1986 (12) TMI 357 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Tenability of the claim of exemption under Section 5(2) of the Central Sales Tax Act for the turnover of "African nuts".
2. Whether the purchases made by the assessee from M/s. Cashew Corporation of India Ltd. are in the course of import.
3. Application of the first limb of Section 5(2) of the Central Sales Tax Act.
4. Application of the second limb of Section 5(2) of the Central Sales Tax Act.

Detailed Analysis:

1. Tenability of the Claim of Exemption Under Section 5(2) of the Central Sales Tax Act for the Turnover of "African Nuts":
The core issue is whether the turnover of "African nuts" purchased by the assessee from M/s. Cashew Corporation of India Ltd. qualifies for exemption under Section 5(2) of the Central Sales Tax Act. The assessing authority, the Deputy Commissioner of Agricultural Income-tax and Sales Tax (Appeals), and the Sales Tax Appellate Tribunal all held that these purchases were local purchases and not in the course of import. The assessee contested these findings in revisions before the High Court.

2. Whether the Purchases Made by the Assessee from M/s. Cashew Corporation of India Ltd. are in the Course of Import:
The primary question is whether the purchases made by the assessee from M/s. Cashew Corporation of India Ltd. are in the course of import, thus qualifying for exemption under Section 5(2) of the Central Sales Tax Act. The High Court noted that the Appellate Tribunal failed to consider the provisions of the Import Control Act and the Import Control Order, 1955, which are critical for understanding the nature of the transaction. The Tribunal also did not properly evaluate the seven sets of documents produced by the assessee, which include import licenses, bills of lading, and letters of authority.

3. Application of the First Limb of Section 5(2) of the Central Sales Tax Act:
The first limb of Section 5(2) states that a sale or purchase is deemed to take place in the course of import if it occasions such import. The High Court emphasized that the Tribunal did not adequately consider whether the import of cashew nuts was occasioned by the contract between the assessee and the Cashew Corporation. The Tribunal's findings that there was no privity of contract between the assessee and the foreign sellers, and that the Cashew Corporation did not act as an agent of the assessee, were deemed insufficient. The High Court highlighted the need to evaluate whether the transactions formed an "integrated transaction" or "integrated contract" in the course of import.

4. Application of the Second Limb of Section 5(2) of the Central Sales Tax Act:
The second limb of Section 5(2) states that a sale or purchase is deemed to take place in the course of import if it is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India. The Tribunal's assessment that there was no primary evidence to prove the high seas sale was found wanting. The High Court noted that the assessee should be given an opportunity to substantiate the contents of the letter from the Cashew Corporation dated 4th November 1970, which purportedly indicated a high seas sale.

Conclusion:
The High Court concluded that the Appellate Tribunal failed to consider the crucial aspects of the case, including the provisions of the Import Control Act and the Import Control Order, and the nature of the transaction between the Cashew Corporation and the assessee. The Tribunal's findings were not in accordance with law, and the matter was remitted back to the Appellate Tribunal for a fresh consideration, taking into account the relevant legal principles and evidence. The tax revision cases were allowed, and the Tribunal was directed to dispose of the appeals expeditiously.