Import sales exemption and excise-duty deduction failed, while welding machinery was held outside the single-point tax entry.

Retrospective deletion of Rule 6(b) of the Tamil Nadu General Sales Tax Rules barred deduction of excise duty from turnover, so the claim for exclusion failed. Sales of imported goods by the assessee to local buyers were treated as separate domestic transactions, not sales in the course of import under section 5(2) of the Central Sales Tax Act, because the import was not occasioned by the later sale and there was no privity between the local buyer and the foreign seller; the exemption claim therefore failed. Item 41 of the First Schedule was confined to machinery properly regarded as electrical goods, so motor generator welding sets, mobile arc welding generators and similar machinery did not qualify for single-point tax and fell under the general multi-point rate.

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Issues: (i) Whether the assessee was entitled to exclude excise duty from turnover; (ii) whether the assessee's sales of imported goods to local buyers were sales in the course of import exempt under section 5(2) of the Central Sales Tax Act; and (iii) whether motor generator welding sets, mobile arc welding generators and similar machinery fell within item 41 of the First Schedule so as to attract single-point tax.

Issue (i): Whether the assessee was entitled to exclude excise duty from turnover.

Analysis: Rule 6(b) of the Tamil Nadu General Sales Tax (Turnover and Assessment) Rules, which earlier permitted deduction of excise duty from turnover, had been deleted with retrospective effect. Once that deduction provision stood deleted, the assessee could not claim exclusion of excise duty from the taxable turnover. The validity of the deletion had already been upheld in writ proceedings.

Conclusion: The claim for exclusion of excise duty was rightly rejected and the assessee failed on this issue.

Issue (ii): Whether the assessee's sales of imported goods to local buyers were sales in the course of import exempt under section 5(2) of the Central Sales Tax Act.

Analysis: The transaction was treated as comprising two separate sales, namely a purchase by the assessee from the foreign seller and a later sale by the assessee to the local buyer. The movement of goods from abroad was occasioned by the first sale and not by the subsequent local sale. The assessee acted as principal, not as agent of either the foreign seller or the local buyer, and there was no privity of contract between the local buyer and the foreign seller. On those facts, the later sale could not be characterised as a sale in the course of import.

Conclusion: The assessee was not entitled to exemption under section 5(2) of the Central Sales Tax Act on the disputed turnover.

Issue (iii): Whether motor generator welding sets, mobile arc welding generators and similar machinery fell within item 41 of the First Schedule so as to attract single-point tax.

Analysis: Item 41, even after amendment, was construed as covering only such machinery as could properly be regarded as electrical goods. The expression 'machinery' took colour from the opening words of the entry and did not extend to all machinery merely because electricity was used in its operation. The machinery sold by the assessee was not intrinsically electrical goods and therefore did not answer the description of item 41. It was liable to be assessed at the general multi-point rate under section 3.

Conclusion: The assessee succeeded on this issue and the machinery could not be taxed under item 41 at single-point rate.

Final Conclusion: The tax cases were allowed only to the limited extent that the disputed machinery was held outside item 41, while the challenges to the import exemption claim and the excise-duty deduction claim failed.

Ratio Decidendi: A subsequent domestic sale of goods imported by the assessee does not become a sale in the course of import merely because the import was arranged to fulfil that sale, and an entry limited to electrical goods cannot be expanded to cover all machinery solely because electricity is used in its working.

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