1. These are two references under section 34(1) of the Bombay Sales Tax Act, 1953 (hereinafter referred to as 'the said Act'), made at the instance of the Commissioner of Sales Tax. The same two questions have been referred to us for our determination in these references. These questions are as follows :
'(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the impugned transactions in respect of supply of designs by the respondents to their customers were not sales as defined by section 2(g) of the Central Sales Tax Act, 1956
(2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the impugned sales of blocks by the respondents to the Russian Embassy at New Delhi were exempt from tax under article 286(1)(b) of the Constitution of India ?'
2. As far as question No. (1) is concerned, Mr. Sanghavi, the learned Advocate for the applicant, has stated that he does not wish this question to be answered and, accordingly, we decline to answer the said question.
3. As far as question No. (2) is concerned, the facts necessary for the determination of the same are as follows :
The respondents were registered as a dealer under the said Act as well as the Central Sales Tax Act, 1956. During the assessment period 1st April, 1958, to 31st March, 1959, which is covered by Sales Tax Reference No. 40 of 1976, and the assessment period 1st April, 1959, to 31st December, 1959, which is covered by Sales Tax Reference No. 39 of 1976, the respondents supplied blocks to the Russian Embassy at New Delhi. The Russian Embassy furnished a certificate to the respondents to the effect that the said blocks were purchased for the office use of the embassy. The Sales Tax Officer assessing the respondents taxed these transactions under the Central Sales Tax Act as sales in the course of inter-State trade and commerce. The respondents preferred appeals against this decision of the Sales Tax Officer before the Assistant Commissioner of Sales Tax. These appeals were, however, dismissed. The respondents then preferred revision applications against the decision of the Assistant Commissioner. The Deputy Commissioner of Sales Tax, who disposed of these revision applications, confirmed the findings of the Assistant Commissioner and the Sales Tax Officer in this regard. The respondents then went by way of further revisions before the Sales Tax Tribunal. The Tribunal upheld the contention of the respondents that the aforesaid sales were exempt under article 286(1)(b) of the Constitution of India as being sales in the course of export out of the territory of India. The said question referred to us arises from this decision of the Tribunal.
4. The question which we have to consider in these references is whether the sales in question by the respondents to the Russian Embassy at New Delhi are sales in the course of export and, as such, exempt under article 286(1)(b) of the Constitution of India. Clause (1) of article 286 of the Constitution of India runs as follows :
'(1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place -
(a) outside the State; or
(b) in the course of the import of the goods into, or export of the goods out of, the territory of India.'
5. The contention of the respondents before the Tribunal was that the aforesaid sales were completely exempt from taxation under the sales tax laws, because they were sales in the course of export of the goods out of the territory of India. This contention has found favour with he Tribunal. We are, however, unable to accept the view taken by the Tribunal. It is beyond doubt that New Delhi, where the Russian Embassy is situated, is geographically a part of the territory of India. The only question which arises is whether the premises occupied by the Russian Embassy at New Delhi should be considered in law to be beyond or without the territory of India. We find no provision in any statute in this country law under which the said premises of the Russian Embassy can be regarded as beyond or without the territory of India. We asked Mr. Patil, the learned Advocate for the respondents, to point out whether there is any such provision in any law in this country and Mr. Patil conceded that he was unable to find any such provision and frankly stated that he was unable to support the view of the Tribunal that the premises occupied by the Russian Embassy are beyond or without the territory of India. The Tribunal in its judgment has referred to certain diplomatic privileges and immunities which have been granted to the envoys of foreign countries. The grant of the said privileges or immunities to such envoys are not relevant for determination of the question whether the aforesaid premises should be regarded in law as beyond or without the territory of India. Even if regard were to be had to international conventions, our attention has been drawn to only one of such conventions, and that is Vienna Convention on Diplomatic Relations, which has been signed by this country. This Convention came into force on 24th April, 1964. The opening part of article 34 of the said Vienna Convention provides that a diplomatic agent shall be exempt from all dues and taxes, personal or real, national, regional or municipal. Clauses (a) to (f) of this article contain exceptions to the said exemption. Clause (a) refers to indirect taxes of a kind which are normally incorporated in the price of goods or services and such taxes are thus taken out of the aforesaid exemption. Hence, it is clear that, even according to this Convention, the sales by the respondents to the Russian Embassy at New Delhi would not be entitled to any exemption from the levy of sales tax. It must be remembered in this regard that tax is sought to be levied not on the Russian Embassy but on the respondents who are certainly Indian citizens.
6. Mr. Patil sought to rely on a notification dated 7th April, 1964, issued by the Government of Maharashtra in exercise of the powers conferred by sub-section (5) of section 8 of the Central Sales Tax Act, 1956, providing, in brief, that no tax under the Central Sales Tax Act is liable to be levied in respect of the goods sold to any Diplomatic Officer stationed at New Delhi by any dealer having his place of business in the State of Maharashtra in respect of the sale by him from such place of business of such goods in the course of inter-State trade or commerce if the requisite certificate from the Diplomatic Officer is produced. In our view, this notification is of no relevance at all in the case before us, because it is of a much later date, viz., 7th April, 1964, whereas the transactions with which we are concerned have taken place between 1st April, 1958, and 31st December, 1959. We may point out here that as far as the Tribunal is concerned, it has referred to this notification but has incorrectly set out the contents thereof. The Tribunal has observed that the said notification can be considered as by way of clarification, which in fact would mean that the notification merely set out what the law actually was even apart from the notification. This view appears to us erroneous. The notification has been issued under sub-section (5) of section 8 of the Central Sales Tax Act. A plain reading of sub-section (5) of section 8 of that Act, as it then stood, makes it clear that but for the exemptions granted the transactions in question would be subject to the levy of tax under the Central Sales Tax Act. Moreover, as we have already pointed out, there is nothing to show that the transactions of sale such as those in question before us would be exempt from the levy of sales tax either under the statute law or by reason of any international convention. The notification, cannot, therefore, be regarded as clarificatory.
7. In the result, we answer question No. (2) in the negative. As both these references have been argued together, we direct the respondents to pay to the applicant the costs of these references fixed at Rs. 300 in the aggregate.
8. Reference answered accordingly.