Import-linked sales under CST: absence of privity alone is not decisive; limited interim protection granted subject to security.

Section 5(2) of the Central Sales Tax Act, 1956 was examined in the context of whether the sale or purchase of medical equipment was occasioned in the course of import into India. The text notes that absence of privity between the foreign supplier and the ultimate consumer was not, by itself, conclusive against the claim; the relevant test was whether the movement of goods was integrally connected with the supply contract and inextricably bound up with the local sale. As the assessing authority had made adverse factual findings and affidavit evidence was still required, the court granted only limited interim protection, subject to deposit of a portion of the demand as security.

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Issues: Whether the petitioner had made out a prima facie case for interim protection in a challenge to the disallowance of exemption under Section 5(2) of the Central Sales Tax Act, 1956, and whether conditional restraint against coercive recovery should be granted pending affidavits.

Analysis: The dispute turned on whether the sale or purchase of medical equipment was occasioned in the course of import into India. The absence of privity of contract between the foreign supplier and the ultimate consumer was not, by itself, decisive against the claim under Section 5(2) of the Central Sales Tax Act, 1956. The relevant inquiry was whether the movement of goods was integrally connected with the contract for supply and whether the import was inextricably bound up with the local sale. Since the assessing authority had recorded factual findings against the petitioner and the matter required examination on affidavits, the Court treated the case as one warranting interim protection but not complete relief at this stage. Taking into account the revenue nature of the dispute and the taxed amount, the Court directed security by deposit of a portion of the demand as a condition for continuance of protection.

Conclusion: The petitioner was held entitled to limited interim protection, subject to deposit of Rs.25 lakhs, while the writ petition was kept pending for further hearing.

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