High Court Rules on Sales Tax Exemption for Import Transactions

The High Court ruled in favor of the dealer on the issue of transactions based on 'actual user licenses,' finding them exempt from sales tax as sales in the course of import. However, regarding transactions supplying goods to government departments based on import recommendation certificates, the Court ruled against the department, determining that these sales were not in the course of import. The Court answered affirmatively for the dealer on the first issue and negatively for the department on the second issue, with no costs awarded.

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Issues:
1. Whether transactions based on 'actual user licenses' are exempt from sales tax as sales in the course of importRs.
2. Whether transactions involving supply of goods to government departments based on import recommendation certificates are exempt from sales tax as sales in the course of importRs.

Analysis:
The High Court dealt with two references from the Sales Tax Appellate Tribunal concerning the assessment year 1971-72 under the Bengal Finance (Sales Tax) Act, 1941, and the Central Sales Tax Act, 1956. The first issue revolved around imports made by the assessee on 'actual user licenses' obtained by Indian constituents, where the assessee acted as an agent for the license holders. The Tribunal found that these transactions constituted sales in the course of import and were exempt from sales tax. The Court referenced a prior case to support this conclusion, affirming that such sales were indeed in the course of import, thereby ruling in favor of the dealer on this issue.

Regarding the second issue, which involved transactions supplying goods to government departments based on import recommendation certificates, the Court relied on another precedent. It was determined that in such transactions, two sales occurred: one between the foreign seller and the Indian dealer, and the second sale by the dealer to the ultimate consignee. Consequently, these sales were not considered to be in the course of import, leading to a ruling against the department on this matter. The Court answered question No. 1 affirmatively in favor of the dealer and question No. 2 negatively in favor of the department. No costs were awarded in this judgment.

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