Import sale exemption and writ maintainability: contract-linked imports were held exempt, and jurisdictional challenge was allowed.

The Calcutta HC held that a writ petition may be entertained despite pending statutory appeals where the challenge is to an assessment alleged to be without jurisdiction, ultra vires, or void ab initio, and where the jurisdictional issue can be decided without frustrating the appeals. It further applied section 5 of the Central Sales Tax Act, 1956 to hold that a sale is in the course of import when the contract of sale directly and inextricably occasions the import movement or is completed by transfer of title before customs clearance. On the facts, the transactions were occasioned by the contracts and were exempt from sales tax, so the assessment orders and consequential demands could not stand.

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Issues: (i) whether the writ petition was maintainable notwithstanding the pendency of statutory appeals; (ii) whether the impugned sales were sales in the course of import and therefore exempt from sales tax.

Issue (i): whether the writ petition was maintainable notwithstanding the pendency of statutory appeals.

Analysis: The existence of an alternative statutory remedy ordinarily weighs against writ intervention, but the bar is not absolute. Where the impugned action is alleged to be wholly without jurisdiction, ultra vires, or otherwise void ab initio, the High Court may interfere under Article 226 of the Constitution of India. The Court also noted that a writ remedy may be moulded if the material facts are already available and the jurisdictional challenge can be severed from other issues pending in appeal, provided such interference does not render the statutory appeals nugatory. On the facts, the jurisdictional challenge was capable of consideration in writ proceedings.

Conclusion: The writ petition was maintainable to the extent it challenged the assessments as being without jurisdiction.

Issue (ii): whether the impugned sales were sales in the course of import and therefore exempt from sales tax.

Analysis: Section 5 of the Central Sales Tax Act, 1956 treats a sale as occurring in the course of import only where the sale occasions the import or is effected by transfer of documents of title before the goods cross the customs frontiers. Applying that test, the Court held that the imports were undertaken pursuant to contracts with the purchasers and that the movement of goods from abroad was inextricably linked with those contracts. The authorities had not properly applied the governing principle governing import sales and had instead treated the transactions as taxable local sales. On the materials before the Court, the sales were occasioned by the contracts and therefore fell within the protective ambit of section 5.

Conclusion: The sales were in the course of import and were exempt from sales tax.

Final Conclusion: The assessment orders and consequential demands could not stand, as the transactions fell within the import-sale exemption and the jurisdictional objection succeeded.

Ratio Decidendi: A sale is in the course of import when the contract of sale is the direct and inextricable cause of the import movement, and a writ court may interfere notwithstanding an alternative remedy where the assessment is alleged to be without jurisdiction.

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