Import occasioned by buyer's order qualifies as inter-State sale in course of import despite no direct privity with foreign supplier.

Documentary evidence showed that a buyer's purchase order identified the imported goods, foreign source and technical specifications, and the importer's order to the foreign supplier matched that specification. On that basis, the import was treated as occasioned by the buyer's order and as part of a composite back-to-back arrangement, bringing the transaction within the first limb of section 5(2) of the Central Sales Tax Act, 1956. The absence of direct privity between the buyer and the foreign supplier did not defeat the import character where the evidence established that the import was undertaken solely to execute the buyer's order. The same finding undermined the basis for treating the movement as an intra-State taxable sale and for sustaining penalty for alleged suppression or evasion.

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Issues: Whether the transaction constituted a sale in the course of import under section 5(2) of the Central Sales Tax Act, 1956, and whether the penalty levied under the Kerala General Sales Tax Act, 1963 was sustainable.

Analysis: The purchase order placed by the buyer specified the imported goods, make and model, foreign source, and other technical particulars, and the subsequent order placed by the importer with the foreign supplier matched that specification. The movement of goods from the foreign supplier was therefore traced to the buyer's purchase order, showing an inextricable link and a back-to-back arrangement. The transaction was treated as a composite one in which the import was occasioned by the buyer's order, attracting the first limb of section 5(2) of the Central Sales Tax Act, 1956. The absence of direct privity between the buyer and the foreign supplier was held not to defeat the claim where the documentary evidence established that the import was undertaken only to execute the buyer's order. Since the transaction fell within section 5(2), the premise for treating the movement as an in-State taxable sale and for sustaining penalty on alleged suppression or evasion did not survive.

Conclusion: The transaction was held to be in the course of import and not liable to the impugned tax treatment in the State, and the penalty order could not stand.

Final Conclusion: The revision was allowed and the orders of the authorities below and the Tribunal were set aside, with parties left to bear their own costs.

Ratio Decidendi: Where documentary evidence shows that a foreign import was occasioned by a prior buyer's order specifying the goods and source, the sale is in the course of import under section 5(2) even without direct privity between the ultimate buyer and the foreign seller.

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