Sale in the course of import established where contract, import documents and delivery chain showed a direct link to the foreign purchase.

Goods ordered for a specific local buyer, imported by the seller under contractual obligation and earmarked for delivery to that buyer, were held to have a direct and inextricable link between the sale and the actual import. On those facts, the transaction satisfied the requirements of a sale in the course of import under section 5(2) of the Central Sales Tax Act, 1956 and could not be treated as an independent local sale. The levy of penalty was therefore unsustainable.

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Issues: Whether the transaction was a sale in the course of import so as to attract section 5(2) of the Central Sales Tax Act, 1956.

Analysis: The purchase order, import documents and contractual terms showed that the goods were ordered for a specific local buyer, that the respondent was obliged to import the equipment from the foreign supplier, and that the imported goods were earmarked only for delivery to the purchaser. The documents established a direct and inextricable bond between the contract of sale and the actual import, with each link in the chain connected to the preceding one. On these facts, the transaction satisfied the settled requirements of section 5(2) and could not be treated as an independent local sale.

Conclusion: The transaction was covered by section 5(2) of the Central Sales Tax Act, 1956 and the levy of penalty was unsustainable.

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