Import-linked sales exemption fails without privity or agency nexus; local resale of imported goods remains taxable under CST.

Sales of photography goods were held not to be sales in the course of import under section 5(2) of the Central Sales Tax Act, 1956, because the import was not occasioned by any sale to local purchasers. The court applied the test of an integral and inextricable link between the foreign purchase and the local sale, requiring privity with the foreign seller or proof that the intermediary acted merely as agent or conduit for the real buyer. On the facts, there was no contract between the foreign seller and the local purchasers, no restriction preventing diversion after import, and no material showing agency. The goods were imported on the assessee's own purchase arrangement and then sold locally, making the sales taxable as inter-State sales.

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Issues: Whether the sales of photography goods imported on the strength of an actual users import licence and thereafter sold to local purchasers were sales in the course of import within the meaning of section 5(2) of the Central Sales Tax Act, 1956.

Analysis: A sale is in the course of import only where the import is occasioned by the sale and there is an integral connection or inextricable link between the two. The tests require that the goods move from the foreign seller to India in pursuance of the contract of sale, or that the intermediary merely acts as an agent or conduit for the real importer-cum-user. On the facts found, no material established any contract between the foreign seller and the local buyer, no term prohibiting diversion after import, and no proof that the assessee acted only as agent for the local purchasers. The goods were imported pursuant to the assessee's own purchase arrangement and were thereafter sold locally.

Conclusion: The sales were not in the course of import and were rightly treated as inter-State sales liable to tax under the Central Sales Tax Act, 1956.

Ratio Decidendi: To claim exemption under section 5(2) of the Central Sales Tax Act, 1956, the assessee must establish a direct and inextricable nexus between the import and the sale, typically through privity with the foreign seller or proof that the intermediary acted merely as an agent of the local buyer.

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