Import exemption denied where sales tax law treated the goods as tax-free and no tax was chargeable on sale.

Imported goods did not qualify for the exemption under Notification No. 34/98-Cus. because the proviso applied only where the goods were sold from a place where no tax was chargeable on sale or purchase. The Court read sections 3 and 7 of the Delhi Sales Tax Act, 1975 with Entry 67 of the Third Schedule and treated the goods as tax-free goods, meaning no sales tax was in fact chargeable on their sale. A mere exemption from tax was not enough to avoid the notification condition, so the importer could not claim the benefit and the Revenue succeeded.

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Issues: Whether goods covered by a sales tax exemption or tax-free entry can be said to be sold from a place where no tax is chargeable on sale or purchase, so as to attract the condition in Notification No. 34/98-Cus. dated 13.06.1998.

Analysis: The notification granted benefit only where imported goods were sold from a place where no tax was chargeable on sale or purchase. The relevant goods were covered by section 7 and Entry 67 of the Third Schedule to the Delhi Sales Tax Act, 1975. Reading sections 3 and 7 together, the Court held that the goods were treated as tax-free goods and that no sales tax was in fact chargeable on their sale. A mere exemption from tax did not assist the importer, because the proviso to the notification was attracted once the goods were sold from a place where no tax was chargeable.

Conclusion: The benefit of the exemption notification was not available to the importer. The order of the Tribunal was set aside and the Commissioner's order was restored.

Final Conclusion: The appeal succeeded for the Revenue on the construction of the exemption notification and the sales tax law governing tax-free goods.

Ratio Decidendi: Where the governing sales tax law makes the goods tax-free so that no tax is chargeable on their sale, a condition in an import exemption notification referring to sale from a place where no tax is chargeable is satisfied only in the negative, and the importer cannot claim the exemption.

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