IMPORTANT POINT
The expression, sale or purchase occasions such import occurring in sub-section (2) of Section 5 of the Central Sales Tax Act does not require that a completed sale should precede the import of material liable for exemption from sales tax under the Act.

Headnote:(i) Sales Tax-Central Sales Tax Act-Section 5(2) & 2(g)-Expression sale or purchase occasions such import -Meaning-Expression sale occasions import to be given same meaning which the expression occasions the movement of goods has received by Courts-Meaning of sale as defined in the Act-Wide meaning-It includes not only sale of goods but also transfer of goods on hire purchase system-Whether expression requires that a completed sale should precede the import ?-(No).
       Held : It is almost settled by numerous decisions of the Supreme Court that the expression "sale occasions import" is to be interpreted in the same manner in which the expression "occasions the movement of goods" occurring in Section 3(a) of the Act has received interpretation. In other words, the expression "sale occasions import" has to be given the same meaning which the expression "occasions the movement of goods" has received by the Courts. The definition of "sale" in the Act shows that the word "sale" has been given a very wide meaning so as to include not only the sale of goods, but also the transactions, namely, a transfer of goods on hire purchase system. Further, the use of words "sale of goods" in Section 3 of the Act and the words "contract of sale" occurring in Section 4(2) of the Act have been assigned the same meaning which is wider to the meaning of sale in the general law. In such a situation the word "sale" defined in Section 2(g) of the Act and employed in Section 3 and other sections of the Act would embrace not only completed contract, but also the contract of sale or agreement of sale if such contract of sale or agreement of sale provides for movement of goods or movement of goods is incident of the contract of sale. This matter may be examined from another angle. An agreement to transfer goods to the buyer for a price is an important element of sale and the same is also borne out from Section 4 of Sale of Goods Act. If Section 4 of the Sale of Goods Act is read along with Sections 3 and 4 of the Act, it would mean an agreement to sell would also be a sale within the meaning of sale provided such agreement of sale stipulates for transfer or movement of goods or movement of goods is incident of the contract of sale and in that case, such movement of goods would be deemed to be occasioned by the sale. It is immaterial that actual sale does not take place at the time of movement of goods and takes place later on. This interpretation of Section 3(a) of the Act if applied to Sub-section (2) of Section 5 of the Act, would mean that if an agreement for sale stipulates import of goods or import of goods is incident of contract of sale and goods have entered the import stream, such import would fall within the expression "sale occasions import". (Para 7)
       Further held that while interpreting the expression "sale occasions import" occurring in sub-section (2) of Section 5 of the Act, it is not necessary that a completed sale should precede the import. (Para 12)
       (ii) Central Sales Tax Act-Section 5(2)-Assessee carrying on business of buying and selling chemicals submitted a tender for supply of Carbamite-Assessee mentioned name of a West Germany Company as supplier-Director General of Supplies and Disposal (DGS & D) accepted tender of assessee-Import licence issued-After consignment arrived, it was forwarded to consignee-Goods supplied to DGS & D-Assessee claimed exemption from levy of sales tax stating supply under contract was a sale in course of import of goods into India-Whether sale had occasioned import of material liable for exemption from sales tax under the Act ?-(Yes)-It is not necessary that a completed sale should precede the import-Assessee is entitled to exemption from sales tax.(Paras 7 & 12)

JUDGMENT

V.N. Khare, J.-This short question that arises for consideration in this appeal is whether the expression "sale or purchase occasions such import" occurring in sub-section (2) of Section 5 of the Central Sales Tax Act (in short the Act) requires that a completed sale should precede the import.

2. The material facts which have given rise to the aforesaid question are these :

3. In response to the tender invited by the Directorate General of Supplies and Disposal (for short DGS & D ), Government of India, New Delhi, the respondent M/s. Embee Corporation, Bombay (hereinafter referred to as the assessee ) who carries on the business of buying and selling chemicals, had submitted a tender for supply of Carbamite for use in the manufacture of different types of propellant explosives as per specifications. The assessee in its tender mentioned the name of M/s. Chemiches Werk Lowi, West Germany as the supplier and from whom the materials were to be imported for which necessary import recommendation certificate was to be provided by the DGS&D for the value of the material to be imported. The total price quoted in the tender was Rs. 23.50 per kg. F.O.R. Bombay and the full break-up thereof was disclosed therein. The DGS&D accepted the tender of the assessee vide letter dated May 29, 1971 subject, inter alia, to the condition that the contract would be governed by the conditions of the contract as contained in form DGS&D-68 (revised) including clause 24 thereof as amended upto-date. It was also a condition that the contracted material was to be inspected by the Chief Inspector, C.I.M.E., Kirkee, Pune at Bombay Port and the General Manager, Cordite Factory, Aruvankadu was mentioned as the indentor. The assessee thereafter requested the DGS&D to furnish the import recommendation certificate to enable it to import the material as Carbamite was a strategic material which also required an export permit to be granted by the West Germany Government to the assessee s principal. The DGS&D issued the import recommendation certificate in favour of the assessee for procuring the aforesaid material from West Germany and recommended that the import licence might be issued as per particulars. Against the said order of the DGS&D, the Controller (Import Trade Control) issued licence as requested for. One of the conditions of the licence was that the goods imported shall be utilised or disposed of in the manner stipulated in DGS&D letter dated June 17, 1971 and the imported materials shall not be utilised or disposed of in any other manner. The DGS&D had also furnished end-use certificate to the effect that Carbamite be allowed to be imported by the Indian Government as it was intended for consumption in India and not re-exported or re-utilised for any purpose other than consumption by the Government factory. In the Bill of Lading the name of assessee was shown as a party to be notified and the General Manager, Cordite Factory Aruvankadu was described as the consignee of Carbamite. After the consignment arrived, the same was forwarded to the consignee named in the contract, viz., Cordite Factory, Aruvankadu.

4. After the goods were supplied to DGS&D, the assessee claimed exemption before the Sales Tax Officer from levy of sales tax as, according to it, the supply under the contract was a sale in course of import of the goods into India. This plea of the assessee was rejected by the Sales Tax Officer and the same was upheld in appeal. The tribunal also substantially rejected the second appeal of the assessee. At the instance of the assessee, the tribunal referred three questions to the High Court at Bombay for answer. The High Court while answering the questions referred to it held that in the present case there were two sales viz., the sale between the assessee and DGS&D and the foreign supplier and the assessee, but both the sales were integrated or inter-linked so as to from one transaction and, as such, the sale had occasioned the import of ma

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1997 Supreme(SC) 1120

IMPORTANT POINTThe expression, sale or purchase occasions such import occurring in sub-section (2) of Section 5 of the Central Sales Tax Act does not require that a completed sale should precede the import of material liable for exemption from sales tax under the Act.

Cases Referred (1)

IMPORTANT POINT
The expression, sale or purchase occasions such import occurring in sub-section (2) of Section 5 of the Central Sales Tax Act does not require that a completed sale should precede the import of material liable for exemption from sales tax under the Act.