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<h1>Court rules yarn sales not exempt from sales tax; vendors liable for costs.</h1> The Court dismissed the petition, ruling that the petitioners were vendors selling yarn to mills, not acting as agents. The sales were not exempt from ... - Issues Involved:1. Whether the petitioners acted as agents of the mills.2. Whether the sales were effected in the course of import and thus exempt from sales tax under Article 286(1)(b) of the Constitution.Issue-wise Analysis:1. Agency Relationship:The petitioners contended that they were not the importers but acted as agents for the mills, who held the necessary permits under the Import and Export Control Act, 1947. The Commercial Tax Officer and the Sales Tax Appellate Tribunal rejected this claim, stating that the transactions were sales by the petitioners to the mills. The Court observed several factors disproving the agency claim:- The contracts between the petitioners and the mills were framed as sales agreements, specifying a particular price.- The invoices did not disclose the price paid by the petitioners to the foreign suppliers, indicating a vendor-purchaser relationship.- The petitioners placed bulk orders with foreign suppliers before securing orders from the mills, suggesting they were not acting as agents.- The petitioners handled the import process, including opening letters of credit and arranging for the clearance and delivery of goods to the mills, further indicating ownership and not agency.2. Sales in the Course of Import:The petitioners alternatively argued that the sales were in the course of import and thus exempt from sales tax under Article 286(1)(b) of the Constitution. The Court referred to the Supreme Court's decision in Gokal and Co. (Private) Ltd. v. Assistant Collector of Sales Tax, which held that the fact that an import license is non-transferable does not affect the property in the goods passing to the buyer. Similarly, in this case, the fact that the import license was issued in the name of the mills did not prevent the petitioners from owning the goods and selling them to the mills. The letter of authority permitted the petitioners to import the goods, ensuring compliance with the Act and the terms of the license.Conclusion:The Court dismissed the petition, concluding that the petitioners were not acting as agents but as vendors selling the yarn to the mills. The sales were not exempt from sales tax as they were not in the course of import under Article 286(1)(b) of the Constitution. The petitioners were ordered to pay costs of Rs. 100.
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