COMMERCIAL TAXES OFFICERversusM/S. BOMBAY MACHINERY STORE

                         [2020] 6 S.C.R. 521                               521


                COMMERCIAL TAXES OFFICER                                   A
                                   v.
               M/S. BOMBAY MACHINERY STORE
                   (Civil Appeal No. 2217 of 2011)
                           APRIL 27, 2020                                  B

       [DEEPAK GUPTA AND ANIRUDDHA BOSE, JJ.]
       Central Sales Tax Act, 1956 – First explanation to s.3; s.6 –
Inter-State sale – Benefit of exemption u/s.6(2) – Goods delivered
to carrier for transmission – If a timeframe can be imposed for            C
delivery of goods to be taken therefrom – Circulars in question inter
alia treated retention of goods beyond 30 days (as per the later
Circular) in transporters’ godown as cut-off period – After that
date, assessee was deemed to have had taken constructive delivery
of goods and sale beyond that period within the State was held to
be local sales and subjected to sales tax under the State Act – In         D
first set of appeals (C.A No.2217 of 2011 & C.A No.2220 of 2011),
High Court quashed the two circulars – In another set of appeals
also (C.A No.10000 of 2011 and C.A No.10001 of 2011) following
the aforesaid judgment, High Court quashed the orders of statutory
authorities imposing tax under State Act and invalidated the two           E
circulars – Held: A legal fiction is created in first explanation to s.3
– That fiction is that the movement of goods, from one State to another
shall terminate, where the good were delivered to a carrier for
transmission, at the time of when delivery is taken from such carrier
– No concept of constructive delivery either express or implied in
the said provision – Movement of the goods, for the purposes of            F
s.3(b) would terminate only when delivery is taken, having regard
to first explanation to that section – It does not qualify the term
‘delivery’ with any timeframe within which such delivery shall have
to take place – Thus, fixing of timeframe impermissible – High Court
rightly held in the judgment assailed in C.A No.2217 of 2011 that          G
there is no place for any intendment in taxing statutes – Judgments
of the High Court in the four appeals, not interfered with – Rajasthan
Sales Tax Act, 1954 – Sale of Goods Act, 1930 – s.51 – Interpretation
of Statutes.

                                                                           H
                                 521
522            SUPREME COURT REPORTS                      [2020] 6 S.C.R.


A           Dismissing the appeals, the Court
            HELD: 1.1 In this set of appeals where the respondent is
      Bombay Machinery Store, transfer of documents of title were
      effected subsequent to the goods reaching the location within
      destination State. But when the goods are delivered to a carrier
B     for transmission, first explanation to Section 3 of the 1956 Act
      specifies that movement of the goods would be deemed to
      commence at the time when goods are delivered to a carrier and
      shall terminate at the time when delivery is taken from such
      carrier. The said provision does not qualify the term ‘delivery’
      with any timeframe within which such delivery shall have to take
C     place. In such circumstances fixing of timeframe by order of the
      Tax Administration of the State would be impermissible. [Para
      12][535 F-G]
             1.2 Sub-clause (1) of the Section 51 of the Sale of Goods
      Act, 1930 specifies when the goods shall be deemed to be in
D     course of transit and sub-clause (3) thereof lays down the
      conditions for termination of transit. That condition is an
      acknowledgment to the buyer or his agent by the carrier that he
      holds the goods on his behalf. There is no material to suggest
      such an acknowledgment was made by the independent
E     transporter in these appeals. In the case of Arjan Dass Gupta
      principle akin to constructive delivery was expounded. However,
      such construction would not be proper to interpret the provisions
      of Section 3 of the 1956 Act. A legal fiction is created in first
      explanation to that Section. That fiction is that the movement of
      goods, from one State to another shall terminate, where the good
F     have been delivered to a carrier for transmission, at the time of
      when delivery is taken from such carrier. There is no concept of
      constructive delivery either express or implied in the said
      provision. On a plain reading of the statute, the movement of the
      goods, for the purposes of clause (b) of Section 3 of the 1956 Act
G     would terminate only when delivery is taken, having regard to
      first explanation to that Section. There is no scope of incorporating
      any further word to qualify the nature and scope of the expression
      “delivery” within the said section. The legislature has eschewed
      from giving the said word an expansive meaning. The High Court
      under the judgment which is assailed in Civil Appeal No.2217 of
H
       COMMERCIAL TAXES OFFICER v. M/S. BOMBAY                                 523
                 MACHINERY STORE

2011 rightly held that there is no place for any intendment in                 A
taxing statutes. The interpretation of the Division Bench of the
Delhi High Court given in the case of Arjan Dass Gupta does not
lay down correct position of law. The Tax Administration
Authorities cannot give their own interpretation to legislative
provisions on the basis of their own perception of trade practise.
                                                                               B
[Paras 14, 15][536-G-H; 537-A-F]
      Arjan Dass Gupta and Brothers v. Commissioner of
      Sales Tax, Delhi Administration (1980) 45 STC 52
      (Delhi) – not approved.
      CTO v. Bhagwandas & Sons (1996 Tax World 107);                           C
      Guljag Industries Limited v. State of Rajasthan &
      Another (2003) 129 STC 3 (Raj.) – referred to.
      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2217
of 2011.
      From the Judgment and Order dated 14.09.2007 of the High Court           D
of Judicature for Rajasthan at Jaipur in S.B. Sales Tax Revision Petition
No. 186 of 2005.
      With
      C.A. No. 2220/2011, 10000/2017 and 10001/2017
                                                                               E
      Milind Kumar, Adv. for the Appellant.
      U.A. Rana, Himanshu Mehta and P.V. Yogeswaran, Advs. for
the Respondent.
      The Judgment of the Court was delivered by
                                                                               F
      ANIRUDDHA BOSE, J.
       1. All these four appeals are being dealt with by this judgment as
they all involve adjudication on a common question of law arising out of
Sections 3 and 6 of the Central Sales Tax Act, 1956 (1956 Act), which
was operational at the material point of time. The question is as to whether   G
as a condition of giving the benefit of Section 6(2) of the said Act, the
tax authorities can impose a limit or timeframe within which delivery of
the respective goods has to be taken from a carrier when the goods are
delivered to a carrier for transmission in course of inter-state sale. For
proper appreciation of the dispute involved in these appeals, the aforesaid
provisions are reproduced below:-                                              H
524      SUPREME COURT REPORTS                           [2020] 6 S.C.R.


A     “3. When is a sale or purchase of goods said to take place
      in the course of inter-State trade or commerce. A sale or
      purchase of goods shall be deemed to take place in the course of
      inter-State trade or commerce if the sale or purchase—
      (a) occasions the movement of goods from one State to another;
B     or
      (b) is effected by a transfer of documents of title to the goods
      during their movement from one State to another.
      Explanation 1 — Where goods are delivered to a carrier or other
      bailee for transmission, the movement of the goods shall, for the
C     purposes of clause (b), be deemed to commence at the time of
      such delivery and terminate at the time when delivery is taken
      from such carrier or bailee.
      Explanation 2 — Where the movement of goods commences and
      terminates in the same State it shall not be deemed to be a
D     movement of goods from one State to another by reason merely
      of the fact that in the course of such movement the goods pass
      through the territory of any other State.
      Explanation 3 – Where the gas sold or purchased and transported
      through a common carrier pipeline or any other common transport
E     or distribution system becomes co-mingled and fungible with other
      gas in the pipeline or system and such gas is introduced into the
      pipeline or system in one State and is taken out from the pipeline
      in another State, such sale or purchase of gas shall be deemed to
      be a movement of goods from one State to another.”
F     6. Liability to tax on inter-State sales.— [(1)] Subject to the
      other provisions contained in this Act, every dealer shall, with
      effect from such date as the Central Government may, by
      notification in the Official Gazette, appoint, not being earlier than
      thirty days from the date of such notification, be liable to pay tax
      under this Act on all sales [of goods other than electrical energy]
G
      effected by him in the course of inter-State trade or commerce
      during any year on and from the date so notified:
      [Provided that a dealer shall not be liable to pay tax under this Act
      on any sale of goods which, in accordance with the provisions of
      sub-section (3) of section 5 is a sale in the course of export of
H     those goods out of the territory of India.]
COMMERCIAL TAXES OFFICER v. M/S. BOMBAY                                  525
 MACHINERY STORE [ANIRUDDHA BOSE, J.]

[(1A) A dealer shall be liable to pay tax under this Act on a sale of    A
any goods effected by him in the course of inter-State trade or
commerce notwithstanding that no tax would have been leviable
(whether on the seller or the purchaser) under the sales tax law
of the appropriate State if that sale had taken place inside that
State.]
                                                                         B
[(2) Notwithstanding anything contained in sub-section (1) or sub-
section (1A), where a sale of any goods in the course of inter-
State trade or commerce has either occasioned the movement of
such goods from one State to another or has been effected by a
transfer of documents of title to such goods during their movement
from one State to another, any subsequent sale during such               C
movement effected by a transfer of documents of title to such
goods, -
(a) to the Government, or
(b) to a registered dealer other than the Government, if the goods       D
are of the description referred to in sub-section (3) of section 8,
shall be exempt from tax under this Act:
Provided that no such subsequent sale shall be exempt from tax
under this sub-section unless the dealer effecting the sale furnishes
to the prescribed authority in the prescribed manner and within          E
the prescribed time or within such further time as that authority
may, for sufficient cause, permit,—
(a) a certificate duly filled and signed by the registered dealer
from whom the goods were purchased containing the prescribed
particulars in a prescribed form obtained from the prescribed            F
authority; and
(b) if the subsequent sale is made –
(i) to a registered dealer, a declaration referred to in clause (a) of
sub-section (4) of section 8, or
(ii) to the Government, not being a registered dealer, a certificate     G
referred to in clause (b) of section (4) of section 8:
Provided further that it shall not be necessary to furnish the
declaration or the certificate referred to in clause (b) of the
preceding proviso in respect of a subsequent sale of goods if,—
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526            SUPREME COURT REPORTS                              [2020] 6 S.C.R.


A           (a) the sale or purchase of such goods is, under the sales tax law
            of the appropriate State exempt from tax generally or is subject to
            tax generally at a rate which is lower than four per cent. (whether
            called a tax or fee or by any other name); and
            (b) the dealer effecting such subsequent sale proves to the
B           satisfaction of the authority referred to in the preceding proviso
            that such sale is of the nature referred to in clause (a) or clause
            (b) of this sub-section.
            [(3) Notwithstanding anything contained in this Act, if –
            (a) any official or personnel of –
C
            (i) any foreign diplomatic mission or consulate in India; or
            (ii) the United Nations or any other similar international body, entitled
            to privileges under any convention to which India is a party or
            under any law for the time being in force; or
D           (b) any consular or diplomatic agent of any mission, the United
            Nations or other body referred to in sub-clause (i) or sub-clause
            (ii) of clause (a), purchases any goods for himself or for the
            purposes of such mission, United Nations or other body, then, the
            Central Government may, by notification in the Official Gazette,
            exempt, subject to such conditions as may be specified in the
E
            notification, the tax payable on the sale of such goods under this
            Act.”
             (4) The provisions of sub-section (3) shall not apply to the sale of
            goods made in the course of inter-State trade or commerce unless
            the dealer selling such goods furnishes to the prescribed authority
F
            a certificate in the prescribed manner on the prescribed form duly
            filled and signed by the official, personnel, consular or diplomatic
            agent, as the case may be.”
             2. We shall narrate the factual context of Civil Appeal No.2217 of
      2011, before we address the legal issue involved in these appeals, treating
G     this to be the lead case. The dispute relating to the other three appeals
      are not identical, but the question of law being the same in all these
      appeals, we shall avoid narrating in detail the sequence of events which
      led to filing of the said appeals, except to the extent such narration is
      necessary for understanding the scope of these appeals. In Civil Appeal
H     No.2217 of 2011, the period of assessment is 1995-96. The respondent-
       COMMERCIAL TAXES OFFICER v. M/S. BOMBAY                               527
        MACHINERY STORE [ANIRUDDHA BOSE, J.]

assessee Bombay Machinery Store had purchased electricity motors             A
and its parts in the said financial year out of the State and sold them to
purchasers within the Kota region of the State of Rajasthan. For such
sales, they obtained the benefit of exemption under Section 6(2) of the
1956 Act. These goods had remained with the transport company upon
arrival in Kota for more than a month. Revenue’s case is that after          B
importing these goods into Rajasthan, sale was effected through bilty
(transport receipt) on obtaining separate orders. Such sale, it is the
revenue’s case, constituted sale within the State and hence taxable @12%
per annum under the Rajasthan Sales Tax Act, 1954. Civil Appeal No.2220
of 2011 relates to the same firm but for the assessment year 1994-95.
Quantum of sales for the year 1994-95 effected through the same process      C
was Rs.3,15,639/- and for 1995-96 it was Rs.2,60,93/-. Claim of benefit
under Section 6(2) of the 1956 Act was rejected and tax along with
interest and penalty was imposed under the State Act by Commercial
Tax Officer, Anti-Evasion Circle-I, Kota after a survey by two orders,
both dated 11th December, 1997. The appeals by Bombay Machinery              D
Stores were allowed by the Deputy Commissioner (Appeals),
Commercial Taxes, Kota following a decision delivered on 8th March,
1996 by the Rajasthan Tax Board in the case of CTO vs. Bhagwandas
& Sons (1996 Tax World 107). The orders of the first appellate authority
were passed on interpretation of the first explanation to Section 3B(1)
of the 1956 Act. Imposition of tax, interest and penalty under the State     E
Act was quashed. In State Tax authority’s appeal before the Tax Board,
reliance was placed on two circulars issued by the Commissioner bearing
S.No.1132A: CCT Circular F.11(3)CST/Tax/CCT/1/61 dated 15th April,
1998, clarified by a further circular dated 19th July, 1999. The Board did
not take into consideration these two circulars. These were not referred
                                                                             F
to in the orders of the Tax Assessment Officer. The Board sustained the
view of the Deputy Commissioner (Appeals) in a composite order. This
order was challenged by the revenue by filing two revision petitions
before the High Court, as two appeals were disposed of by the Board by
its order dated 24.11.2004. The High Court, in the judgment delivered on
14th September, 2007 confirmed the Board’s order and quashed two             G
circulars bearing S.No.115B dated 16th September, 1997 and S.No.1132A
dated 15th April, 1998. These circulars sought to impose a time limit on
retention of goods in the carrier’s godown, beyond which time the revenue
was to treat obtaining of constructive delivery of the goods involved.
That judgment is under appeal before us. Before we deal with this
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528             SUPREME COURT REPORTS                          [2020] 6 S.C.R.


A     judgment, we shall briefly refer to the other appeals which have been
      heard together.
             3. In Civil Appeal No.2220 of 2011, incidences of sale relate to
      different dates between 24th March, 1994 and 30th January, 1995.
             4. Civil Appeal No.10000 of 2017 and Civil Appeal No. 10001 of
B     2017 relate to another assessee, Unicolour Chemicals Company. That
      firm purchased chemical and colour from a Gujarat based company, and
      the goods reached the godown of the carrier transport company on 12th
      May, 2000. They were sold to a firm in Jaipur in two tranches, after 55
      days and 80 days from the date of arrival. The monetary value of these
C     goods was Rs.1,27,592. In Civil Appeal No. 10001 of 2017, revenue’s
      case is that survey of the business place of the same firm revealed that:-
            “the stock of taxable good colour chemical of price Rs.4,72,653/-
            has been found less and on doubt on the nature of sale showing in
            the Section 6(2) of the Central Sales Tax Act and seeing the
D           possibility of tax evasion the record found in the survey of the
            business firm has been seized.”
                                                       (quoted from the order
                                                   annexed to the paper book)
             These goods had reached the godown of the transport company
E          th
      on 25 July, 2001. These were brought against bilty and the documents
      were transferred to the same firm on 4th September, 2001. There was
      thus delay of 41 days. The tax fixation authorities directed application of
      the State Act treating the transactions to be local sales. This order was
      sustained by the Deputy Commissioner (Appeals) and the order of the
F     Tax Board also went against Unicolour. The High Court, following the
      judgment in the case of Bombay Machinery Store (which we are
      treating as the lead case in this judgment), quashed the orders of the
      statutory authorities in both the appeals and also invalidated the two
      circulars.
            5. The two circulars issued by the Commissioner, Commercial
G
      Taxes Department, Rajasthan have been quoted in the impugned
      judgment in the case of Bombay Machinery Store. Henceforth, wherever
      we refer to the expression judgment under appeal, we shall imply that
      judgment only, unless we specifically refer to any of the three other
      decisions under appeal. These circulars read:-
H
COMMERCIAL TAXES OFFICER v. M/S. BOMBAY                                     529
 MACHINERY STORE [ANIRUDDHA BOSE, J.]

“S. No. 1115B : CCT Circular F.11(3)/CST/Tax/CCT/1997/                      A
1563 dated 16.9.1997
As you are aware of the fact that to avoid multiple taxation of
goods sold by transfer of documents of title to the goods in their
single movement from one State-to another, provisions for
exemption of such transaction are embodied in S. 6(2), CST Act,             B
1956. It appears that application of this provision has been made
more or less mechanical by the assessing authorities in as much
as on furnishing form E-I/E-II and C forms without looking into
the material facts regarding single inter-State movement of such
goods, benefits are conferred to such dealers. If the movement of
the goods from one State to another terminates, the subsequent              C
sales will be treated as intra-State sales and benefit of the above
sub-section (2) of Section 6 will not be available in such cases. It
is found that trade is often claiming large exemptions under this
provision, particularly in respect of paper, dyes and chemicals,
etc. It is, therefore, directed that all the assessing authorities should   D
specifically examine the nature of transactions before granting
benefit under the said section.
It may be argued that in view of the Explanation I to Section 3 of
the CST Act, 1956, inter-State movement of goods continues until
the consignee obtains physical delivery of goods from the carrier,          E
after arrival of these goods at the destination. This argument is
based on the incorrect notion that “delivery” in the Explanation
means only “physical delivery”. This argument can be countered
on the basis of the well settled proposition of “constructive
delivery”.
                                                                            F
The material fact to be looked into by the assessing authorities
while granting benefit of Section 6(2) of the CST Act relate to the
termination of the movement of goods in the inter-State
transactions. If after arrival of the goods at the destination, the
consignee asks the transporter expressly or impliedly, to retain
the goods at his godown until further directions, then the carrier          G
ceases to hold the goods as transporter, and in the eyes of law, the
goods are as much in possession of the consignee as if he had
taken them into his own godown. As per the settled legal concept
this sequence of events tantamounts to constructive delivery of
the goods by transporter to the consignee and transit ends. Any             H
530      SUPREME COURT REPORTS                            [2020] 6 S.C.R.


A     sale by the consignee thereafter will be local sale and benefit of
      Section 6(2) will not be available.
      The transporters, whether Railways or Roadways, impose
      condition of delivery of goods transported through them at the
      destination usually within ten days and the consignee is required
B     to check up with such transporting agency as to the arrival of the
      goods. In these circumstances, if the carrier retains the goods for
      an extended period, then there is a clear inference that the
      consignee was aware of the arrival of his goods and the transporter
      is holding the goods on his behalf as a bailee for the consignee.
      These factual matrix leads to the conclusion that there is a local
C     sale and not sale under said Section 6(2). Payment of warehouse
      rent/demurrage charges by the consignee to the transporter is
      conclusive evidence that transporters have assumed the role of
      bailee and transit having ended. It may be observed that bailment
      can be either gratuitous or for remuneration or partially both. In
D     law, there can also be bailment without contract.
      As per legal position, ‘transit’ gets over as soon as a reasonable
      time elapses for the consignee to elect whether he would take the
      goods away or leave them in the transporters premises, because
      at the conclusion of reasonable time there is deemed to be a
E     constructive delivery of goods from the transporters to the
      consignee. If a dealer claims that the had not obtained the delivery
      of goods, the burden of proving that the goods really remained
      with the carrier from the date of their arrival till the date of their
      clearance is on the dealer. If the dealer fails to furnish this proof,
      then the assessing authority would be justified in concluding that
F     the dealer had himself taken physical delivery of the goods from
      the carrier and thereby disallowing his claim of exemption under
      S. 6(2), CST Act.
      The decision of the Delhi High Court in Arjun Dass Gupta and
      Bros. v. Commer of Sales Tax, New Delhi, reported in (1980) 45
G     STC 52, lays down the basic guidelines regarding exemption of
      sales under S. 6(2), CST Act. The Delhi High Court had held that
      Explanation I to S. 3(b) of the CST Act, 1956 did not permit the
      dealer to expand the movement of goods beyond the time of
      physical landing of the goods in the Union Territory of Delhi. As
H     to the knowledge except this there are no other directly relevant
COMMERCIAL TAXES OFFICER v. M/S. BOMBAY                                   531
 MACHINERY STORE [ANIRUDDHA BOSE, J.]

or contra judgment reported from any other High Court. It is              A
understood that Special Leave Petition is pending in the Supreme
Court on the issue but there is no stay. As such Delhi High Court
judgment holds the field.
It is therefore, enjoined upon the assessing authorities that in future
they should not grant the benefit of exemption under S. 6(2), CST         B
Act, simply on furnishing of the Form E-I/E-II and C Form. If on
the contrary it is found that assessee had taken physical delivery
or the goods remained with the transporter beyond a reasonable
time looking to the facts and circumstances of each case, the
doctrine of constructive delivery should be invoked and action be
taken accordingly.                                                        C

S. No. 1132A : CCT Circular F.11(3) CST/Tax/CCT/61 dated
15.04.1998
It may be recalled that vide circular dated 16.9.1997 [S. No.1115B],
instructions were issued clarifying therein the legal position of         D
granting benefits under Section 6(2) of the CST Act, 1956. It has
been clarified that the concept of constructive delivery shall also
be invoked while determining when the transit comes to an end. It
was also clarified that the Railways or Roadways usually impose
conditions of delivery of goods transported by them at the
destination within 10 days and the consignee is required to check         E
up with such transporting agency as to the arrival of the goods. In
view of this, it was desired by the above referred circular that the
AAs should ascertain the fact that whether the goods remained
with the transporter beyond reasonable time. Looking to the facts
and circumstances of each case, the doctrine of constructive              F
delivery should be invoked and action be taken accordingly.
The representatives of various associations of trade and industry
had brought to the notice that in almost all cases the AAs are
invoking the doctrine of constructive delivery in a mechanical
manner immediately after ten days of arrival of the goods at the          G
destination. As per these Associations, this approach has resulted
in hardship to the dealers and avoidable harassment is being caused
to them with adverse effect on the trade. They have requested
for increasing this limit.

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532            SUPREME COURT REPORTS                            [2020] 6 S.C.R.


A           Keeping in view these factual aspects and the discussions at the
            Govt; level, it is reiterated that the reasonability of the time should
            be looked into after analysing the facts and circumstances of each
            case and the usual period of treating constructive delivery which
            may even extend upto thirty days instead of ten days as suggested
            in the above referred circular.
B
            Deputy Commissioner (Admn) should ensure that, while ensuring
            the State revenue, no harassment shall be caused to the dealers
            by enthusiastic assessing authorities while determining the end of
            transit.”
C             6. The High Court has referred to two decisions, one by the
      Rajasthan High Court itself, in the case of Guljag Industries Limited
      vs. State of Rajasthan & Another reported in (2003) 129 STC 3 (Raj.)
      and the other of the Delhi High Court in the case of Arjan Dass Gupta
      and Brothers vs. Commissioner of Sales Tax, Delhi Administration
      (1980) 45 STC 52 (Delhi). In the latter decision, a Bench of the Delhi
D     High Court construed certain provisions of 1956 Act and the Bengal
      Finance (Sales Tax) Act, 1941, (as it was applicable to Delhi at the
      material point of time). On the aspect of what would be implication of
      the expression ‘delivery’ in Section 3(b) of the 1956 Act, it was, inter-
      alia, held:-
E           “10…….Normally, when the goods are carried by a carrier from
            one State to another, the delivery is taken by the importer
            immediately after the goods land in the importing State. Thus,
            normally, the landing of the goods in the importing State and the
            delivery of the goods are almost simultaneous acts, although
F           technically there will be some hiatus between the two. Considering
            these commercial facts, it is difficult to accede to the retailer’s
            contention that the movement of goods continues even if the goods
            have landed in Delhi only because the importer has transferred
            the documents of title to the purchasing retailers and such retailers
            take delivery from the railways at a subsequent time. If taking
G           delivery is the test of termination of movement and not the landing
            of the goods in an importing State, Explanation 1 to Section 3(b)
            of the Central Sales Tax Act would lead to anomalous results. If,
            after the landing of the goods in Delhi, the railway receipts are
            endorsed one after another to ten persons and the delivery is taken
H           by the tenth person, say after three months, the movement of
       COMMERCIAL TAXES OFFICER v. M/S. BOMBAY                                533
        MACHINERY STORE [ANIRUDDHA BOSE, J.]

      goods would on the dealer’s interpretation artificially continue for    A
      three months after the landing of the goods in Delhi.”
       7. In the judgment under appeal, the Rajasthan High Court,
however, disagreed with this view of the Delhi High Court relying on the
case of Guljag Industries Limited (supra), in which three appeals
were dealt with in a common judgment. It was held by the High Court in        B
the judgment under appeal:-
      “12. Therefore, the proposition of law by the learned
      Commissioner in the impugned circulars that “as per legal position,
      ‘transit’ gets over as soon as a reasonable time elapses for the
      consignee to elect whether he would take the goods away or              C
      leave them in the transporters premises, because at the conclusion
      of reasonable time there is deemed to be a constructive delivery
      of goods from the transporter to the consignee”, cannot be said to
      be a correct legal position. The subsequent Circular dated
      15.4.1998 purportedly issued to ameliorate the situation for dealers
      created by previous circular dated 16.9.1997, merely ended up           D
      extending the time limit of 10 days to 30 days without undoing the
      damage done by the previous circular by propounding a particular
      view of constructive delivery. In fact, the very power to issue
      such circulars by the learned Commissioner giving a particular
      interpretation of law purportedly binding on all the assessing          E
      authorities is doubtful. There is no specific provision in the Sales
      Tax Act, either under the RST Act or under the CST Act,
      empowering the Commissioner to issue such circulars, as against
      such powers conferred under Section 119 of the Income Tax Act
      on the Central Board of Direct Taxes. Even Section 119 of the
      Income Tax Act, which empowers the highest administrative body          F
      under the Act, namely CBDT, by way of its proviso restricts and
      provides that no such order, instruction or direction shall be issued
      so as to require any Income Tax authority to make a particular
      assessment or dispose of a particular case in a particular manner
      and such orders or instructions shall also not interfere with the       G
      discretion of the Commissioner (Appeals) in exercise of its
      appellate functions. Therefore, this court cannot countenance the
      issuance of such circulars by the Commissioner of Sales Tax,
      which unduly fetter with the quasi-judicial discretion of the
      assessing authorities, who are expected in law to give their findings
                                                                              H
534             SUPREME COURT REPORTS                             [2020] 6 S.C.R.


A            of fact and interpret the statutory law in their own quasi-judicial
             discretion in accordance with the law as interpreted by the
             Supreme Court or jurisdictional High Court. The circulars issued
             by the Commissioner in the aforesaid manner like done vide
             Circulars dated 16.9.1997 and 15.4.1998 are likely to hamper and
             throttle such quasi-judicial discretion which vests with the assessing
B
             authorities. Therefore, the aforesaid circulars issued by the
             Commissioner aforesaid on 15.4.1998 (S. No. 1132A) and
             16.9.1997 (S. No. 1115B) are in conflict with the Division Bench
             decision of this Court in Guljag Industries Ltd’s case (supra)
             and even otherwise they are found to be without any authority of
C            law. Consequently, both these circulars are found to be ultra vires
             and are hereby quashed.
             13. In view of aforesaid, since there was no basis for the learned
             Commissioner to stipulate the time frame of 10 days or 30 days
             and thereafter, to require the assessing authority to invoke the
D            concept of constructive delivery so as to deny the exemption of
             CST on subsequent sales made by transfer of documents of title
             to the goods made under Section 6(2) of Act, though requisite
             conditions of Section 6(2) of the Act are fulfilled by the dealer
             and such circulars have already been held to be ultra vires and
             have been quashed and in absence of any other material justifying
E            the denial of exemption under Section 6(2) of the Act to the
             assessee, the impugned order of the Tax Board allowing such
             exemption to the assessee is not required to be interfered with in
             the present revision petitions filed by the Revenue.”
             8. We must add here that the decision in the case of Guljag (supra)
F     was subsequently carried up in appeal before this Court. It appears from
      the records of this Court that two of these appeals were disposed of on
      30th September, 2010 as the assessee chose to approach the statutory
      forum whereas another appeal was dismissed having regard to the
      quantum of tax involved in the appeal.
G            9. We, accordingly, shall test the revenue’s case including the
      question of legality of the said two circulars in the context of the provisions
      of Sections 3 and 6 of the 1956 Act. The respondent in this case had
      taken benefit of sub-section (2) on the ground that this was a case
      involving inter-state sale and the sale took place by way of transfer of
H     documents of title of such goods during their movement from one State
       COMMERCIAL TAXES OFFICER v. M/S. BOMBAY                               535
        MACHINERY STORE [ANIRUDDHA BOSE, J.]

to another. It is also the respondents’ case that the requisite forms and    A
certificates were duly furnished pertaining to such sales. On the part of
the State, barring retention of the goods in the transporters’ godown at
the destination point for a long period of time, default on no other count
by the assesses has been asserted.
       10. In the two appeals in which the respondent is Bombay              B
Machinery Stores, sales pertained to financial years before the circulars
came into subsistence. In these instances of sales, the Commercial Tax
officer in the respective orders treated retention of goods beyond 30
days in the transporters’ godown as the cut-off period. After that date,
the assessee was deemed to have had taken constructive delivery of
goods and sale beyond that period within the State of Rajasthan was          C
held to be local sales and subjected to sales tax under the State Law.
Same reasoning was followed in the respective orders of the tax
authorities forming subject-matters of two appeals involving Unicolour
Chemicals Company. The Tax Board, while deciding the issue in favour
of revenue, referred to the aforesaid two circulars in upholding the         D
concept of constructive delivery.
       11. As per the aforesaid circulars, retention of goods by the
transporter beyond the time stipulated therein (being 30 days as per the
later circular) would imply that constructive delivery of the goods has
been made by the transporter to the consignee. In such a situation, the      E
transit status of the goods would stand terminated and the deeming
provision in first explanation to Section 3 of the 1956 Act conceiving the
time-point of delivery as termination of movement shall cease to operate.
       12. In this set of appeals we have already indicated that transfer
of documents of title were effected subsequent to the goods reaching         F
the location within destination State. But when the goods are delivered
to a carrier for transmission, first explanation to Section 3 of the 1956
Act specifies that movement of the goods would be deemed to commence
at the time when goods are delivered to a carrier and shall terminate at
the time when delivery is taken from such carrier. The said provision
does not qualify the term ‘delivery’ with any timeframe within which         G
such delivery shall have to take place. In such circumstances fixing of
timeframe by order of the Tax Administration of the State in our opinion
would be impermissible.
      13. Before the High Court, the revenue authorities has relied on
Section 51 of the Sale of Goods Act, 1930 (hereinafter referred to as the    H
536             SUPREME COURT REPORTS                           [2020] 6 S.C.R.


A     “1930 Act”). But the said provision also does not aid or assist the revenue.
      Section 51 of the 1930 Act reads: -
            “51. Duration of transit.—(1) Goods are deemed to be in course
            of transit from the time when they are delivered to a carrier or
            other bailee for the purpose of transmission to the buyer, until the
B           buyer or his agent in that behalf takes delivery of them from such
            carrier or other bailee.
            (2) If the buyer or his agent in that behalf obtains delivery of the
            goods before their arrival at the appointed destination, the transit
            is at an end.
C           (3) If, after the arrival of the goods at the appointed destination,
            the carrier or other bailee acknowledges to the buyer or his agent
            that he holds the goods on his behalf and continues in possession
            of them as bailee for the buyer or his agent, the transit is at an end
            and it is immaterial that a further destination for the goods may
D           have been indicated by the buyer.
            (4) If the goods are rejected by the buyer and the carrier or other
            bailee continues in possession of them, the transit is not deemed
            to be at an end, even if the seller has refused to receive them
            back.
E           (5) When goods are delivered to a ship chartered by the buyer, it
            is a question depending on the circumstances of the particular
            case, whether they are in the possession of the master as a carrier
            or as agent of the buyer.
            (6) Where the carrier or other bailee wrongfully refuses to deliver
F           the goods to the buyer or his agent in that behalf, the transit is
            deemed to be at an end.
            (7) Where part delivery of the goods has been made to the buyer
            or his agent in that behalf, the remainder of the goods may be
            stopped in transit, unless such part delivery has been given in
G           such circumstances as to show an agreement to give up possession
            of the whole of the goods.
             14. Sub-clause (1) of the said provision specifies when the goods
      shall be deemed to be in course of transit and sub-clause (3) thereof lays
      down the conditions for termination of transit. That condition is an
H     acknowledgment to the buyer or his agent by the carrier that he holds
       COMMERCIAL TAXES OFFICER v. M/S. BOMBAY                                    537
        MACHINERY STORE [ANIRUDDHA BOSE, J.]

the goods on his behalf. There is no material to suggest such an                  A
acknowledgment was made by the independent transporter in these
appeals. In such circumstances we do not think the decision of the High
Court requires any interference.
        15. In the case of Arjan Dass Gupta (supra) principle akin to
constructive delivery was expounded and we have quoted the relevant               B
passage from that decision earlier in this judgment. In our opinion,
however, such construction would not be proper to interpret the provisions
of Section 3 of the 1956 Act. A legal fiction is created in first explanation
to that Section. That fiction is that the movement of goods, from one
State to another shall terminate, where the good have been delivered to
a carrier for transmission, at the time of when delivery is taken from            C
such carrier. There is no concept of constructive delivery either express
or implied in the said provision. On a plain reading of the statute, the
movement of the goods, for the purposes of clause (b) of Section 3 of
the 1956 Act would terminate only when delivery is taken, having regard
to first explanation to that Section. There is no scope of incorporating          D
any further word to qualify the nature and scope of the expression
“delivery” within the said section. The legislature has eschewed from
giving the said word an expansive meaning. The High Court under the
judgment which is assailed in Civil Appeal No.2217 of 2011 rightly held
that there is no place for any intendment in taxing statutes. We are of
the view that the interpretation of the Division Bench of the Delhi High          E
Court given in the case of Arjan Dass Gupta does not lays down correct
position of law. In the event, the authorities felt any assessee or dealer
was taking unintended benefit under the aforesaid provisions of the 1956
Act, then the proper course would be legislative amendment. The Tax
Administration Authorities cannot give their own interpretation to legislative    F
provisions on the basis of their own perception of trade practise. This
administrative exercise, in effect, would result in supplying words to
legislative provisions, as if to cure omissions of the legislature.
      16. For these reasons, we do not want to interfere with the
judgments of the High Court in these four appeals. The appeals are                G
dismissed. Any connected applications shall also stand disposed of.
       There shall be no order as to costs.


Divya Pandey                                                 Appeals dismissed.
                                                                                  H