M/S HOTEL ASHOKA (INDIAN TOUR.DEV.COR.LTD.) versus ASSISTANT COMMISSIONER OF COMMERCIAL TAXES &ANR.

Citation: [2012] 1 S.C.R. 808 · Decided: 03-02-2012 · Supreme Court of India · Bench: D.K. JAIN · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2012] 1 S.C.R. 808 
A 
M/S HOTEL ASHOKA (INDIAN TOUR.DEV.COR.LTD.) 
B 
c 
v. 
ASSISTANT COMMISSIONER OF COMMERCIAL TAXES 
&ANR. 
(Civil Appeal No. 2560 of 2010) 
FEBRUARY 03, 2012 
[D.K. JAIN AND ANIL R. DAVE, JJ.] 
CENTRAL SALES TAX ACT, 1956: 
s .. 5(2) rlw Art. 286 of the Constitution and s.2(ii) of 
Customs Act - Goods sold at duty free shops at the 
International Airport - Held: State Government has no right to 
tax any such transaction which takes place at the duty free 
0 shops which are not within the customs frontiers of India -
Karnataka value Added Tax, 2003 - Customs Act, 1962 -
s.2(ii) - Constitution of India, 1950-Art. 286 -Arts.226 and 136 
- Alternative remedy. 
The appellant, a dealer registered under the 
E Kamataka Value Added Tax Act, 2003 and the Central 
Sales Tax Act, 1956, filed returns stating that no tax was 
payable by it in respect of the goods sold directly to the 
passengers af1he duty free shops at the International 
Airport, 
Bengaluru. 
However, 
the 
Assistant 
F Commissioner of Commercial Taxes directed the 
appellant to pay a sum of Rs. 4,20,70,900/- by way of sales 
tax. The writ petition filed by the appellant was dismissed 
by the Single Judge of the High Court on the ground that 
it had not exhausted the alternative remedy under the Act. 
G The Division Bench of the High Court declined to 
interfere. Aggrieved, the Assessee filed the appeals. 
Allowing the appeals, the court 
HELD : 1. It is true that the appellant had rushed to 
H 
808 
HOTEL ASHOKA (INDIAN TOUR.DEVCOR.LTD.) v. ASSTT 
809 
COMMNR. OF COMMERCIAL TAXES 
the High Court without exhausting equally efficacious 
A 
alternative statutory remedy. The Single Judge of the High 
Court was also right when he directed the appellant to 
move the statutory appellate authority. In normal 
circumstances, even this Court would have expressed 
the same opinion, but looking to the fact that the special 
B 
leave petition has already been admitted and the matter 
pertains to the assessment year 2004-2005, it would not 
be in the interest of justice to relegate the appellant to the 
statutory authorities especially when the legal position is 
very clear and the law is also in favour of the appellant. c 
[Para ,28] [819-H; 820-A-B] 
2.1 In the instant case, admittedly, the goods brought 
from foreign countries by the appellant had been kept in 
bonded warehouses and, as such, the said goods are 
deemed to have been kept outside the customs frontiers 
D 
of the country. Before the goods were imported in the 
country, they had been sold at the duty fnie shops of the 
appellant situated at the International Airport of 
Bengaluru which are also beyond the customs frontiers 
of India. [Para 18-19 & 23] [817-E; 818-A-B; 819-A-B] 
E 
2.2 No tax on the sale or purchase of goods can be 
imposed by any State when the transaction of sale or 
purchase takes place in the course of import of goods 
. into or export of goods out of the territory of India. Thus, 
if any transaction of sale or purchase takes place when 
the goods are being imported in India or they are being 
exported from India, no State can imposu any tax thereon. 
F 
In view of the provision of sub.s. (2) of s.5 of the Central 
Sales Tax Act, 1956, it is clear that a sale or purchase of G 
goods shall be deemed to take place in the course of 
import of the goods into the territory of India only if sale 
or purchase takes place before the goods have crossed 
the customs frontiers of India. [Para 20 and 22] [818-B-
C; G] 
H 
810 
SUPREME COURT REPORTS 
[2012] 1 S.C.R. 
A 
2.3 When any transaction takes place outside the 
customs frontiers of India, the transaction would be said 
to have taken place outside India. Though the transaction 
might take place within India but technically, looking to 
the provisions of s. 2(11) of the Customs Act and Article 
B 286 of the Constitution, the said transaction would be said 
to have taken place outside India. It cannot be said that 
the goods are imported into the territory of India till the 
goods or the documents of title to the goods are brought 
into India. Admittedly, in the instant case, the goods had 
c not been brought into the customs frontiers of India 
before the transaction of sales had taken place and, 
therefore, the transactions had taken place beyond or 
outside the custom frontiers of India. (Para 30] (820-E-G] 
2.4 It is not disputed that in the instant case the 
D goods were sold by giving physical possession at the 
duty f

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