Sale in the course of import

[PARVEEN ARORA]

Dear Sir

We are importing machines from France.

The machines will be sold to  Bank (customer) at Mumbai.

 Bank (customer)  is saying that they will give us a Purchase Order and the same can be cleared from Customs under SITCOI (Sale in the course of Import) process. Other than PO, they will not provide any other documents for this sale/transaction.

In this regard pl give us the option that the sale will covered in 'Sale in the course of import' (exempted sale)

Thanks & regards

[sanjeev bajaj]

Dear Parveen,

Section 5(2) of CST Act, 1956 with respect to sale occasion such import, is very crucial to handle as thare are lot judgements prescribing various situations favouring or otherwise. I have come across the following ingredients, although not mandatory :

1. There should be Privy of contract between local buyer and foreigh supplier.

2. There must be integral connection or inextricable link between the sale and actual import.

3. Importer should be acting like an agent of the actual user although not an agent.

In my opinion, the above ingredients are minimum to fulfill by whatever the documents you retain. Even Purchase Order may be sufficient if, it indicates the above ingredients.

 

This is my opinion only and I invite others to come with suggestions and arguments so that It can be further evaluated as tax involve is heavy amount and can lead to cost cutting in competition.

AI Summary

Sale in the course of import: ensure privity, integral link, and importer-as-agent to claim exemption. Qualification for sale in the course of import exemption requires demonstration of privity of contract between the local buyer and foreign supplier, an integral connection between the sale and the import, and that the importer functions in practice as an agent of the ultimate user; a purchase order may suffice if it evidences these elements.