1975 (7) TMI 125 - HC - VAT and Sales Tax

High Court rules no import tax on sale to linked customer under Central Sales Tax Act.

The High Court allowed the tax case, ruling that the sale to the linked customer did not occasion the import of goods into India. The court emphasized the ... SALE IN THE COURSE OR IMPORT — DEALER HAVING IMPORT LICENCE TO IMPORT ZINC — CONTROLLER DIRECTING DEALER TO SELL GOODS TO PARTICULAR CUSTOMER — CUSTOMER PLACING ORDER WITH DEALER AND PAYING ADVANCE — SUBSEQUENT IMPORT AND SALE TO CUSTOMER BY ENDORSING BILLS OF LADING Issues:1. Whether the sale in favor of the linked customer occasioned the import of goods into India.2. Whether the sale in favor of the linked customer can be deemed to have taken place in the course of import under section 5(2) of the Central Sales Tax Act.Analysis:Issue 1: The main issue in this case was whether the sale in favor of the linked customer by the importers occasioned the import of goods into India. The Tribunal held that the sale to the linked customer did not occasion the import as the contract between the importers and the foreign seller was what caused the import. The Supreme Court precedent in Binani Bros. (P.) Ltd. v. Union of India was cited, emphasizing that unless there is a privity of contract between the foreign seller and the local purchaser, the sale cannot be said to have been made in the course of import. It was noted that the linked customer had no direct dealings with the foreign seller, and the importers' contract with the foreign seller was what led to the import of goods. The court concluded that the sale to the linked customer did not occasion the import.Issue 2: The second issue revolved around whether the sale in favor of the linked customer could be deemed to have taken place in the course of import under section 5(2) of the Central Sales Tax Act. The Tribunal did not address this issue due to its ruling on the first point. However, the court remanded the case for further consideration on this aspect. The court highlighted the importance of determining whether the transfer of documents of title occurred before the goods crossed the customs frontier, as this would impact whether the sale could be deemed to be in the course of import. The Tribunal was instructed to reevaluate this question and consider any relevant documents provided by the respondents. Additionally, the Tribunal was directed to examine whether the importers could have transferred the bills of lading to the linked customer before the goods were actually imported, as per certain Control Orders.In conclusion, the High Court allowed the tax case and remanded it for further consideration on the issues related to the sale in favor of the linked customer and its implications under the Central Sales Tax Act. The court emphasized the need to determine the timing of the transfer of documents of title in relation to the customs frontier crossing to ascertain if the sale could be deemed to have occurred in the course of import.