9911796707
TMI Blog1973 (7) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... late Tribunal accepted the contention of the assessee and held that the disputed turnovers are not taxable. The finding of the Appellate Tribunal is in the following terms: "There is no dispute that the goods were imported and supplied on the strength of the actual user's import licence obtained by the customers. From a specimen contract of supply produced by the appellant's agent, viz., the one in respect of supply of 72 tons of microcele to Messrs. Hindustan Insecticides Limited, Udyogamandal P.O. Kerala State, it is seen that the purchaser places orders with the appellant quoting the import licence number, quantity of goods, rate, etc., as agreed by the previous correspondence with the appellant. The appellant then places orders with the foreign supplier for supply of the goods. In the order the customer who required the goods and also the licence numbers are noted. After the goods are received the appellant draws invoice on the customer. In the instant case, the order was placed on Messrs. JohnsManvilla, New York. From the nature of the transaction, as described above, it is evident that the contract of sale provides for the import of the specified goods from abroad and the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in the decisions of the Supreme Court, namely, Ben Gorm Nilgiri Plantations Co. v. Sales Tax Officer' and Coffee Board v. joint Commercial Tax Officer[1970] 25 S.T.C. 528 (S.C.)., and that the facts of these cases do not justify a conclusion that the sales were in the course of import. In Ben Gorm Nilgiri Plantations Co. v. Sales Tax Officer[1964] 15 S.T.C. 753 (S.C.)., their Lordships of the Supreme Court held that in order that there may be a sale in the course of export, the export must be inextricably linked up with the sale so that the bond cannot be dissociated without a breach of the obligation arising out of a statute, contract or a mutual understanding between the parties in respect of the transaction. No single test can be laid down as decisive for determining that question also. It must be determined on a correct appraisal of all the facts. The relevant passage where this principle is laid down is given at page 759, which reads thus: "A sale in the course of export predicates a connection between the sale and export, the two activities being so integrated that the connection between the two cannot be voluntarily interrupted, without a breach of the contract or the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igatory under an ordinary foreign purchase. If that purchase and import are made only to perform the contract of sale which the purchaser entered into with a consumer in India, the presence of two sales, one by the foreign supplier and another by the importer cannot take the transaction outside the ambit of a sale in the course of import. If both are inextricably linked the requirement of a sale in the course of import is established. In this respect the sale in the course of import is distinguishable from the presence of two sales, one to the intermediary and the other to the foreign importer in the case of an export transaction. So the decision in the Coffee Board's case(1) is distinguishable. This leads to the question as to what amounts to an inextricable bond between the import and the sale to constitute a sale in the course of import. For this purpose the counsel for the assessee relied on the principle laid down in the decision of the Supreme Court in Khosla Co. (P.) Ltd. v. Deputy Commissioner of Commercial Taxes[1966] 17 S.T.C. 473 (S.C.)., which was a case of a sale in the course of an import. The consumer in that case, namely, the Director-General of Supplies and Dispos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at their Lordships said: "The decided cases establish that sales will be considered as sales in the course of export or import or sales in the course of inter-State trade and commerce under the following circumstances: (1) When goods which are in export or import stream are sold; (2) When the contracts of sale or law under which goods are sold require those goods to be exported or imported to a foreign country or from a foreign country as the case may be or are required to be transported to a State other than the State in which the delivery of goods takes place; and (3) Where as a necessary incidence of the contract of sale goods sold are required to be exported or imported or transported out of the State in which the delivery of goods takes place." So if the contract of sale requires the goods to be imported from a foreign country to fulfil the contract or if as a necessary incidence of the contract of sale, goods sold are required to be imported, that sale will be a sale in the course of import. Recently, in an appeal from the decision in Deputy Commissioner of Agricultural Income-tax and Sales Tax v. Kotak & Co.[1973] 32 S.T.C. 6 at p. 7; 1970 K.L.T. 1062., the Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndents were precluded from selling the goods to anybody other than the mills to whom the user's import licence had been granted. From the facts set out above, it is obvious that the respondents could not have sold the goods to anybody other than the licenceholders." Though the principle laid down in Ben Gorm Nilgiri Plantations Co. v. Sales Tax Officer[1964] 15 S.T.C. 753 (S.C.)., that there must be proof of an inextricable link between the sale and the import is still the law for a sale in the course of export or import, the Supreme Court has, in this case, given great weight to the actual user's import licence and its terms to constitute that proof. In this regard, the usefulness of the import licence seems to be different from that of the use of export quota in the case of goods exported. The export quota right by itself was held to be insufficient to constitute that link in Coffee Board's case[1970] 25 S.T.C. 528 (S.C.). and in Ben Gorm's case(1). In the light of these principles, we have to see whether inextricable link between the import and sale has been established. Here there is an import licence in favour of M/s. Hindustan Insecticides Limited, that import licence was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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