Printing Machine Sale Not Exempt from Sales Tax: Lack of Privity Key

The Sales Tax Tribunal determined that the sale of the printing machine did not qualify as a sale in the course of import, subjecting it to sales tax. The lack of privity between the foreign exporter and the Indian importer during the final sale transaction post-importation led to this conclusion. Two distinct sales were identified: one between the German manufacturer and the dealer, and the other between the dealer and the purchasing party. The Court upheld the inclusion of the amount in the dealer's turnover for sales tax purposes, ruling against the dealer.

---

---

Issues:
1. Whether the sale of the printing machine imported by the dealer from Germany and sold to M/s. Union Printers Co-operative Society Ltd. qualifies as a sale in the course of import under section 5(2) of the Central Sales Tax Act, 1956Rs.
2. Whether the dealer acted as an agent of the purchasing dealer M/s. Union Printers Co-operative Industrial Society Ltd. and made purchases on behalf of the principalRs.
3. Whether the amount of Rs. 2,39,908.85 can be included in the dealer's turnover for the purpose of levying sales tax under the ActRs.

Analysis:

Issue 1:
The Sales Tax Tribunal concluded that the transaction constituted a sale in the course of import, thereby exempting it from tax. The Tribunal considered the realization of sales tax from the purchaser but emphasized that this fact alone does not alter the nature of the transaction. The assessment order revealed that when the Chief Controller of Imports and Exports permitted M/s. Union Printers Co-operative Industrial Society Ltd. to acquire the imported machinery, the dealer invoiced the transaction, charging and collecting a 5% sales tax. The judgment referenced significant Supreme Court cases like K.G. Khosla and Co. (P) Ltd. v. Deputy Commissioner of Commercial Taxes and Binani Bros. (P) Ltd. v. Union of India to analyze the concept of sale in the course of import.

Issue 2:
The Court highlighted the absence of privity of contract between the foreign exporter and the Indian importer in the present case. The original licensee failed to take delivery of the imported goods, leading to subsequent unsuccessful attempts by other parties. Ultimately, M/s. Union Printers Co-operative Industrial Society Ltd. purchased the machinery, establishing a direct contractual relationship solely with the dealer. This lack of privity between the foreign exporter and the Indian importer during the final sale transaction post-importation led to the determination that the second sale to the ultimate purchaser did not qualify as a sale in the course of import.

Issue 3:
The judgment clarified that two distinct sales occurred in the case: one between the German manufacturer and the dealer, and the other between the dealer and M/s. Union Printers Co-operative Industrial Society Ltd. The second sale, which took place after the goods had entered India and been imported, did not meet the criteria for a sale in the course of import. Consequently, the Court upheld the Commissioner of Sales Tax's position and ruled against the dealer, affirming the inclusion of the amount in the dealer's turnover for sales tax purposes. No costs were awarded, and the reference was answered accordingly.

---