1973 (7) TMI 75

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....rnover of Rs. 1,43,261.19 represented the sale of marine engines. The assessee contended that the sale of marine engines was effected in the course of import and so it is exempt from tax under the General Sales Tax Act. This contention was rejected by the assessing authority and the first appellate authority. But, on second appeal, the Appellate Tribunal by a majority of 2: 1 held that the assessee is entitled to exemption in respect of the marine engines. The finding of the majority is in these terms: "The copies of the agreements have been furnished before us. The agreements are in the form of a letter addressed to M/s. India Sea Foods (Regd.), Cochin-5. It states that, with reference to an earlier conversation in the matter of the tra....

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.... the marine engine direct as he had no import licence. The appellant was, therefore, requested to import the engine on behalf of Mr. Austin and it was in pursuance of this agreement that the goods were moved from their original place to Cochin. K.G. Khosla and Co. (P.) Ltd. v. Deputy Commissioner of Commercial Taxes, Madras[1966] 17 S.T.C. 473 (S.C.)., lays down that before a sale could be said to have occasioned the import it was not necessary that the sale should have preceded the import and that the movement of goods into India was incidental to the contract. If it is proved that there was no possibility of the goods being diverted by the assessee for any other purpose, the sales can be said to take place in the course of import of goods....

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....he purchase of the engine. In pursuance to this contract, the assessee imported the engine and sold it to Mr. Austin. There is an inextricable link between the contract of sale and import. There is the intention to import and an obligation to import. The contract of sale occasioned the movement of the goods from a foreign country, and a diversion of the goods if made on import, will be a breach of the contract of sale entered into by the assessee with Mr. Austin. Therefore, the facts of this case clearly come within the scope of the principle laid down by the Supreme Court in Ben Gorm Nilgiri Plantations Co. v. Sales Tax Officer[1964] 15 S.T.C. 753 (S.C.)., wherein their Lordships stated the principle thus: "A sale in the course of expor....