Sale in the course of import: cotton purchased through an authorised channel was not local turnover for sales tax.

Purchase of cotton from an importer was treated as a sale in the course of import because the import licence stood in the assessee's name and the goods were brought in for use in its own mills. The importer acted only as the authorised channel for bringing in the cotton and had no freedom to divert it to another buyer. On that footing, the transaction formed part of the same import chain and satisfied the principle that a sale is in the course of import where the import is for a specific purchaser and the importer has no independent option to sell elsewhere. The sale was therefore not taxable as local turnover under sales tax law.

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Issues: Whether the purchase of cotton by the assessee from the importer was a sale in the course of import and thus not liable to be treated as local turnover for sales tax purposes.

Analysis: The import licence stood in the assessee's name and the goods were imported for its actual use in its own mills. The importer was merely the authorised channel through whom the cotton was brought in, and the importer had no freedom to divert the goods to any other buyer. The transaction was therefore part of the same chain of import and fell within the principle that a sale is in the course of import when the import is for the specific purchaser and the importer has no independent option to sell elsewhere.

Conclusion: The sale was in the course of import and could not be treated as taxable local turnover. The assessee succeeded.

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