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TMI Blog1973 (4) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Mohammed, Senior Advocate (A.G. Pudissery, Advocate, with him), for the appellant. G.B. Pai, Senior Advocate (P.C. Bhartari, Advocate, and O.C. Mathur and Ravinder Narain, Advocates, of J.B. Dadachanji and Co., with him), for the respondents in C.A. Nos. 1889 to 1891 and 1897 of 1970. -------------------------------------------------- The judgment of the court was delivered by RAGHAVAN, J.-The common assessee in these cases is a firm, and the firm was assessed to sales tax for three different years. The firm is importing foreign cotton and supplying the same to several mills in India; and the assessments were on the sales effected by the firm to the several mills of the foreign cotton imported by it. The firm objected to the assessments contending that the transactions under which the foreign cotton was passed on to the mills were not sales but were only the result of agency agreements, so that those transactions were not assessable to sales tax; and that even if the transactions were sales, article 286(1)(b) of the Constitution read with section 5(2) of the Central Sales Tax Act of 1956 saved such transactions from assessment to tax. Both these contentions were reject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioned the import and could have come within the expression "in the course of the import of the goods". But the Supreme Court reversed the said decision and held that, for a sale to have occasioned the import, it was not necessary that the sale should have preceded the import. The Supreme Court observed that, if the import was the result of a covenant in the contract of sale or an incident of such contract, the import, even if it preceded the sale, was necessitated by the sale or was the result of the sale; in other words, the sale occasioned the import. And such an import came within sub-section (2) of section 5 of the Central Sales Tax Act. In considering this question, the Supreme Court considered two sections, section 5 and section 3, relating to import or export of goods and inter-State trade and commerce respectively. The Supreme Court said that the expression "sale occasioning import" occurred in both the above sections and it should have the same meaning in both the sections; and the Supreme Court further observed that, if as a result of a covenant or as a result of an incident of such contract the import was effected, then the import preceding the actual sale or transfer of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onclusion of the Appellate Tribunal and dismiss these revision cases. However, we do not pass any order regarding costs. Appeals were preferred to the Supreme Court against this decision of the High Court. Dr. V.A. Sayed Mohammed, Senior Advocate (A.G. Pudissery, Advocate, with him), for the appellant. G.B. Pai, Senior Advocate (P.C. Bhartari, Advocate, and O.C. Mathur and Ravinder Narain, Advocates of J.B. Dadachanji and Co., with him), for the respondents in C.A. Nos. 1889 to 1891 and 1897 of 1970. T.A. Ramachandran and K.Jayaram, Advocates, for the respond- ents in C.A. Nos. 1892 to 1896 of 1970. Ram Phal Bansal, S.P. Pande and Ganpat Rai, Advocates, for the respondents in C.A. Nos. 1898 to 1900 of 1970. JUDGMENT The judgment of the court was delivered by HEGDE, J-In these appeals by certificate a common question of law arises for decision and that question is whether the sales effected by the respondent with which we are concerned in these cases occasioned import of Egyptian cotton. The Sales Tax Officer as well as the Appellate Assistant Commissioner, rejecting the contention of the assessee, came to the conclusion that the sales in question were intra-State sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red, the period during which they would be supplied, the price and other particulars and on getting these enquiries the appellant-firm contacts the foreign suppliers in Egypt, Sudan or America for ascertaining whether they could supply the cotton required. If the offers received are found acceptable, the appellant-firm enters into contract with the various mills concerned and immediately thereafter accept the offer made by the foreign suppliers. The supply of such foreign cotton to M/s. Mahalakshmi Textiles Mills Ltd., one of the mills to whom supply was made by the firm is detailed in the said note and it is stated that the supply made to the other mills also are under similar circumstances. According to the appellant, after receiving enquiries from the mills the firm contacts the American suppliers in New York. The foreign suppliers agreed to supply the quantity at the price agreed upon. Thereafter the firm entered into a contract with the mills dated March 20, 1964, that the import licence issued in favour of the mills was made available to the firm for utilisation of the contract, that the letter of authority issued authorising the firm to import cotton was also issued, that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot go into the correctness of those facts. Dr. Sayed Mohammed, the learned counsel for the department, contended that the observation of the High Court that "one of the conditions in the contract is that the goods imported should not, in any circumstance, be diverted from its determined destination, i. e., the mills" is incorrect as there is no such term in the contract entered into between the respondents and the mills. This submission, though in a technical sense may be correct, has really no substance because as could be seen from the letter of authority issued by the Government that one of the conditions of the letter of authority was, to quote the words of that letter, "The person or firm in whose favour it has been issued, will act purely as an agent of the licensee and the goods imported will be the property of the licence-holder both at the time of clearance through the customs and subsequent thereto. The licence-holder will have to ensure that the goods on importation will be delivered to him and shall not be disposed of otherwise. The licensee shall not cause or permit the holder of the letter of authority to dispose of the goods". This clause must be read as a part of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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