Course of import exemption depends on the sale itself occasioning import; separate Indian resale remains taxable.

A sale is treated as in the course of import only where the contract itself occasions the import and there is the required privity between the foreign seller and the Indian purchaser. Mere knowledge that goods will be imported, or the use of import licences and recommendation certificates, is insufficient. Where goods are first sold by a foreign exporter to an importer and then resold in India, the import and the inland sale are separate transactions. On these principles, the inland sale was held not exempt under section 5(2) of the Central Sales Tax Act and was taxable.

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Issues: (i) Whether the sale to the Government authorities was a sale in the course of import so as to fall within section 5(2) of the Central Sales Tax Act and be exempt from sales tax; (ii) Whether the import transaction and the onward supply involved one composite sale or two distinct sales.

Issue (i): Whether the sale to the Government authorities was a sale in the course of import so as to fall within section 5(2) of the Central Sales Tax Act and be exempt from sales tax.

Analysis: The determining test was whether the contract of sale itself occasioned the import of goods into India and whether there was the necessary privity between the foreign seller and the Indian purchaser. Mere knowledge that goods would be imported, or the fact that import licences and recommendation certificates were obtained for performance of the contract, was held insufficient. On the facts, the sale by the assessee to the purchasing authorities was concluded after the goods had been imported, and the import was occasioned by the prior foreign sale to the assessee, not by the onward sale within India.

Conclusion: The sale was not in the course of import and was not exempt under section 5(2); the finding was against the assessee.

Issue (ii): Whether the import transaction and the onward supply involved one composite sale or two distinct sales.

Analysis: The Court applied the distinction drawn in the earlier authorities between a case where the importer acts merely as an agent of the foreign seller and a case where the importer first purchases from abroad and then resells in India. The facts showed a sale from the foreign exporter to the assessee and a separate sale from the assessee to the purchasing authorities. The two transactions were legally independent and the inland sale did not itself occasion the import.

Conclusion: There were two distinct and different sales, not one composite sale; the finding was against the assessee.

Final Conclusion: The reference was answered in favour of the revenue, and the assessee's claim to sales tax exemption on the ground of import was rejected.

Ratio Decidendi: A sale is in the course of import only when the contract of sale itself occasions the import and the foreign seller is in privity with the Indian purchaser; where the importer buys from abroad and thereafter resells in India, the transactions are separate and the inland sale is taxable.

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