Agency arrangement in import transactions was not a sale, so supply to the licence-holder escaped sales tax.

Goods imported against a licence-holder's actual user import licence under a letter of authority, where the contract and connected documents showed the importer acting only as indenting agent on the licence-holder's account and at its risk, were treated as an agency arrangement. The Court read the documents as a whole, gave weight to the stated ownership and agency terms, and held that billing details, a force majeure clause, and the absence of a charge break-up did not convert the transaction into a sale. The supply to the licence-holder was therefore not liable to sales tax.

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Issues: Whether the transaction by which the respondent imported electrolytic copper ingot bars against the licence-holder's actual user import licence and supplied them to the licence-holder was a sale liable to tax or only an agency transaction not liable to tax.

Analysis: The contract between the respondent and the licence-holder stated that the goods were to be imported against the licence-holder's import licence and under the letter of authority, and expressly described the respondent as acting merely as indenting agent for importing the goods on the licence-holder's account and at its risk. The Court read the contract as a whole and treated these terms as reflecting the dominant intention of the parties. The billing and surrounding documents were consistent with agency and not an independent sale. The letter of authority also required the respondent to act purely as agent and provided that the imported goods would remain the property of the licence-holder, which supported the same conclusion. The Court held that the existence of a force majeure clause and the absence of a detailed break-up of charges did not convert the arrangement into a sale. The import under the letter of authority was given substantial significance where the documents and circumstances left any ambiguity.

Conclusion: The transaction was held to be one of agency and not a sale, and therefore no sales tax was leviable on the supply to the licence-holder.

Final Conclusion: The reference was answered in favour of the assessee, confirming that the supply transaction did not attract liability as a taxable sale.

Ratio Decidendi: Where goods are imported against a licence-holder's actual user licence under a letter of authority that makes the importer act purely as agent and the transaction documents, read as a whole, show the dominant intention of agency, the arrangement is not a sale liable to sales tax.

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