COMMERCIAL TAXES OFFICER versus M/S. BOMBAY MACHINERY STORE on 27 April 2020

1. All these four appeals are being dealt with by this judgment asthey all involve adjudication on a common question of law arising out ofSections 3 and 6 of the Central Sales Tax Act, 1956 (1956 Act), whichwas operational at the material point of time. The question is as to whetheras a condition of giving the benefit of Section 6(2) of the said Act, thetax authorities can impose a limit or timeframe within which delivery ofthe respective goods has to be taken from a carrier when the goods aredelivered to a carrier for transmission in course of inter-state sale. Forproper appreciation of the dispute involved in these appeals, the aforesaidprovisions are reproduced below:- A

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“3. When is a sale or purchase of goods said to take placein the course of inter-State trade or commerce. A sale orpurchase of goods shall be deemed to take place in the course ofinter-State trade or commerce if the sale or purchase—

(a) occasions the movement of goods from one State to another;or B

(b) is effected by a transfer of documents of title to the goodsduring their movement from one State to another.

Explanation 1 — Where goods are delivered to a carrier or otherbailee for transmission, the movement of the goods shall, for thepurposes of clause (b), be deemed to commence at the time ofsuch delivery and terminate at the time when delivery is takenfrom such carrier or bailee.

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Explanation 2 — Where the movement of goods commences andterminates in the same State it shall not be deemed to be amovement of goods from one State to another by reason merelyof the fact that in the course of such movement the goods passthrough the territory of any other State.

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Explanation 3 – Where the gas sold or purchased and transportedthrough a common carrier pipeline or any other common transportor distribution system becomes co-mingled and fungible with othergas in the pipeline or system and such gas is introduced into thepipeline or system in one State and is taken out from the pipelinein another State, such sale or purchase of gas shall be deemed tobe a movement of goods from one State to another.”

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F6. Liability to tax on inter-State sales.— [(1)] Subject to theother provisions contained in this Act, every dealer shall, witheffect from such date as the Central Government may, bynotification in the Official Gazette, appoint, not being earlier thanthirty days from the date of such notification, be liable to pay taxunder this Act on all sales [of goods other than electrical energy]Geffected by him in the course of inter-State trade or commerceduring any year on and from the date so notified:

[Provided that a dealer shall not be liable to pay tax under this Acton any sale of goods which, in accordance with the provisions ofsub-section (3) of section 5 is a sale in the course of export ofHthose goods out of the territory of India.]

[(1A) A dealer shall be liable to pay tax under this Act on a sale ofany goods effected by him in the course of inter-State trade orcommerce notwithstanding that no tax would have been leviable(whether on the seller or the purchaser) under the sales tax lawof the appropriate State if that sale had taken place inside thatState.]

[(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 ofsuch goods from one State to another or has been effected by atransfer of documents of title to such goods during their movementfrom one State to another, any subsequent sale during suchmovement effected by a transfer of documents of title to suchgoods, - (a) to the Government, or (b) to a registered dealer other than the Government, if the goodsare 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 taxunder this sub-section unless the dealer effecting the sale furnishesto the prescribed authority in the prescribed manner and withinthe prescribed time or within such further time as that authoritymay, for sufficient cause, permit,—

(a) a certificate duly filled and signed by the registered dealerfrom whom the goods were purchased containing the prescribedparticulars in a prescribed form obtained from the prescribedauthority; and (b) if the subsequent sale is made –

(i) to a registered dealer, a declaration referred to in clause (a) ofsub-section (4) of section 8, or

(ii) to the Government, not being a registered dealer, a certificatereferred to in clause (b) of section (4) of section 8:

Provided further that it shall not be necessary to furnish thedeclaration or the certificate referred to in clause (b) of thepreceding proviso in respect of a subsequent sale of goods if,—

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A(a) the sale or purchase of such goods is, under the sales tax lawof the appropriate State exempt from tax generally or is subject totax generally at a rate which is lower than four per cent. (whethercalled a tax or fee or by any other name); and (b) the dealer effecting such subsequent sale proves to theBsatisfaction of the authority referred to in the preceding provisothat 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 –

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(i) any foreign diplomatic mission or consulate in India; or

(ii) the United Nations or any other similar international body, entitledto privileges under any convention to which India is a party orunder any law for the time being in force; or D(b) any consular or diplomatic agent of any mission, the UnitedNations or other body referred to in sub-clause (i) or sub-clause(ii) of clause (a), purchases any goods for himself or for thepurposes of such mission, United Nations or other body, then, theCentral Government may, by notification in the Official Gazette,exempt, subject to such conditions as may be specified in theEnotification, the tax payable on the sale of such goods under thisAct.”

(4) The provisions of sub-section (3) shall not apply to the sale ofgoods made in the course of inter-State trade or commerce unlessthe dealer selling such goods furnishes to the prescribed authorityFa certificate in the prescribed manner on the prescribed form dulyfilled and signed by the official, personnel, consular or diplomaticagent, as the case may be.”

2. We shall narrate the factual context of Civil Appeal No.2217 of2011, before we address the legal issue involved in these appeals, treatingGthis to be the lead case. The dispute relating to the other three appealsare not identical, but the question of law being the same in all theseappeals, we shall avoid narrating in detail the sequence of events whichled to filing of the said appeals, except to the extent such narration isnecessary for understanding the scope of these appeals. In Civil AppealHNo.2217 of 2011, the period of assessment is 1995-96. The respondent-

assessee Bombay Machinery Store had purchased electricity motorsand its parts in the said financial year out of the State and sold them topurchasers within the Kota region of the State of Rajasthan. For suchsales, they obtained the benefit of exemption under Section 6(2) of the1956 Act. These goods had remained with the transport company uponarrival in Kota for more than a month. Revenue’s case is that afterimporting these goods into Rajasthan, sale was effected through bilty(transport receipt) on obtaining separate orders. Such sale, it is therevenue’s case, constituted sale within the State and hence taxable @12%per annum under the Rajasthan Sales Tax Act, 1954. Civil Appeal No.2220of 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 processwas Rs.3,15,639/- and for 1995-96 it was Rs.2,60,93/-. Claim of benefitunder Section 6(2) of the 1956 Act was rejected and tax along withinterest and penalty was imposed under the State Act by CommercialTax Officer, Anti-Evasion Circle-I, Kota after a survey by two orders,both dated 11[th] December, 1997. The appeals by Bombay MachineryStores were allowed by the Deputy Commissioner (Appeals),Commercial Taxes, Kota following a decision delivered on 8[th] 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 authoritywere passed on interpretation of the first explanation to Section 3B(1)of the 1956 Act. Imposition of tax, interest and penalty under the StateAct was quashed. In State Tax authority’s appeal before the Tax Board,reliance was placed on two circulars issued by the Commissioner bearingS.No.1132A: CCT Circular F.11(3)CST/Tax/CCT/1/61 dated 15[th] April,1998, clarified by a further circular dated 19[th] July, 1999. The Board didnot take into consideration these two circulars. These were not referredto in the orders of the Tax Assessment Officer. The Board sustained theview of the Deputy Commissioner (Appeals) in a composite order. Thisorder was challenged by the revenue by filing two revision petitionsbefore the High Court, as two appeals were disposed of by the Board byits order dated 24.11.2004. The High Court, in the judgment delivered on14[th] September, 2007 confirmed the Board’s order and quashed twocirculars bearing S.No.115B dated 16[th] September, 1997 and S.No.1132Adated 15[th] April, 1998. These circulars sought to impose a time limit onretention of goods in the carrier’s godown, beyond which time the revenuewas to treat obtaining of constructive delivery of the goods involved.That judgment is under appeal before us. Before we deal with this AB

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Ajudgment, we shall briefly refer to the other appeals which have beenheard together.

3. In Civil Appeal No.2220 of 2011, incidences of sale relate todifferent dates between 24[th] March, 1994 and 30[th] January, 1995.

4. Civil Appeal No.10000 of 2017 and Civil Appeal No. 10001 ofB2017 relate to another assessee, Unicolour Chemicals Company. Thatfirm purchased chemical and colour from a Gujarat based company, andthe goods reached the godown of the carrier transport company on 12[th]May, 2000. They were sold to a firm in Jaipur in two tranches, after 55days and 80 days from the date of arrival. The monetary value of theseCgoods was Rs.1,27,592. In Civil Appeal No. 10001 of 2017, revenue’scase 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 inthe Section 6(2) of the Central Sales Tax Act and seeing theDpossibility of tax evasion the record found in the survey of thebusiness firm has been seized.”

(quoted from the orderannexed to the paper book)

These goods had reached the godown of the transport companyEon 25[th] July, 2001. These were brought against bilty and the documentswere transferred to the same firm on 4[th] September, 2001. There wasthus delay of 41 days. The tax fixation authorities directed application ofthe State Act treating the transactions to be local sales. This order wassustained by the Deputy Commissioner (Appeals) and the order of theTax Board also went against Unicolour. The High Court, following theFjudgment in the case of Bombay Machinery Store (which we aretreating as the lead case in this judgment), quashed the orders of thestatutory authorities in both the appeals and also invalidated the twocirculars.

5. The two circulars issued by the Commissioner, CommercialGTaxes Department, Rajasthan have been quoted in the impugnedjudgment in the case of Bombay Machinery Store. Henceforth, whereverwe refer to the expression judgment under appeal, we shall imply thatjudgment only, unless we specifically refer to any of the three otherdecisions under appeal. These circulars read:-H

“S. No. 1115B : CCT Circular F.11(3)/CST/Tax/CCT/1997/1563 dated 16.9.1997

As you are aware of the fact that to avoid multiple taxation ofgoods sold by transfer of documents of title to the goods in theirsingle movement from one State-to another, provisions forexemption of such transaction are embodied in S. 6(2), CST Act,1956. It appears that application of this provision has been mademore or less mechanical by the assessing authorities in as muchas on furnishing form E-I/E-II and C forms without looking intothe material facts regarding single inter-State movement of suchgoods, benefits are conferred to such dealers. If the movement ofthe goods from one State to another terminates, the subsequentsales will be treated as intra-State sales and benefit of the abovesub-section (2) of Section 6 will not be available in such cases. Itis found that trade is often claiming large exemptions under thisprovision, particularly in respect of paper, dyes and chemicals,etc. It is, therefore, directed that all the assessing authorities shouldspecifically examine the nature of transactions before grantingbenefit under the said section.

It may be argued that in view of the Explanation I to Section 3 ofthe CST Act, 1956, inter-State movement of goods continues untilthe consignee obtains physical delivery of goods from the carrier,after arrival of these goods at the destination. This argument isbased on the incorrect notion that “delivery” in the Explanationmeans only “physical delivery”. This argument can be counteredon the basis of the well settled proposition of “constructivedelivery”.

The material fact to be looked into by the assessing authoritieswhile granting benefit of Section 6(2) of the CST Act relate to thetermination of the movement of goods in the inter-Statetransactions. If after arrival of the goods at the destination, theconsignee asks the transporter expressly or impliedly, to retainthe goods at his godown until further directions, then the carrierceases to hold the goods as transporter, and in the eyes of law, thegoods are as much in possession of the consignee as if he hadtaken them into his own godown. As per the settled legal conceptthis sequence of events tantamounts to constructive delivery ofthe goods by transporter to the consignee and transit ends. Any A

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sale by the consignee thereafter will be local sale and benefit ofSection 6(2) will not be available.

The transporters, whether Railways or Roadways, imposecondition of delivery of goods transported through them at thedestination usually within ten days and the consignee is requiredto check up with such transporting agency as to the arrival of thegoods. In these circumstances, if the carrier retains the goods foran extended period, then there is a clear inference that theconsignee was aware of the arrival of his goods and the transporteris holding the goods on his behalf as a bailee for the consignee.These factual matrix leads to the conclusion that there is a localsale and not sale under said Section 6(2). Payment of warehouserent/demurrage charges by the consignee to the transporter isconclusive evidence that transporters have assumed the role ofbailee and transit having ended. It may be observed that bailmentcan be either gratuitous or for remuneration or partially both. Inlaw, there can also be bailment without contract.

As per legal position, ‘transit’ gets over as soon as a reasonabletime elapses for the consignee to elect whether he would take thegoods away or leave them in the transporters premises, becauseat the conclusion of reasonable time there is deemed to be aconstructive delivery of goods from the transporters to theconsignee. If a dealer claims that the had not obtained the deliveryof goods, the burden of proving that the goods really remainedwith the carrier from the date of their arrival till the date of theirclearance is on the dealer. If the dealer fails to furnish this proof,then the assessing authority would be justified in concluding thatthe dealer had himself taken physical delivery of the goods fromthe carrier and thereby disallowing his claim of exemption underS. 6(2), CST Act.

The decision of the Delhi High Court in Arjun Dass Gupta andBros. v. Commer of Sales Tax, New Delhi, reported in (1980) 45STC 52, lays down the basic guidelines regarding exemption ofsales under S. 6(2), CST Act. The Delhi High Court had held thatExplanation I to S. 3(b) of the CST Act, 1956 did not permit thedealer to expand the movement of goods beyond the time ofphysical landing of the goods in the Union Territory of Delhi. Asto the knowledge except this there are no other directly relevant or contra judgment reported from any other High Court. It isunderstood that Special Leave Petition is pending in the SupremeCourt on the issue but there is no stay. As such Delhi High Courtjudgment holds the field.

It is therefore, enjoined upon the assessing authorities that in futurethey should not grant the benefit of exemption under S. 6(2), CSTAct, simply on furnishing of the Form E-I/E-II and C Form. If onthe contrary it is found that assessee had taken physical deliveryor the goods remained with the transporter beyond a reasonabletime looking to the facts and circumstances of each case, thedoctrine of constructive delivery should be invoked and action betaken accordingly.

S. No. 1132A : CCT Circular F.11(3) CST/Tax/CCT/61 dated15.04.1998

It may be recalled that vide circular dated 16.9.1997 [S. No.1115B],instructions were issued clarifying therein the legal position ofgranting benefits under Section 6(2) of the CST Act, 1956. It hasbeen clarified that the concept of constructive delivery shall alsobe invoked while determining when the transit comes to an end. Itwas also clarified that the Railways or Roadways usually imposeconditions of delivery of goods transported by them at thedestination within 10 days and the consignee is required to checkup with such transporting agency as to the arrival of the goods. Inview of this, it was desired by the above referred circular that theAAs should ascertain the fact that whether the goods remainedwith the transporter beyond reasonable time. Looking to the factsand circumstances of each case, the doctrine of constructivedelivery should be invoked and action be taken accordingly.

The representatives of various associations of trade and industryhad brought to the notice that in almost all cases the AAs areinvoking the doctrine of constructive delivery in a mechanicalmanner immediately after ten days of arrival of the goods at thedestination. As per these Associations, this approach has resultedin hardship to the dealers and avoidable harassment is being causedto them with adverse effect on the trade. They have requestedfor increasing this limit.

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Keeping in view these factual aspects and the discussions at theGovt; level, it is reiterated that the reasonability of the time shouldbe looked into after analysing the facts and circumstances of eachcase and the usual period of treating constructive delivery whichmay even extend upto thirty days instead of ten days as suggestedin the above referred circular.

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Deputy Commissioner (Admn) should ensure that, while ensuringthe State revenue, no harassment shall be caused to the dealersby enthusiastic assessing authorities while determining the end oftransit.”

C6. The High Court has referred to two decisions, one by theRajasthan High Court itself, in the case of Guljag Industries Limitedvs. 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 DelhiDHigh Court construed certain provisions of 1956 Act and the BengalFinance (Sales Tax) Act, 1941, (as it was applicable to Delhi at thematerial point of time). On the aspect of what would be implication ofthe expression ‘delivery’ in Section 3(b) of the 1956 Act, it was, inter-alia, held:-E“10

“10…….Normally, when the goods are carried by a carrier fromone State to another, the delivery is taken by the importerimmediately after the goods land in the importing State. Thus,normally, the landing of the goods in the importing State and thedelivery of the goods are almost simultaneous acts, althoughFtechnically there will be some hiatus between the two. Consideringthese commercial facts, it is difficult to accede to the retailer’scontention that the movement of goods continues even if the goodshave landed in Delhi only because the importer has transferredthe documents of title to the purchasing retailers and such retailerstake delivery from the railways at a subsequent time. If takingGdelivery is the test of termination of movement and not the landingof 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 areendorsed one after another to ten persons and the delivery is takenby the tenth person, say after three months, the movement of H

goods would on the dealer’s interpretation artificially continue forthree 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 thecase of Guljag Industries Limited (supra), in which three appealswere dealt with in a common judgment. It was held by the High Court inthe judgment under appeal:-

“12. Therefore, the proposition of law by the learnedCommissioner in the impugned circulars that “as per legal position,‘transit’ gets over as soon as a reasonable time elapses for theconsignee to elect whether he would take the goods away orleave them in the transporters premises, because at the conclusionof reasonable time there is deemed to be a constructive deliveryof goods from the transporter to the consignee”, cannot be said tobe a correct legal position. The subsequent Circular dated15.4.1998 purportedly issued to ameliorate the situation for dealerscreated by previous circular dated 16.9.1997, merely ended upextending the time limit of 10 days to 30 days without undoing thedamage done by the previous circular by propounding a particularview of constructive delivery. In fact, the very power to issuesuch circulars by the learned Commissioner giving a particularinterpretation of law purportedly binding on all the assessingauthorities is doubtful. There is no specific provision in the SalesTax Act, either under the RST Act or under the CST Act,empowering the Commissioner to issue such circulars, as againstsuch powers conferred under Section 119 of the Income Tax Acton the Central Board of Direct Taxes. Even Section 119 of theIncome Tax Act, which empowers the highest administrative bodyunder the Act, namely CBDT, by way of its proviso restricts andprovides that no such order, instruction or direction shall be issuedso as to require any Income Tax authority to make a particularassessment or dispose of a particular case in a particular mannerand such orders or instructions shall also not interfere with thediscretion of the Commissioner (Appeals) in exercise of itsappellate functions. Therefore, this court cannot countenance theissuance of such circulars by the Commissioner of Sales Tax,which unduly fetter with the quasi-judicial discretion of theassessing authorities, who are expected in law to give their findings AB

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Aof fact and interpret the statutory law in their own quasi-judicialdiscretion in accordance with the law as interpreted by theSupreme Court or jurisdictional High Court. The circulars issuedby the Commissioner in the aforesaid manner like done videCirculars dated 16.9.1997 and 15.4.1998 are likely to hamper andthrottle such quasi-judicial discretion which vests with the assessingBauthorities. Therefore, the aforesaid circulars issued by theCommissioner aforesaid on 15.4.1998 (S. No. 1132A) and16.9.1997 (S. No. 1115B) are in conflict with the Division Benchdecision of this Court in Guljag Industries Ltd’s case (supra)and even otherwise they are found to be without any authority ofClaw. Consequently, both these circulars are found to be ultra viresand are hereby quashed.

13. In view of aforesaid, since there was no basis for the learnedCommissioner to stipulate the time frame of 10 days or 30 daysand thereafter, to require the assessing authority to invoke theDconcept of constructive delivery so as to deny the exemption ofCST on subsequent sales made by transfer of documents of titleto the goods made under Section 6(2) of Act, though requisiteconditions of Section 6(2) of the Act are fulfilled by the dealerand such circulars have already been held to be ultra vires andhave been quashed and in absence of any other material justifyingEthe denial of exemption under Section 6(2) of the Act to theassessee, the impugned order of the Tax Board allowing suchexemption to the assessee is not required to be interfered with inthe present revision petitions filed by the Revenue.”

8. We must add here that the decision in the case of Guljag (supra)Fwas subsequently carried up in appeal before this Court. It appears fromthe records of this Court that two of these appeals were disposed of on30[th] September, 2010 as the assessee chose to approach the statutoryforum whereas another appeal was dismissed having regard to thequantum of tax involved in the appeal.

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9. We, accordingly, shall test the revenue’s case including thequestion of legality of the said two circulars in the context of the provisionsof Sections 3 and 6 of the 1956 Act. The respondent in this case hadtaken benefit of sub-section (2) on the ground that this was a caseinvolving inter-state sale and the sale took place by way of transfer ofHdocuments of title of such goods during their movement from one State to another. It is also the respondents’ case that the requisite forms andcertificates were duly furnished pertaining to such sales. On the part ofthe State, barring retention of the goods in the transporters’ godown atthe destination point for a long period of time, default on no other countby the assesses has been asserted.

10. In the two appeals in which the respondent is BombayMachinery Stores, sales pertained to financial years before the circularscame into subsistence. In these instances of sales, the Commercial Taxofficer in the respective orders treated retention of goods beyond 30days in the transporters’ godown as the cut-off period. After that date,the assessee was deemed to have had taken constructive delivery ofgoods and sale beyond that period within the State of Rajasthan washeld to be local sales and subjected to sales tax under the State Law.Same reasoning was followed in the respective orders of the taxauthorities forming subject-matters of two appeals involving UnicolourChemicals Company. The Tax Board, while deciding the issue in favourof revenue, referred to the aforesaid two circulars in upholding theconcept of constructive delivery.

11. As per the aforesaid circulars, retention of goods by thetransporter beyond the time stipulated therein (being 30 days as per thelater circular) would imply that constructive delivery of the goods hasbeen made by the transporter to the consignee. In such a situation, thetransit status of the goods would stand terminated and the deemingprovision in first explanation to Section 3 of the 1956 Act conceiving thetime-point of delivery as termination of movement shall cease to operate.

12. In this set of appeals we have already indicated that transferof documents of title were effected subsequent to the goods reachingthe location within destination State. But when the goods are deliveredto a carrier for transmission, first explanation to Section 3 of the 1956Act specifies that movement of the goods would be deemed to commenceat the time when goods are delivered to a carrier and shall terminate atthe time when delivery is taken from such carrier. The said provisiondoes not qualify the term ‘delivery’ with any timeframe within whichsuch delivery shall have to take place. In such circumstances fixing oftimeframe by order of the Tax Administration of the State in our opinionwould be impermissible.

13. Before the High Court, the revenue authorities has relied onSection 51 of the Sale of Goods Act, 1930 (hereinafter referred to as the A

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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 courseof transit from the time when they are delivered to a carrier orother bailee for the purpose of transmission to the buyer, until theBbuyer or his agent in that behalf takes delivery of them from suchcarrier or other bailee.

(2) If the buyer or his agent in that behalf obtains delivery of thegoods before their arrival at the appointed destination, the transitis at an end.

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(3) If, after the arrival of the goods at the appointed destination,the carrier or other bailee acknowledges to the buyer or his agentthat he holds the goods on his behalf and continues in possessionof them as bailee for the buyer or his agent, the transit is at an endand it is immaterial that a further destination for the goods mayhave been indicated by the buyer.

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(4) If the goods are rejected by the buyer and the carrier or otherbailee continues in possession of them, the transit is not deemedto be at an end, even if the seller has refused to receive themback.

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(5) When goods are delivered to a ship chartered by the buyer, itis a question depending on the circumstances of the particularcase, whether they are in the possession of the master as a carrieror as agent of the buyer.

(6) Where the carrier or other bailee wrongfully refuses to deliverFthe goods to the buyer or his agent in that behalf, the transit isdeemed to be at an end.

(7) Where part delivery of the goods has been made to the buyeror his agent in that behalf, the remainder of the goods may bestopped in transit, unless such part delivery has been given inGsuch circumstances as to show an agreement to give up possessionof the whole of the goods.

14. Sub-clause (1) of the said provision specifies when the goodsshall be deemed to be in course of transit and sub-clause (3) thereof laysdown the conditions for termination of transit. That condition is anHacknowledgment to the buyer or his agent by the carrier that he holds the goods on his behalf. There is no material to suggest such anacknowledgment was made by the independent transporter in theseappeals. In such circumstances we do not think the decision of the HighCourt requires any interference.

15. In the case of Arjan Dass Gupta (supra) principle akin toconstructive delivery was expounded and we have quoted the relevantpassage from that decision earlier in this judgment. In our opinion,however, such construction would not be proper to interpret the provisionsof Section 3 of the 1956 Act. A legal fiction is created in first explanationto that Section. That fiction is that the movement of goods, from oneState to another shall terminate, where the good have been delivered toa carrier for transmission, at the time of when delivery is taken fromsuch carrier. There is no concept of constructive delivery either expressor implied in the said provision. On a plain reading of the statute, themovement of the goods, for the purposes of clause (b) of Section 3 ofthe 1956 Act would terminate only when delivery is taken, having regardto first explanation to that Section. There is no scope of incorporatingany further word to qualify the nature and scope of the expression“delivery” within the said section. The legislature has eschewed fromgiving the said word an expansive meaning. The High Court under thejudgment which is assailed in Civil Appeal No.2217 of 2011 rightly heldthat there is no place for any intendment in taxing statutes. We are ofthe view that the interpretation of the Division Bench of the Delhi HighCourt given in the case of Arjan Dass Gupta does not lays down correctposition of law. In the event, the authorities felt any assessee or dealerwas taking unintended benefit under the aforesaid provisions of the 1956Act, then the proper course would be legislative amendment. The TaxAdministration Authorities cannot give their own interpretation to legislativeprovisions on the basis of their own perception of trade practise. Thisadministrative exercise, in effect, would result in supplying words tolegislative provisions, as if to cure omissions of the legislature.

16. For these reasons, we do not want to interfere with thejudgments of the High Court in these four appeals. The appeals aredismissed. Any connected applications shall also stand disposed of.

There shall be no order as to costs.

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