TMI Blog1997 (8) TMI 443X X X X Extracts X X X X X X X X Extracts X X X X ..... his appeal is whether the expression "sale or purchase occasions such import" occurring in sub-section (2) of section 5 of the Central Sales Tax Act, 1956 (in short "the Act") requires that a completed sale should precede the import. 2.. The material facts which have given rise to the aforesaid question are these: In response to the tender invited by the Directorate General of Supplies and Disposals (for short "DGS D"), Government of India, New Delhi, the respondent-M/s. Embee Corporation, Bombay (hereinafter referred to as "the assessee") who carries on the business of buying and selling chemicals, had submitted a tender for supply of carbamite for use in the manufacture of different types of propellant explosives as per specifications. The assessee in its tender mentioned the name of M/s. Chemisches Werk Lowi, West Germany, as the supplier and from whom the materials were to be imported for which necessary import recommendation certificate was to be provided by the DGS D for the value of the material to be imported. The total price quoted in the tender was Rs. 23.50 per kg. f.o.r. Bombay and the full break-up thereof was disclosed therein. The DGS D accepted the tende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court at Bombay for answer. The High Court while answering the questions referred to it held that in the present case there were two sales, viz., the sale between the assessee and DGS D and the foreign supplier and the assessee, but both the sales were integrated or inter-linked so as to form one transaction and, as such, the sale had occasioned the import of material liable for exemption from sales tax under the Act. 4.. In this appeal learned counsel appearing for the appellant referred to sections 4, 5 and 18 to 24 of the Sale of Goods Act, 1930, and argued that the expression "sale occasions such import" occurring in sub-section (2) of section 5 of the Act means a completed sale and it should precede the import, and in the present case since there was no sale in terms of the Sale of Goods Act, the sale has not occasioned the import and as such the respondent-assessee is not entitled to any exemption from Central sales tax. 5.. Article 286 of the Constitution forbids a State from imposing or authorising the imposition of a tax on the sale or purchase of goods when such sale or purchase takes place (a) outside the State or (b) in the course of the import of goods into or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, the question that arises for consideration herein is, what meaning should be given to the expression "sale occasions import". It is almost settled by numerous decisions of the Supreme Court that the expression "sale occasions import" is to be interpreted in the same manner in which the expression "occasions the movement of goods" occurring in section 3(a) of the Act has received interpretation. In other words, the expression "sale occasions import" has to be given the same meaning which the expression "occasions the movement of goods" has received by the courts. In the light of aforesaid settled legal position emerging from the Constitution Bench decisions, we will now examine the meaning of "sale" as defined in the Act. Section 2(g) of the Act defines "sale" thus: " 'sale' with its grammatical variations and cognate expressions, means any transfer of property in goods by one person to another for cash or for deferred payment or for any other valuable consideration, and includes a transfer of goods on the hire purchase or other system of payment by instalments, but does not include a mortgage or hypothecation of or a charge or pledge on goods;" 7.. The above definition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te into Mysore within the meaning of the definition? In Tata Iron and Steel Co. Ltd. v. S.R. Sarkar [1960] 11 STC 655, it was held that a sale occasions the movement of goods from one State to another within section 3(a) of the Central Sales Tax Act, when the movement 'is the result of a covenant or incident of the contract of sale'. That the cement concerned in the disputed sales was actually moved from another State into Mysore is not denied. The respondents only contend that the movement was not the result of a covenant in or an incident of the contract of sale. This Court then, on the facts of the case, found that the movement of cement from another State into Mysore was the result of a covenant in the contract of sale or incident of such contract. This Court did not go into the question as to whether the property had passed before the movement of the goods or not, and this was because according to the decision in Tata Iron and Steel Co. v. S.R. Sarkar [1960] 11 STC 655 (SC), it did not matter whether the property passed in one State or the other. Tata Iron and Steel Co. case [1960] 11 STC 655 (SC), was again followed by this Court in Singareni Collieries Co. Ltd. v. Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Khosla's case [1966] 17 STC 473 (SC) has held the field nearly more than three decades and its correctness has not been doubted so far. We, therefore, reject the prayer of learned counsel for the appellant. 10.. Learned counsel then urged that this case is covered by decisions of this Court in the cases of 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 decision of this Court in the case of Binani Bros. [1974] 33 STC 254, is distinguishable as in that case no obligation was imposed on the appellant to supply the imported goods to DGS D after they had been imported and the same could be directed to other channels. Similarly, the decision of this Court in the case of Mod. Serajuddin [1975] 36 STC 136 is not applicable to the present case as in that case it was found that the appellant in the said case sold the goods directly to the corporation who entered into a contract with a foreign buyer and it was found that the immediate cause of export was the contract between the foreign buyer who was importer and the corporation wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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