The Apex Court held that the goods sold by the High Sea Agreement before it reached the customs frontier is not interstate sale and it is in the course of import.
The appellant, Vellanki Frame works filed the petition challenging the assessment orders passed by the Commercial Tax Officer wherein it was held that the transactions in question were not the sales in the course of import but had been inter-State sales, liable to Central Sales Tax, and denied the exemption claimed under Section 5(2) of the Central Sales Tax Act, 19563 while granting time to the appellant to produce the prescribed C-Forms to the assessing authority for availing the benefit of concessional rate of tax.
In each of the transactions, when the goods in question reached the port at Visakhapatnam, the appellant carried out the proceedings envisaged by the Customs Act, 1962 and filed a bill of entry for warehousing and thereafter, filed another bill of entry for home consumption (ex-bond).
On the basis of such bills of entry, the appellant was duly assessed for customs duty. The appellant later on raised debit notes on the end-buyers.
In this case the High Court observed that once the appellant got released the goods after filing the bill of entry for home consumption, the import stream dried up and the goods got mixed in the local goods.
Any movement of the goods thereafter was bound to be a sale under Section 3(a) of the CST Act, and such movement being from the State of Andhra Pradesh to other State, it had been a matter of inter-State sale.
The principle that actual sale may not necessarily precede the movement of goods, in its true effect, operates rather against the appellant in relation to the sale to end-buyers after the goods were cleared for home consumption.
The division bench of Justices A.M. Khanwilkar and Dinesh Maheshwari observed that the claimed exemption under Section 5(2) of the CST Act has rightly been denied to the appellant and the High Court has been justified in dismissing the writ petitions filed by the appellant. The High Court has yet been considered and gave time to the appellant to submit C-Forms for availing the benefit of concessional rate of tax. No case for interference is made out.
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