BURMAH SHELL OIL STORAGE AND DISTRIBUTION CO. OF INDIA LTD., AND ANOTHER vs. THE COMMERCIAL TAX OFFICER AND OTHERS (AND CONNECTED APPEAL)

CIVIL APPEAL No. 751/1957Supreme Court[1961] 1 S.C.R. 90227 September 1960Bench: 5 JudgesAuthor: S.K. DAS, M. HIDAYATULLAH, K.C. DAS GUPTA, J.C. SHAH, N. RAJAGOPALA AYYANGAR23 pages
AI SummaryDismissed

What did the Supreme Court hold?

The Tribunal held that for the purpose of Article 286(1)(a), a sale means a completed transaction where property in goods passes. The Explanation to Article 286(1)(a) is intended to avoid multiple taxation and deems a sale to have taken place in the State where goods are delivered for consumption as a direct result of the sale. In this case, there was no rival State where the goods could be said to have been delivered for consumption, making Article 286(1)(a) and its Explanation inapplicable. The Tribunal further held that the word 'export' in Article 286(1)(b) means sending goods from one country to another where they can be said to be imported. Aviation spirit loaded on aircraft for consumption, though taken out of the country, was not exported as it had no foreign destination for import. Therefore, the sales could not be said to have occasioned the export or to be in the course of export. The sales were deemed to have been made within the State of West Bengal, and the customs barrier did not limit the territory of West Bengal for sales tax purposes. The appeals were dismissed.

What were the facts?

The appellant companies, Burmah Shell Oil Storage and Distributing Co. of India Ltd. and Standard Vacuum Oil Company, sold motor spirit for aviation purposes to aircraft at Dum Dum Airport, Calcutta. These aircraft either proceeded directly to foreign countries or did so after landing elsewhere in India. Dum Dum Airport was a customs aerodrome. The sales tax authorities of West Bengal sought to levy tax on these sales under the Bengal Motor Spirit Sales Taxation Act, 1941. The appellant companies claimed exemption from tax under Article 286(1)(a) and (b) of the Constitution of India, arguing that the sales occurred outside West Bengal, were delivered outside the customs barrier, and were in the course of export.

What were the issues?

1. Whether the sales of aviation spirit to aircraft bound for foreign countries constituted sales outside the State of West Bengal, considering Article 286(1)(a) and its Explanation. The assessee argued that the sales did not fall within the Explanation to Article 286(1)(a) and that delivery outside the customs barrier meant the sales were outside the State. The revenue contended that the sales were within the State. 2. Whether the sales of aviation spirit to aircraft constituted sales in the course of export out of the territory of India, under Article 286(1)(b). The assessee argued that the aviation spirit was taken out of India, thus constituting export. The revenue argued that the sales were not in the course of export.

Which sections of the Income-tax Act were involved?

Article 286(1)(a), Article 286(1)(b), Bengal Motor Spirit Sales Taxation Act, 1941

AI-generated summary — verify with the full judgment below

L. llu:an ,\Jal Kath1ulu , .. J'Ju ftlC01Jlf·ltlX UfJictY, sp~ctaJ Circlt, AmlnJ/ll Can!t. 902 SUPREME COURT REPOHTS [ I9&I] sub-s. (5) that "Income-tax Offic<•rs shall perform their functiorrn in respect of such persons ...... as the Commi~Hioner ...... may ...... direct" <inly show that the CommiAsioner mn.y direct that one Income-tax Officer Ahall not and !!notlwr lncomr-t-Rx Cfficer sl1all, per- form the functions in respect of such and such pnson or per80lls.

The plural i11cluding the singular, the order of thu Commissio11cr waH valid, becausu he arra11ged aud distrilrnted work, and <lid not- se"k to transfer any ca~e. It is, however, contemlcd that this renders suL-s. (7 A) otioso. In 01u· opi11iu11, it does nut.

Special 1irovisiu11 for transfer of pe11ding <'ases is ·~JI that i". provided there, aud if ouch a transfer takes pla<'e, the proviBions of sub-s. (7A) will be invoked.

Tho8P provisions are to be rllad as 11ut pre- judicing the g<'11eral powers granted b) sub-s. (5) and vice versa.

For these reasons, tlie appeal fails, r.nd will ho dis- missed with eusts.

Appeal dismi.ssed. BURMAH SHELL OIL STORAGE AN'D DISTRIBUTING CO., OF INDIA, LTD,

The order continues below.

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