Import nexus and deemed sale protection in works contracts require earmarked goods and a direct contractual link to the import.

Section 6D of the Bengal Finance (Sales Tax) Act, 1941 was treated as a valid deeming provision grounded in article 366(29A)(b) and not as overriding constitutional limits; where a deemed sale is otherwise protected under section 27(1)(a), that immunity continues, so the provision itself was not unconstitutional. For a sale to qualify as in the course of import, there must be an integrated nexus between the import and the particular contract sale, with the imported goods earmarked for that transaction and not divertible elsewhere. On the stated facts, the zinc was not shown to be tied to the works contract, so the deemed sale remained taxable under section 6D and did not enjoy section 27(1)(a) protection.

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Issues: (i) Whether section 6D of the Bengal Finance (Sales Tax) Act, 1941 is unconstitutional for allegedly taxing deemed sales beyond the State Legislature's competence and contrary to article 286(1) of the Constitution of India. (ii) Whether the deemed sale of zinc used in the galvanising works contract was a sale in the course of import and therefore protected by section 27(1)(a) of the Bengal Finance (Sales Tax) Act, 1941.

Issue (i): Whether section 6D of the Bengal Finance (Sales Tax) Act, 1941 is unconstitutional for allegedly taxing deemed sales beyond the State Legislature's competence and contrary to article 286(1) of the Constitution of India.

Analysis: Clause (a) of section 6D(1) derives support from article 366(29A)(b) of the Constitution of India and creates deemed sales only for the purpose of taxation under the Act. The provision is not to be read as overriding the constitutional and statutory restrictions on taxation. If a deemed sale falls within the protection of section 27(1)(a), the immunity operates; section 6D itself does not offend article 286(1).

Conclusion: The challenge to section 6D failed, and the provision was held not to be unconstitutional.

Issue (ii): Whether the deemed sale of zinc used in the galvanising works contract was a sale in the course of import and therefore protected by section 27(1)(a) of the Bengal Finance (Sales Tax) Act, 1941.

Analysis: Protection for a sale in the course of import requires an integrated nexus between the import transaction and the sale sought to be protected, with the imported goods being tied to that sale and not freely divertible to other transactions. On the facts, the contract with the customer contained no stipulation that the zinc had to be imported for that contract, there was no privity between the customer and the importer, and the imported zinc could have been used for other jobs. The purchase from the importer and the deemed sale in execution of the works contract were distinct transactions, and the imported zinc was not shown to be attributable to the particular contract in question.

Conclusion: The deemed sale was not in the course of import and was liable to tax under section 6D; the assessee's claim to protection under section 27(1)(a) failed.

Final Conclusion: The application challenging the tax on the deemed sale of zinc was rejected, and the assessment as modified in appeal was sustained.

Ratio Decidendi: A deemed sale in execution of a works contract is protected as a sale in the course of import only when the import and the sale are integrally connected by the contract so that the goods imported are earmarked for that transaction and cannot be diverted to other purposes; absent such nexus and privity, the sale remains taxable.

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