Sales not in course of import deemed local sales subject to tax. Court upholds revenue's decision.

The sales for Rs. 1,36,005 and Rs. 1,18,865 were held not to be sales in the course of import under Section 5(2) of the Central Sales Tax Act. They were deemed local sales subject to sales tax. Additionally, the sales were not deemed to have taken place outside the State under Section 4 of the Act. The court upheld the decisions of the Board of Revenue and the Appellate Tribunal, dismissing both tax cases and awarding costs to the revenue.

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Issues Involved:
1. Whether the sales for Rs. 1,36,005 and Rs. 1,18,865 were sales in the course of import under Section 5(2) of the Central Sales Tax Act.
2. Whether the sales should be deemed to have taken place outside the State within the meaning of Section 4 of the Central Sales Tax Act.

Issue-Wise Detailed Analysis:

1. Sales in the Course of Import under Section 5(2) of the Central Sales Tax Act:

The primary issue was whether the sales for Rs. 1,36,005 and Rs. 1,18,865 were sales in the course of import falling within the ambit of Section 5(2) of the Central Sales Tax Act. The relevant facts and legal principles were analyzed as follows:

- Facts Considered by the Board of Revenue:
- The goods were imported from Germany by the assessee and then sold to local buyers.
- There was no stipulation in the contracts with local buyers that the goods should be imported from a foreign country.
- The foreign exporter raised the invoice in the name of the assessee.
- The assessee did not possess an import license; the import license stood in the name of Project Equipment Corporation of India.
- The contract for import was between the assessee and the foreign seller in Germany, leading to two sales based on separate contracts.

- Tribunal's Findings:
- The transactions did not fall within the ambit of Khosla's case.
- The goods were imported not against the actual user's license but based on recommendatory certificates from the Project Equipment Corporation of India.
- There was no privity of contract between the local buyers and the foreign seller.

- Legal Principles:
- The Supreme Court in Coffee Board v. Joint Commercial Tax Officer laid down that a sale in the course of export must cause the export to take place or be the immediate cause of the export.
- The principles laid down in Coffee Board's case apply mutatis mutandis to sales in the course of import.
- In Binani Brothers (P.) Ltd. v. Union of India, it was held that there must be privity of contract between the local buyers and the foreign seller for the sale to be in the course of import.

- Application of Legal Principles:
- The contracts between the assessee and the foreign seller and between the assessee and the actual users were separate, leading to two sales.
- The assessee acted independently and not as an agent of the actual users or the foreign seller.
- The import was necessitated by the contract between the assessee and the foreign seller, not by the sales to the actual users.

Conclusion:
The sales for Rs. 1,36,005 and Rs. 1,18,865 were not sales in the course of import as visualized under Section 5(2) of the Central Sales Tax Act. The disputed sales were local sales exigible to sales tax.

2. Sales Deemed to Have Taken Place Outside the State under Section 4 of the Central Sales Tax Act:

The alternative contention was whether the sales should be deemed to have taken place outside the State within the meaning of Section 4 of the Central Sales Tax Act.

- Facts Considered:
- The goods were appropriated by the foreign seller in Germany pursuant to orders placed by the actual users.
- There was no evidence that the goods supplied by the foreign seller were manufactured according to any specification provided by the actual users.

- Legal Principles:
- In Bengal Corporation Private Limited v. State of Madras, it was held that for a sale to be deemed outside the State, there must be specific ascertained goods appropriated to the contract before shipment.

- Application of Legal Principles:
- There was no evidence of specific ascertained goods being appropriated to the contract before shipment.
- The unilateral discretion vested with PEC to call upon the assessee to deliver the goods to other actual users negated the contention of appropriation.

Conclusion:
The sales were not deemed to have taken place outside the State within the meaning of Section 4 of the Central Sales Tax Act. The alternative ground also failed.

Final Judgment:
The orders of the Board of Revenue and the Appellate Tribunal were upheld, and both tax cases were dismissed. The revenue was awarded costs of Rs. 500.

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