1997 (8) TMI 443 - SC - VAT and Sales Tax

Whether the expression sale or purchase occasions such import occurring in sub-section (2) of section 5 of the Central Sales Tax Act 1956 requires that a completed sale should precede the import? Held that - Appeal dismissed. 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.

Summary

Issues Involved:
1. Interpretation of the expression "sale or purchase occasions such import" under sub-section (2) of section 5 of the Central Sales Tax Act, 1956.
2. Whether a completed sale should precede the import for the purpose of exemption from Central sales tax.
3. Applicability of previous case law to the present case.

Issue-wise Detailed Analysis:

1. Interpretation of the Expression "Sale or Purchase Occasions Such Import":

The crux of the case revolves around the interpretation of the phrase "sale or purchase occasions such import" as stated in sub-section (2) of section 5 of the Central Sales Tax Act, 1956. The court examined the statutory provisions and relevant case law to determine whether the sale must precede the import to qualify for tax exemption.

2. Whether a Completed Sale Should Precede the Import:

The court referred to various sections of the Central Sales Tax Act, including sections 3, 4, and 5, to understand the legislative intent. It was noted that the term "sale" under section 2(g) of the Act has a broad definition, encompassing not only completed sales but also agreements to sell if they involve the movement of goods. The court emphasized that the movement of goods as an incident of the contract of sale satisfies the requirement of "sale occasions import."

The court cited the Constitution Bench decision in K.G. Khosla and Co. (P.) Ltd. v. Deputy Commissioner of Commercial Taxes [1966] 17 STC 473 (SC), which held that the sale need not precede the import. This ruling was pivotal in establishing that the timing of the sale relative to the import is immaterial as long as the import is a direct result of the contract of sale.

3. Applicability of Previous Case Law:

The court addressed the appellant's argument that the decision in K.G. Khosla's case should not apply due to differences in factual circumstances. However, the court found no significant distinction between the present case and Khosla's case, as both involved the inspection of goods upon arrival in India and the import being a direct result of the contract of sale.

The appellant also cited other cases, such as Binani Bros. (P.) Ltd. v. Union of India [1974] 33 STC 254, Mod. Serajuddin v. State of Orissa [1975] 36 STC 136, and K. Gopinathan Nair v. State of Kerala [1997] 105 STC 580; [1997] 2 Scale 252. The court distinguished these cases based on their specific factual contexts and found them inapplicable to the present case.

Conclusion:

The court concluded that the expression "sale occasions import" does not necessitate that a completed sale precede the import. The sale and import can be part of an integrated transaction where the import is an incident of the contract of sale. Consequently, the assessee's claim for exemption from Central sales tax was upheld, and the appeal was dismissed.

Final Judgment:

The appeal and petition were dismissed, affirming that the expression "sale occasions import" under sub-section (2) of section 5 of the Central Sales Tax Act does not require a completed sale to precede the import. There was no order as to costs.