The Supreme Court on Wednesday (13.01.2021) comprising of a bench of Justices AM Khanwilkar and Dinesh while delivering a judgment remarked, "In our view, the extraordinary writ jurisdiction cannot be utilised by a litigant only to take chance and then to seek recourse to the other remedy after failing in its attempt on the basic merits of the case before the High Court". (Vellanki Frame Works Vs Commercial Tax Officer)
The bench observed that a litigation cannot be allowed to be unendingly kept alive at the choice of a litigant.
Facts of the Case
These appeals by special leave are directed against the common judgment and order dated 18.12.2014 in Writ Petition Nos. 2552 of 2013 and 6258 of 2013 whereby, the High Court of Judicature at Hyderabad for the State of Telangana and the State of Andhra Pradesh upheld the assessment orders dated 20.01.2010 and 18.05.2010 passed by the Commercial Tax Officer, Chinawaltair Circle and 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, 1956 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.
We may usefully observe at the outset that, in all, seven transactions of similar nature form the subject matter of these appeals; one relating to the assessment for the year 2005-06 and others relating to the assessment for the year 2006-07. The common salient features of all these transactions had been that they were for the supply of timber from a foreign country and were allegedly executed in a similar fashion thus: The supplier (party number 1) sold the goods in question to the first buyer (party number 2) and delivered them at the port of shipment. Thereafter, while the goods were in transit on high seas, party number 2 transferred the goods to the appellant (who was invariably party number 3 in these transactions) by endorsing the bill of lading in favour of the appellant. Further to this and while the goods were on high seas, the appellant allegedly transferred them to the end-buyer (party number 4) by endorsing the bill of lading in favour of the end-buyer.
Contention of the parties & Observation
The legal issue considered by the bench was whether the sales in question took place in the course of the import of the goods into the territory of India and qualify for exemption under Section 5(2) of the CST Act? Referring to various judgments on the subject, the bench concluded that the High Court was right in observing 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.
Regarding the submission that, in view of the disputed questions of fact involved, the appellant may be relegated to the remedy of appeal, the bench observed:
Despite being aware of the availability of remedy of statutory appeal, consciously chose to file writ petitions against the assessment orders aforesaid and consciously contested the entire matter in the High Court..... After having consciously invoked the writ jurisdiction of the High Court and having contested the matter on merits, the appellant cannot now be allowed to reopen the matter in appeal.
The Decision of the Court
For what has been discussed hereinabove, we are clearly of the view 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 considerate 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.
Lastly, we may observe that in terms of the orders passed in these appeals, the appellant has deposited an amount of Rs. 7,07,325/- (rupees seven lakhs seven thousand three hundred and twenty-five) with the respondent. As these appeals are being dismissed, the respondent shall be entitled to adjust the same against the dues of the appellant.
As a result, these appeals fail and are dismissed with costs and with the observations foregoing.
The judgment also discussed the concept of 'sale in the course of import' and 'Definition of importer'
'Sale in the course of import'
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.
'Definition of importer'
Though the definition of importer includes owner or any person holding out himself as the importer; and this definition of importer is not really relevant to the question of title but, that does not mean that a person who holds out himself to be the importer; and who files the bill of entry for home consumption; and who is assessed for customs duty; and whose suggestion about transfer of title to a third person is not established by any reference to any official record, the transfer on high seas may be presumed on mere suggestion about the alleged endorsement of bill of lading.
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