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TMI Blog2002 (7) TMI 760X X X X Extracts X X X X X X X X Extracts X X X X ..... and for the assessment year 1976-77, the assessee had imported the photography goods to the tune of Rs. 5,55,525 on the basis of the actual users licence and sold the same to the actual buyers. The assessee claimed that the sales were "in the course of import into the territory of India" and hence, not liable to be taxed under the Central Sales Tax Act. The assessing officer rejected the claim of the assessee on the ground that there was no privity of contract between the actual buyer and the foreign seller, but there was a privity of contract only between the assessee and the foreign seller and the goods moved out of the foreign country as a result of the purchase effected by the assessee. He therefore held that the assessee was not entitl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and the local buyer and there was only privity of contract between the assessee and the foreign seller. He therefore, held that the assessee had not acted as agent of the local customer and there is no evidence to show that there was a privity of contract between the foreign seller and the local buyer. He thereafter held that it was the assessee who had sold the goods to the actual user licence holders and set aside the order of the Appellate Assistant Commissioner and restored the order of the assessing officer. The assessee, aggrieved by the order of the Joint Commissioner, preferred the appeal under section 37 of the Tamil Nadu General Sales Tax Act, 1959, read with section 9(2) of the C.S.T. Act. 5.. Mr. N. Inbarajan, learned counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale or purchase either occasions such import or is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India." 9.. The Supreme Court in the case of K. Gopinathan Nair v. State of Kerala [1997] 105 STC 580, has held that in order that a sale or purchase of the goods shall be deemed to take place in the course of import, there are three essential conditions which must be fulfilled before the sale can be said to be in the course of import and they are as under: (1) There must be a sale. (2) Goods must actually be imported. (3) Sale must occasion the import. We are of the opinion to hold that in order to qualify for the exemption under section 5(2) of the C.S.T. Act the good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case has not established that there was any term or condition prohibiting the diversion of the goods after the import. In other words, the assessee has not established that there was an integral connection or link between the transaction of the sale and the actual import making sale in the course of import. Mr. N. Inbarajan, learned counsel for the assessee strongly relied on the decision of the Supreme Court in Deputy Commissioner of Agricultural Income-tax and Sales Tax, Central Zone, Ernakulam v. Kotak Co. [1973] 32 STC 6. In the case before the Supreme Court, the assessee had imported cotton on the strength of actual user's import licence issued to the mills and sold the goods to the mills. It was found on the facts of the case that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Deputy Commissioner of Agricultural Income-tax and Sales Tax, Ernakulam v. Indian Explosives Ltd. [1985] 60 STC 310 (SC) and it found that the sales were not in the course of import within the meaning of section 5(2) of the CST Act. The Supreme Court in K. Gopinathan Nair v. State of Kerala [1997] 105 STC 580 laid down the following tests which should be satisfied to claim that the sale or purchase of the goods was in the course of import: "(1) The sale or purchase must actually take place. (2) Such sale or purchase in India must itself occasion such import, and not vice versa, i.e., the import should not occasion such sale. (3) The goods must have entered the import stream when they are subjected to sale or purchase. (4) The import m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not established that there was any contract between the foreign seller and the local buyer. It was found that there was privity of contract between the assessee and the foreign seller. It is only in pursuance of the purchase order made by the assessee the goods actually moved from the foreign country to Chennai. The assessee has not established that he had acted as an agent of the local buyer and he has not established the terms in the contract prohibiting diversion of the goods after import. In the absence of any material to support the case of the assessee that it had acted as an agent of the local buyer and in the absence of any evidence to show that there was an inextricable link between the import of the goods and sale to the local ..... X X X X Extracts X X X X X X X X Extracts X X X X
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