Purchase in the course of import requires a direct causal link to import, not a post-import sale through a canalising agency.

Purchases of imported African raw cashewnuts from the Cashew Corporation of India were held not to be purchases in the course of import. The court reasoned that the Corporation's contract with the foreign sellers was an independent import transaction, while the assessees' later purchase from the canalising agency was a separate post-import sale. Absence of privity with the foreign sellers, payment of customs duty, and delivery through letters of authority did not make the assessees' purchase the immediate and direct cause of import. The goods had crossed customs frontiers before title or delivery rights passed to the assessees, so the purchases were taxable under the Kerala General Sales Tax Act, 1963.

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Issues: Whether the purchases of African raw cashewnuts made by the assessees from the Cashew Corporation of India were purchases in the course of import so as to be immune from tax under the Kerala General Sales Tax Act, 1963.

Analysis: The purchases made by the assessees could not be treated as part of the transaction occasioning import. The contract between the foreign sellers and the Cashew Corporation of India was a direct and independent purchase by the Corporation, and the subsequent sale by the Corporation to the assessees was a separate transaction. There was no privity of contract between the assessees and the foreign sellers, and the mere fact that the goods were canalised through the Corporation, that the assessees paid customs duty, or that delivery was arranged through letters of authority did not convert the later purchase into a purchase in the course of import. The law governing section 5 of the Central Sales Tax Act, 1956 required the purchase that occasions import to be the immediate and direct cause of the import, and not a post-import purchase from the canalising agency. The argument based on section 2(ab) of the Central Sales Tax Act, 1956 also failed because the goods had crossed the customs frontiers before the assessees obtained the transfer of title documents or delivery rights.

Conclusion: The purchases were not in the course of import and were exigible to tax under the Kerala General Sales Tax Act, 1963.

Ratio Decidendi: A purchase from a canalising agency after the goods have been imported is not a purchase in the course of import unless that purchase itself is the immediate and direct cause of the import.

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