NIRMAL KUMAR PARSAN versus COMMISSIONER OF COMMERCIAL TAXES & ORS.

Citation: [2020] 1 S.C.R. 1132 · Decided: 21-01-2020 · Supreme Court of India · Bench: A.M. KHANWILKAR · Disposal: Dismissed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2020] 1 S.C.R.
NIRMAL KUMAR PARSAN
v.
COMMISSIONER OF COMMERCIAL TAXES & ORS.
(Civil Appeal No. 7863 of 2009)
JANUARY 21, 2020
[A. M. KHANWILKAR AND DINESH MAHESHWARI, JJ.]
West Bengal Sales Tax Act, 1954 – West Bengal Sales Tax
Act, 1994 – Sale of goods imported from foreign country and after
unloading the same on the land-mass of the State kept in the bonded
warehouse without payment of customs duty to foreign bound ships
as “ship stores” – Amenable to sales tax or not – The Tribunal held
that the sale had taken place on the land-mass of the State and the
sale was neither for import nor for export and rejected the claim of
the appellants for exemption – The High Court upheld the view of
the Tribunal – Before the Supreme Court, the appellants contended
that the process of import was not complete at the time of sale of the
goods in question to the foreign-going ship and the transaction of
sale was “in the course of import”, for which reason it was not
amenable to sales tax – Held: A priori, for a sale or purchase to
qualify as a sale or purchase in course of import, the essential
conditions are that such sale shall occur before the goods had
crossed the customs frontiers of India and the import of the goods
must be effected or the import is occasioned due to such sale or
purchase – In the instant case, the sales in question did not occasion
import – The stated sales or appropriation of goods kept in bonded
warehouse within the land-mass/ territory of the State of West Bengal
are neither in the course of import or export and more so, were
effected beyond the customs port/ land customs station area –
Therefore, in law, it was a sale amenable to levy of sales tax under
the 1954 Act and the 1994 Act, as the case may be, r/w. s. 4 of the
CST Act – There is no infirmity in the view taken by the authorities
below and which had justly commended to the High Court – Central
Sales Tax Act, 1956 – s.5 r/w. s.2(ab)
Dismissing the appeals, the Court
HELD: 1. The sale to be in the course of import, must be a
sale of goods and as a consequence of such sale, the goods must
   [2020] 1 S.C.R. 1132
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actually be imported within the territory of India and further, the
sale must be part and parcel of the import so as to occasion import
thereof. Indeed, for the purposes of Customs Act, only upon
payment of customs duty the goods are cleared by the Customs
authorities whence import thereof can be regarded as complete.
However, that would be no impediment for levy of sales tax by
the State concerned in whose territory the goods had already
landed/unloaded and kept in the bonded warehouse. For seeking
exemption, it is necessary that the goods must be in the process
of being imported when the sale occurs or the sale must occasion
the import thereof within the territory of India. The word
“occasion” is used to mean “to cause” or “to be the immediate
cause of”. In the present case, the stated sales in no way
occasioned import of the goods into the territory of India. For,
the goods were taken away by the foreign-going ship as ship stores
for being consumed after the goods had crossed the customs
frontiers/Indian Waters. [Para 12][1148-D-F]
2. Indubitably, the sale which is to be regarded as exempt
from payment of sales tax, is a sale which causes the import to
take place or is the immediate cause of the import of goods. The
appellants having failed to establish that the stated goods would
be actually imported within the territory of India and had not
crossed the customs station, cannot contend that the sale was in
the course of import as such within the meaning of Section 5 read
with Section 2(ab) of the Central Sales Tax Act, 1956. Moreover,
there is no direct linkage between the import of the goods and
the sale in question to qualify as having been made in the process
or progress of import.[Para 13][1148-G-H; 1149-A]
3. In the present case, it is not the case of the appellant
that the goods in question were being exported. Since the goods
are to be consumed on the board of the foreign going ship and
the same would be consumed before reaching a destination, it
does not fall under the definition of ‘export’. The sale cannot
qualify as a sale occasioning export unless the goods reach a
destination which is a place outside India. Further, since the goods
have been sold from the bonded warehouse and had crossed the
customs port/land customs station prior to their sale, it cannot
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