Course of import under sales tax fails where importer buys in own name and later sells to local buyers.

The article explains that the insertion of the definition of "customs frontiers of India" in the Central Sales Tax Act was treated as a new legal meaning rather than a mere clarification, so it did not apply retrospectively to earlier transactions. It further notes that a sale is covered by the course of import only where the import is directly occasioned by that very sale; where an importer contracts and imports in its own name and later sells to local buyers, the later sale is outside that protection. It also states that the Corporation was not acting as agent for the allottees and did not prove unconditional appropriation of unascertained goods before shipment.

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Issues: (i) whether the amendment introducing the definition of "customs frontiers of India" in section 2(ab) of the Central Sales Tax Act, 1956 was clarificatory and retrospective so as to govern sales made before its insertion; (ii) whether the sales of imported cashew by the Corporation to the allottees were sales in the course of import under section 5(2) of the Central Sales Tax Act, 1956; and (iii) whether the Corporation acted only as an agent of the allottees or whether there was an unconditional appropriation of unascertained goods before shipment so as to take the transactions outside State sales tax.

Issue (i): whether the amendment introducing the definition of "customs frontiers of India" in section 2(ab) of the Central Sales Tax Act, 1956 was clarificatory and retrospective so as to govern sales made before its insertion.

Analysis: The expression "customs frontiers of India" had already received a definite meaning in earlier law and judicial exposition. The later statutory insertion introduced a new and restricted meaning rather than merely restating an existing ambiguity. A provision that changes the legal content of a taxing expression and affects vested tax liability is prospective unless the legislature clearly makes it retrospective.

Conclusion: The amendment was not retrospective and could not assist the Corporation for transactions prior to its commencement.

Issue (ii): whether the sales of imported cashew by the Corporation to the allottees were sales in the course of import under section 5(2) of the Central Sales Tax Act, 1956.

Analysis: The Corporation contracted with the foreign suppliers in its own name, the import licence stood in its name, the documents were in its name, and it remained owner until clearance through customs. The sale to the allottees was distinct from the purchase from the foreign suppliers. There was no privity of contract between the allottees and the foreign suppliers, and the import was occasioned by the Corporation's contract with the foreign suppliers, not by the Corporation's subsequent sale to the allottees. In law, only the transaction that directly occasions import falls within section 5(2).

Conclusion: The sales to the allottees were not sales in the course of import and were not exempt under section 5(2).

Issue (iii): whether the Corporation acted only as an agent of the allottees or whether there was an unconditional appropriation of unascertained goods before shipment so as to take the transactions outside State sales tax.

Analysis: The materials showed that the Corporation acted on its own account and not as the allottees' agent. The allottees had no direct contractual rights against the foreign suppliers, and the foreign suppliers had no claims against them. On appropriation, the law requires an unconditional and final appropriation of unascertained goods to the contract. The Corporation did not establish such appropriation before shipment; mere separate bills or separate marking of lots did not prove completion of sale outside the State.

Conclusion: The Corporation was not the allottees' agent, and no unconditional appropriation before shipment was proved.

Final Conclusion: The disputed sales were intra-State taxable sales within Karnataka, and the revisional challenge to the tax orders failed.

Ratio Decidendi: For a sale to fall within the course of import under section 5(2) of the Central Sales Tax Act, 1956, the import must be directly occasioned by that very sale; where the importer contracts and imports in its own name and later sells to local buyers, the later sale is not protected as a sale in the course of import.

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