M/S VELLANKI FRAME WORKS versus THE COMMERCIAL TAX OFFICER, VISAKHAPATNAM

Citation: [2021] 3 S.C.R. 903 · Decided: 13-01-2021 · Supreme Court of India · Bench: A.M. KHANWILKAR · Disposal: Dismissed

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Judgment (excerpt)

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[2021] 3 S.C.R. 903
903
M/S VELLANKI FRAME WORKS
v.
THE COMMERCIAL TAX OFFICER, VISAKHAPATNAM
(Civil Appeal Nos. 1322-1323 of 2019)
JANUARY, 13 2021
[A. M. KHANWILKAR AND DINESH MAHESHWARI, JJ.]
Central Sales Tax Act, 1956: s.5(2) – ‘sale in the course of
import’ – Essential features – The basic principles for determining
as to when a sale or purchase of goods takes place in the course of
import or export are contained in s.5 of the CST Act – Under sub-
section (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 – The phrase
‘sale in the course of import’ carries three essential features - (i)
that there must be a sale; (ii) that goods must actually be imported
into the territory of India; and (iii) that the sale must be part and
parcel of the import – A sale would become part and parcel of import
if it either occasions such import or if it occurs by way of a transfer
of document of title to the goods before the goods cross the customs
frontiers of India.
Customs Act, 1962: s.2(26) – Importer, who is – Sale on High
Seas – Appellant’s case was that there was a quadripartite agreement
whereby the supplier sold the goods in question to the first-buyer
and delivered them at the port of shipment – Thereafter, while the
goods were on high seas, first buyer transferred them to the appellant
by endorsing the bill of lading in favour of the appellant – Further
to this and while the goods were yet on high seas, appellant
allegedly transferred them to the end-buyer by endorsing the bill of
lading in favour of the end-buyer – Appellant also suggested that
since the end-buyer did not have ‘the requisite infrastructure’ to
undertake importation of goods whereas the appellant had the
requisite infrastructure for importation, therefore, appellant was to
act as an agent of the end-buyer and to clear the goods from customs
authorities – Held: The inclusive definition of “importer” in s.2(26)
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SUPREME COURT REPORTS
[2021] 3 S.C.R.
of the Customs Act cannot be used to usurp the identity of an importer
from the person who filed the bill of entry; and the person in whose
name the bill of entry is filed, does not cease to be an importer – In
this case, the name of the appellant was reflected as importer in the
Import General Manifest (IGM) of the vessel/s that brought the goods
in question to the port at Visakhapatnam – High Court observed
that if the alleged second high seas sale had taken place, the IGM
would have reflected the name of the last high seas sale purchaser
as the importer and if there was any bonafide omission, the IGM
would have necessitated amendment because only the last purchaser
of the goods on high seas could have been the importer/consignee
– It is but apparent that that while bringing anything into India
from a place outside India is generally regarded as “import” but,
when the goods are cleared for home consumption, they are no
longer imported goods for the purpose of the Customs Act –
Significantly, in the process of importation, the importer, in relation
to any goods, includes any owner or any other person holding
himself to be the importer but, only between the time of their
importation and their clearance for home consumption – In other
words, the net result of the expanded definition of the expression
“importer” is that while any person who imports goods into India
would be an importer but, the owner of the goods or a person holding
himself to be an importer would also be regarded as an importer
during the period between importation of goods and their clearance
for home consumption – This crucial period would generally be
that period when the goods have been warehoused after importation
and are cleared from warehouse by a person other than the person
who actually imported the goods – That being the position, High
Court rightly held that this definition of importer cannot be used to
usurp the identity of an importer from the person who filed the bill
of entry – In other words, the person 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 onus would be heavy on him to
establish that someone else is the owner or importer of goods –

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