MINERALS AND METALS TRADING CORPORATION OF INDIA LTD. versus SALES TAX OFFICER AND ORS.

Citation: [1998] SUPP. 2 S.C.R. 112 · Decided: 25-09-1998 · Supreme Court of India · Bench: S.P. BHARUCHA, V.N. KHARE · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
B 
MINERALS AND METALS TRADING 
CORPORATION OF INDIA LTD. 
11. 
SALES TAX OFFICER AND ORS. 
SEPTEMBER 25, 1998 
[S.P. BHARUCHA AND V.N. KHARE, JJ.] 
Sales Tax: 
C 
Central Sales Tax Act, 1956 : 
Section 5(2) read with Section 2(ab)-Sales tax liability-Sale in the 
course of import-Appel/ant-Corporation-Agent for import and export of 
minerals and metals-Placement of purchase order of coils with foreign 
exporter for and on behalf of SAlL-High sea sale of coils to SAlL by 
D Corporation by transferring shipping documents-SAJL clearing the 
consignment by paying customs duty-lmposition of sales tax on appel/ant-
Corporation-Validity of-Held, sale cf coils by appellant-Corporation to 
SAIL is covered by the provisions of latter part of Section 5(2) read with 
Section 2 (ab) of the Act and amounts to sale in the course of import-Thus, 
E no liability to pay sales tax-Constitution of lndia, 1950-Article 286(1)(b). 
F 
Section 2(ab)-Definition of phrase "crossing the customs frontier of 
India"-lnserted by an amendment in 1976-0bject and necessity of-
Explained. 
Words & Phrases : 
"Crossing the customs frontier of India," "Customs Station" and 
"Customs port" meaning of in the context of Section 2(ab) of Central Sales 
Tax Act, 19:6. 
G 
Appellant-corporation was functioning as a canalising agent for import 
and export of minerals and metals. The Steel Authority of India (SAIL) 
requested the appellant-corporation to import tin mill black plate coils. 
Consequently, appellant-corporation placed purchase order of said coils with 
the foreign exporter for and on behalf of SAIL. The responsibility of payment 
of import duties, port charges and other expenses was on SAIL. The Appellant-
H 
112 
c
MINERALS AND METALS TRADINGCORPN. OF INDIA LTD. v. S.T.O. 113 
corporation made hjgh seas sale of the coils to SAIL by transferring the A 
shipping documents and bill of lading in its favour. Subsequently, on arrival 
of the consignment, SAIL cleared the coils by processing the bill of entry • 
..,, . 
The respondent-Sales tax officer levied sales tax on the aforesaid sale 
rejecting appellant-corporation's plea that no sale tax was payable as the sale 
was in the course of import covered by Section 5(2) of the Central Sales Tax B 
Act, 1956. On challenge, High Court dismissed the writ petition holding that 
appellant was liable to pay sales tax. Hence the present appeal. 
Allowing the appeal, this Court 
HELD : 1. The sale of coils by appellant-corporation to SAIL is covered 
by the provisions of latter part of Section 5(2) read with Section 2(ab) of C 
Central Sales Tax Act, 1956, and amounted to sale in the coune of import. 
Thus, it is not liable to sales tax. (118-E) 
2.1. Article 286(1 )(b) of Constitution provides that no law ofa State 
shall impose, or authorise the imposition of, a tax on the sale or purchase 
of goods where such sale or purchase takes place in the course of import D 
of the goods into, or export of the goods out of, the territory of India. Section 
5(2) of the Act states that 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 
if the sale or purchase either (i) occasions such import or (ii) it is effecte.d 
by a transfer of documents of title to the goods before the goods have crossed E 
the customs frontiers oflndia. (116-F, HJ 
2.2. It is well settled in the commercial world that a bill of lading 
represents the goods and the transfer of it operates as the transfer of goods. 
The delivery of the bill of lading while the goods are afloat is equivalent to 
the delivery of the goods themselves. (117-H; 118•AI 
p 
In the instant case, the bill of lading had been endorsed in favour of 
SAIL while the consignment of the said coils was still upon the high seas. 
The sale, therefore, was a sale in the course of the import of the said coils 
into the territory of India; it was effected by transfer of the documents to the 
said coils before they had crossed the limits of the customs station. The High G 
Court failed to notice that the sales had taken place long after the introduction 
of Section 2(ab) and, therefore, the question whether they were sales in the 
course of import had to be judged on the basis of its provisions. 
(117-H; 118-A-D) 
J. V. Gokal & Co. {Private) Ltd. v. The Assistant Collector of Sale-Tax H 
'
114 
SUPREME COURT REPORTS (1998] SUPP. 2 S.C.R. 
A (Inspection) & Ors., (1960) 2 SCR 852, relied on. 
Cashew Corporat

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