tax under State Act and invalidated the two
circulars – Held: A legal fiction is created in first explanation to s.3
– That fiction is that the movement of goods, from one State to another
shall terminate, where the good were delivered to a carrier for
transmission, at the time of when delivery is taken from such carrier
– No concept of constructive delivery either express or implied in
the said provision – Movement of the goods, for the purposes of
s.3(b) would terminate only when delivery is taken, having regard
to first explanation to that section – It does not qualify the term
‘delivery’ with any timeframe within which such delivery shall have
to take place – Thus, fixing of timeframe impermissible – High Court
rightly held in the judgment assailed in C.A No.2217 of 2011 that
there is no place for any intendment in taxing statutes – Judgments
of the High Court in the four appeals, not interfered with – Rajasthan
Sales Tax Act, 1954 – Sale of Goods Act, 1930 – s.51 – Interpretation
of Statutes.
[2020] 6 S.C.R. 521
521
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SUPREME COURT REPORTS
[2020] 6 S.C.R.
Dismissing the appeals, the Court
HELD: 1.1 In this set of appeals where the respondent is
Bombay Machinery Store, transfer of documents of title were
effected subsequent to the goods reaching the location within
destination State. But when the goods are delivered to a carrier
for transmission, first explanation to Section 3 of the 1956 Act
specifies that movement of the goods would be deemed to
commence at the time when goods are delivered to a carrier and
shall terminate at the time when delivery is taken from such
carrier. The said provision does not qualify the term ‘delivery’
with any timeframe within which such delivery shall have to take
place. In such circumstances fixing of timeframe by order of the
Tax Administration of the State would be impermissible. [Para
12][535 F-G]
1.2 Sub-clause (1) of the Section 51 of the Sale of Goods
Act, 1930 specifies when the goods shall be deemed to be in
course of transit and sub-clause (3) thereof lays down the
conditions for termination of transit. That condition is an
acknowledgment to the buyer or his agent by the carrier that he
holds the goods on his behalf. There is no material to suggest
such an acknowledgment was made by the independent
transporter in these appeals. In the case of Arjan Dass Gupta
principle akin to constructive delivery was expounded. However,
such construction would not be proper to interpret the provisions
of Section 3 of the 1956 Act. A legal fiction is created in first
explanation to that Section. That fiction is that the movement of
goods, from one State to another shall terminate, where the good
have been delivered to a carrier for transmission, at the time of
when delivery is taken from such carrier. There is no concept of
constructive delivery either express or implied in the said
provision. On a plain reading of the statute, the movement of the
goods, for the purposes of clause (b) of Section 3 of the 1956 Act
would terminate only when delivery is taken, having regard to
first explanation to that Section. There is no scope of incorporating
any further word to qualify the nature and scope of the expression
“delivery” within the said section. The legislature has eschewed
from giving the said word an expansive meaning. The High Court
under the judgment which is assailed in Civil Appeal No.2217 of
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2011 rightly held that there is no pl

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