Tax is leviable on sale of goods released after filing bill of entry, from one State to another
In this case before Supreme Court, the purchaser of goods alleged that the sale of goods took place on high seas before goods had crossed customs frontiers of India, whereas the Custom Department contended that the sale in question took place after the purchaser had filed the bill of entry for home consumption and the goods were taken out of the bonded warehouse. All official documents as also dealings of the purchaser clearly establish that the he had been the importer, hence the attached consequences are bound to follow. When the bills of entry recorded the name of the appellant as importer and the purchaser alone was assessed to customs duty, the so called second high seas sale agreements never came into operation. The effect of raising of debit notes by the appellant on the end-buyers has its own bearing in the present case.
Once importer of goods and had cleared all goods for home consumption, the natural consequence of raising debit notes on the end-buyers situated in different States and movement of goods to such end-buyers would be to take such sale transactions in the category of ‘inter-State sales’. Once good is released after filing bill of entry and got mixed in local goods, any movement of that goods from one State to another being ‘sale’ cannot be exempted from tax.
The purchaser had admittedly raised debit notes on the end-buyers but only after having cleared the goods by filing the bill of entry for home consumption. The purchaser was not entitled to the tax exemption and has rightly been held liable for tax over inter-State sales. After the purchaser got the goods released by filing bill of entry for home consumption, indisputably, the goods were ultimately received by end buyer at Lucknow in the State of Uttar Pradesh (and other end-buyers in different States) and appellant raised debit notes from the State of Andhra Pradesh. These facts are sufficient to establish that the movement of goods inside the country from one State to another had been on account of the sale by appellant to the end-buyers; and such sales took place only after the appellant obtained the goods from the bonded warehouse for home consumption. 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; and such movement being from the State of Andhra Pradesh to other State, it had been a matter of inter-State sale.
