TaxTMI 
TaxTMI 
1983 (2) TMI 255
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.... that they are sales in the course of import. The Board of Revenue reached its conclusion on the following facts as culled out from its order: (1) In all the five cases in respect of which exemption is claimed, the goods were imported from Germany by the assessee and then sold to the local buyers, though the goods were imported after orders were obtained by the assessee from local buyers. (2)(a) There is no stipulation in the contracts with the local buyers that the goods should be imported from the foreign country. (2)(b) One of the local buyers in his letter dated 30th July, 1969, requested the assessee to supply them with one Brusting Strength Tester DP. 30 with usual accompaniments and in that letter, there is no stipulation that the supply should be made only from any foreign country. (2)(c) In the letter dated 28th August, 1969, the assessee had written to the manufacturers in Berlin referring to the order placed already indicating at the bottom of the said letter the local buyer, viz., Madras Paper Converters Industry. (3)(a) The foreign exporter has raised the invoice in the name of the assessee. (3)(b) So far as Hydraulics Limited, they had specifically stated....
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....vathi Sri Venkateswara Paper Mills, the documents show that the assesses had sold the machinery from out of the stock held by it after import and as such, it is not a sale in the course of import, but only a sale from out of the stock held by the assessee. It is necessary to state here that this factual basis is disputed by the assessee (see ground No. 10). The common question to be determined is whether in the circumstances of the case, the sales for Rs. 1,36,005 and Rs. 1,18,865 were sales in the course of import falling within the ambit of section 5(2) of the Central Sales Tax Act or not. Section 5(1) and (2) runs thus: "5. (1) A sale or purchase of goods shall be deemed to take place in the course of the export of the goods out of the territory of India only if the sale or purchase either occasions such export or is effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India. (2) A sale or purchase of goods shall be deemed to take place in the course of the import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of documents of title....
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....(2) as well. The above principle was reiterated by the Supreme Court in Binani Brothers (P.) Ltd. v. Union of India [1974] 33 STC 254 (SC) and it is noteworthy to notice the facts in that case, (a) There was no privity of contact between DGS & D and the foreign sellers. (b) The foreign sellers did not enter into any contract by themselves or through the agency of the petitioner to DGS & D. (c) The movement of goods from foreign countries was not occasioned on account of the sales by the petitioner to DGS & D. (d) Though under the contract DGS & D undertook to provide all facilities for the import of the goods for fulfilling the contract including an import recommendation certificate, there was no absolute obligation on DGS & D to procure these facilities. (e) It was the obligation of the petitioner to obtain the import licence. (f) The movement of the goods in the course of import was occasioned by the contracts of sale by the petitioner with DGS & D. A Full Bench of this Court in which the leading judgment was rendered by one of us in Deputy Commissioner of Commercial Taxes v. Vasantha Mills Ltd. [1976] 38 STC 366 (FB) had only followed the ratio of the Supreme Cour....
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....nd, two principles are well settled: (1) Where two sales are involved in the integrated transactions resulting in the import, section 5(2) of the Central Sales Tax Act will never be attracted and (2) Unless the intermediary who actually imports, is held to be the agent of either the actual users or the foreign seller, there can be no privity of contract between the actual users and the foreign seller. In either case, it is not possible to hold that the sale or purchase occasioned the import. Indeed, the learned counsel for the assessee, conscious of the legal position, submitted that in the circumstances of the case, the assessee only acted as agent of the actual users. Here, we add that the learned counsel for the assessee conceded that the assessee is neither an agent of the foreign seller nor that of PEC. In the course of argument, the learned counsel for the assessee filed a typed set containing two agreements. One dated 19th November, 1973, while the other dated 3rd October, 1975. It is relevant to notice that the agreement was placed before the Appellate Tribunal as can be seen from the following reference in paragraph No. 7 of its order: "Hence, it was submitted that the....
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....3, sub-clause (iii), to facilitate sales to actual users, the assessee will put one advertisement every quarter from the date of receipt of import licence of minimum 6 x 2 column inches in at least three leading English and vernacular newspapers at the assessee's cost and the advertisement shall indicate the items which the assessee is importing and the ceiling selling margins allowed to the assessee by PEC on the ex-godown port prices, as also the fact that the goods are available only to actual users. It is also provided in clause 3 that the goods imported under this contract will be sold to the actual users whose requirements have been certified essential by the competent authorities and after obtaining release orders in writing from PEC and also such release orders will be issued by PEC as soon as possible after an application in writing is made. There are also the following covenants: "If the assessee is required by the actual user to install and erect the machine, the assessee will settle the charges directly with the actual user and will indicate these charges in the quotations to him in advance. Similarly, if the actual user requires delivery f.o.r. destination, charges fo....
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....in our view clearly establish that the import is necessitated only because of the contract between the assessee and the foreign seller and has nothing to do with the sales between the assessee and the actual users. To put it differently, the transactions envisage two sales: (i) between the assessee and the foreign seller and (ii) between the assessee and the actual users. Then, there can be no escape in holding that the disputed sales are not sales in the course of import as visualised under section 5(2) of the Central Sales Tax Act. We may add, so far as the appeal is concerned, the facts referred to in paragraph No. 3 themselves will rule out the possibility of the assessee having acted as agent of the actual users. However, the learned counsel for the assessee submitted that in the circumstances of the case, it has to be held that the assessee only acted as agent of the actual users. In our opinion, the circumstances extracted above would not warrant any such conclusion. By way of emphasis, we have to repeat that the circumstances that the actual users did not hold the import licence, that the assessee had to stock machineries in its godown and that the assessee shall have no....