Sale in the course of import applies where licence restrictions and delivery controls make the import and sale inseparable.

Imports made under an actual user's licence and letter of authority were treated as part of a single, pre-existing arrangement where delivery was confined to the licence-holder and diversion of goods was prohibited. On those facts, the movement of goods was held to be integrally connected with the sale transaction, so the import could not be separated from the sale. The transaction therefore fell within the protected category of a sale in the course of import under section 5(2) of the Central Sales Tax Act, 1956, and was not subject to sales tax.

---

---

Issues: Whether the turnover from supply of imported goods was exempt as a sale in the course of import under section 5(2) of the Central Sales Tax Act, 1956, and whether the assessee acted merely as an agent under the actual user's licence and letter of authority.

Analysis: The import was made on the strength of the actual user's licence issued in favour of the college and the letter of authority, which restricted diversion of the goods and required delivery only to the licence-holder. The movement of goods was thus pursuant to a pre-existing arrangement between the licence-holder and the assessee, and the import could not be separated from the sale transaction. The presence of agency-like restrictions and the absence of liberty to deal with the goods independently showed an integral link between the import and the sale, bringing the transaction within the protected category of sales in the course of import.

Conclusion: The transaction was a sale in the course of import and was not exigible to sales tax.

Ratio Decidendi: Where goods are imported under an actual user's licence and a letter of authority that confines delivery to the licence-holder and prohibits diversion, the sale and import are integrally connected so as to attract section 5(2) of the Central Sales Tax Act, 1956.

---