Agency in import financing did not create a taxable sale where goods were delivered to the licence-holder and no profit sale occurred.

Imported goods procured under an actual user licence were treated as received by the licence-holder, not sold by the intermediary applicants. The applicants were authorised only to open the letter of credit and remit payment on behalf of the licence-holder, while the goods were used in manufacture, delivered to the manufacturers, and recovered at actual cost without profit. On that commercial reality, the applicants acted as agents rather than buyers or sellers, so no independent taxable sale arose and the transaction did not fall within sales tax as a sale by the applicants to the manufacturers.

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Issues: Whether the supplies of imported goods made by the applicants to the manufacturers under the debit notes constituted a sale liable to tax, and whether such transaction was outside sales tax as a sale in the course of import.

Analysis: The imported wood was procured against an actual user import licence held by the manufacturers, and a letter of authority permitted the applicants only to act on behalf of the licensee for opening the letter of credit and making remittance. The record showed that the goods were imported for the manufacturers' use in manufacture of bobbins, were delivered to them, and the applicants recovered only the actual expenses incurred without any profit element. On the documents and commercial reality, the applicants acted as agents of the licensee and not as buyers or sellers of the goods. The arrangement did not disclose a sale by the applicants to the manufacturers, nor did the transaction support taxation as an independent sale by the applicants.

Conclusion: The reference was answered in favour of the applicants and the purported supplies were held not to be sales by the applicants to the manufacturers.

Ratio Decidendi: Where an importer authorised under an actual user licence acts only as agent to finance and facilitate import on behalf of the licence-holder, and the imported goods are delivered to the licence-holder without any independent commercial sale by the agent, no taxable sale by the agent to the licence-holder arises.

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