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TMI Blog1975 (11) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... by paying the value of the goods including customs duty and that the assessees acted only as the agents of the purchasers to whom the goods were sold. In this connection, they relied on a preliminary agreement between them and the purchasers as evidenced by their letter dated 15th March, 1960, and later a formal agreement dated 7th April, 1961. The facts relating to these turnovers as evidenced by this letter and the agreement are as follows: In respect of their export of cotton yarn and cotton textiles under the Cotton Textile Export Promotion Incentive Scheme, the assessees were granted import licences for the importation of textile chemicals, dyes and gums. These licences however were not transferable. M/s. Radha Dyeing Factory agreed to purchase from the assessees imported dyes and chemicals. The terms and conditions of such sale and purchase between the assessees and the purchasers are evidenced by the letter dated 15th March, 1960, and the formal agreement dated 7th April, 1961. Under this agreement, the assessees agreed to sell to the purchasers on monopoly basis the imported goods on forward, afloat or c.i.f. basis. The prices for each transaction will have to be settled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llate authorities held that there were two sales, one by the foreign sellers to the assessees, which was an import sale, and another, a sale by the assessees to the purchasers, which was a local sale, and that the turnovers relating to the local sale were liable to be assessed under the Tamil Nadu General Sales Tax Act. The assessment orders relating to the assessment years 1960-61, 1961-62 and 1963-64 to 1965-66 were taken in appeal to the Sales Tax Appellate Tribunal, Coimbatore, while the assessment order relating to the assessment year 1962-63 was taken in appeal to the Sales Tax Appellate Tribunal, Madras. The Madras Tribunal held that there were no two sales, that the agreement between the purchasers and the assessees and the contract of sale between the assessees and the foreign sellers were two integrated transactions forming one import sale and that, therefore, the turnover in question was not liable for sales tax. On the other hand, the Coimbatore Tribunal held that there were two contracts for sale, one between the assessees and the purchasers and another between the foreign sellers and the assessees and that only the sale of the foreign sellers to the assessees was an i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the goods from Belgium into India was incidental to the contract entered into by the assessee with the Director-General of Supplies and Disposals, that there was no possibility of the goods being diverted by the assessee for any other purpose and that, therefore, the sale took place in the course of import of goods within section 5(2) of the Central Sales Tax Act and exempt from taxation. In Deputy Commissioner v. Kotak & Co. [1973] 32 S.T.C. 6 (S.C.)., a textile mills, which had an import licence gave a letter of authority to a firm, which was the assessee in that case, to import the goods and deliver them to it. The mills specified in the contract entered into between them and the assessee the quantity of all the imported cotton to be supplied, its quality and the place from where it was to be imported. The payment was to be made by the mills against the documents. The letter of authority provided that the firm "will act purely as an agent of the licensee (mills) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x authorities that there was only one import sale and that, therefore, he was not liable to pay sales tax. On the other hand, the sales tax authorities took the view that there were two sales involved in that transaction, a sale to the assessee by the foreign sellers and a sale by the assessee to the various Government departments and that the sale by the assessee to the various Government departments was liable to sales tax. The question for consideration was whether in those circumstances there was only one import sale or whether there was an import sale and a local sale. The Supreme Court held that though the purchase by the assessee might be considered as one for the purpose of sale to the Government departments, there were two transactions, one a sale by the foreign seller to the assessee and another by the assessee to the Government department. Only if there is a direct privity of contract between the foreign seller and the local purchaser, the sale could be said to be in the course of import and not otherwise. On the facts, the Supreme Court held that the sale by the assessee to the Government department did not occasion the import of the goods, but it was the purchase mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ign seller is necessary in order to make that transaction one in the course of export or import. It is also immaterial that the local purchaser had helped the importer in the import of the goods by finding out the foreign seller or assisting him in the placing of orders or clearing the goods from the port. What is material is a privity of contract between the ultimate purchaser and the foreign seller in order to make that transaction a sale in the course of import. We have also taken the same view in our decision reported in State of Tamil Nadu v. Visweswaradas Gokuldass [1975] 36 S.T.C. 479. Now coming to the facts of this case, it may be seen that the import licence was in the name of the assessees and the licence could not be transferred. The agreement between the assessees and the purchasers only made the purchasers obliged to help the assessees in importing the goods by paying the premium or part of the price in advance and taking all steps required for importing the goods within the time prescribed. In fact, the contract with the foreign seller was only by the assessees and the order is placed only in the name of the assessees and the import was also effected in the name of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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