Sale in the course of import requires an immediate, legally inextricable link to import; back-to-back purchase was insufficient.

A sale qualifies as a sale in the course of import under Section 5(2) of the Central Sales Tax Act, 1956 only where the sale occasions the import or is effected by transfer of title before the goods cross the customs frontiers. Applying the test of integral connection or inextricable link, the Delhi HC found that the importer acted on a principal-to-principal basis, imported the goods in its own name, and had no privity of contract between the foreign supplier and the bank. The bank's purchase order did not create agency, and the goods could have been diverted to another buyer. The back-to-back arrangement therefore did not satisfy Section 5(2).

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Issues: Whether the import and subsequent sale of the equipment to the bank was a sale in the course of import within Section 5(2) of the Central Sales Tax Act, 1956.

Analysis: Section 5(2) requires that the sale must occasion the import or be effected by transfer of title before the goods cross the customs frontiers. Applying the settled test of integral connection or inextricable link, the Court held that the appellant imported the goods in its own name, on a principal-to-principal basis, and there was no privity of contract between the foreign supplier and the bank. The bank's purchase order did not make the appellant the bank's agent, and the goods could have been diverted to another buyer without breach of any legal obligation to import for the bank. The back-to-back arrangement therefore did not by itself satisfy the statutory requirement.

Conclusion: The transaction did not qualify as a sale in the course of import under Section 5(2) and the answer to the question of law was against the appellant.

Final Conclusion: The appeal failed on the substantive tax issue and was disposed of without costs.

Ratio Decidendi: To fall within Section 5(2) of the Central Sales Tax Act, 1956, the sale must be the immediate and legally inextricable cause of the import, with a binding nexus that prevents diversion of the goods to any other buyer.

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