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Issues: Whether the transfers of timber goods, effected through endorsement of bills of lading and followed by filing of bills of entry and clearance through customs by the appellant, were sales in the course of import exempt under Section 5(2) of the Central Sales Tax Act, 1956, or were inter-State sales taxable under Section 3(a) of that Act.
Analysis: The governing test under Section 5(2) of the Central Sales Tax Act, 1956 is that a sale is in the course of import only if it either occasions the import or is effected by transfer of documents of title before the goods cross the customs frontiers of India. The appellant relied on high seas sale agreements and endorsements of bills of lading, but the official import documents showed the appellant as the importer in the Import General Manifest and in the bills of entry, and customs duty was assessed on the appellant alone. The end-buyers were not shown as importers, the import manifest was not amended, and the appellant itself filed the bills of entry for warehousing and home consumption before raising debit notes on the end-buyers. On these facts, the alleged agency arrangement and second high seas sale were not accepted as establishing that title had passed to the end-buyers before customs clearance. The prior authorities on high seas sales applied where the end-buyer itself, or the real purchaser on high seas, was treated as importer and cleared the goods, which was not the factual position here. The alternative contention that the sale occasioned the import was also rejected, because the facts showed an independent import by the appellant followed by a later sale to buyers outside the State.
Conclusion: The transactions were not sales in the course of import under Section 5(2) of the Central Sales Tax Act, 1956 and were rightly treated as inter-State sales under Section 3(a) of that Act; the claim for exemption failed.
Ratio Decidendi: A transfer of bills of lading on high seas does not secure exemption under Section 5(2) where the importer of record files the bills of entry, is assessed to customs duty, and the official import records do not support transfer of title to the alleged end-buyer before customs clearance.
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