Course of import exemption requires a direct, integrated sale causing import; a later local sale is taxable.

A sale is exempt as being in the course of import only where the sale itself is the immediate and direct cause of the import and forms part of a single integrated transaction. A mere intention that goods be imported, or restrictions on their diversion, is insufficient. Applying that test, the foreign contract was entered into by the State Trading Corporation as principal; it opened the letter of credit, bore the contractual risk, and the later sale to Coromandel arose only after title had passed locally. The transaction therefore did not occasion the import and remained taxable under the State sales tax law.

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Issues: Whether the sale by the assessee to Coromandel Fertilisers was a sale in the course of import so as to fall outside the State sales tax law and within the exemption under the Central Sales Tax Act.

Analysis: The controlling test is whether the sale itself occasioned the import or whether the transfer of goods was effected in the course of import as part of a single integrated transaction. A sale is not exempt merely because the goods were intended for import or because the buyer could not divert them for other use. The decisive factors are the existence of a direct contractual nexus between the foreign seller and the claimed importer, the absence of an independent intermediary dealing as principal, and whether the import is the immediate and direct result of the relevant sale. On the facts, the contract with the foreign seller was entered into by the State Trading Corporation as principal, the contract allowed delivery to Coromandel or other parties, the letter of credit was opened by the Corporation, risk passed to it under the contract, and the sale to Coromandel arose only after title had passed to the Corporation after unloading at Visakhapatnam.

Conclusion: The sale to Coromandel did not occasion the import and was not a sale in the course of import. The transactions were taxable under the State Act and the assessee failed on this issue.

Ratio Decidendi: A sale is exempt as being in the course of import only when it is the immediate and direct cause of the import and is integrally linked with that import as part of a single transaction; where an independent principal purchases from the foreign seller and later sells locally, the later sale is not protected by the import exemption.

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