TMI Blog1973 (7) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... marine engines was effected in the course of import and so it is exempt from tax under the General Sales Tax Act. This contention was rejected by the assessing authority and the first appellate authority. But, on second appeal, the Appellate Tribunal by a majority of 2: 1 held that the assessee is entitled to exemption in respect of the marine engines. The finding of the majority is in these terms: "The copies of the agreements have been furnished before us. The agreements are in the form of a letter addressed to M/s. India Sea Foods (Regd.), Cochin-5. It states that, with reference to an earlier conversation in the matter of the transfer of the rights and interests of M/s. India Sea Foods in one Lister Marine Diesel Engine to be importe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he engine on behalf of Mr. Austin and it was in pursuance of this agreement that the goods were moved from their original place to Cochin. K.G. Khosla and Co. (P.) Ltd. v. Deputy Commissioner of Commercial Taxes, Madras[1966] 17 S.T.C. 473 (S.C.)., lays down that before a sale could be said to have occasioned the import it was not necessary that the sale should have preceded the import and that the movement of goods into India was incidental to the contract. If it is proved that there was no possibility of the goods being diverted by the assessee for any other purpose, the sales can be said to take place in the course of import of goods within the meaning of section 5(2) of the Act. If, as a matter of fact, it was under the terms of the agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in. There is an inextricable link between the contract of sale and import. There is the intention to import and an obligation to import. The contract of sale occasioned the movement of the goods from a foreign country, and a diversion of the goods if made on import, will be a breach of the contract of sale entered into by the assessee with Mr. Austin. Therefore, the facts of this case clearly come within the scope of the principle laid down by the Supreme Court in Ben Gorm Nilgiri Plantations Co. v. Sales Tax Officer[1964] 15 S.T.C. 753 (S.C.)., wherein their Lordships stated the principle 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 66] 17 S.T.C. 473 (S.C.). as well. Recently, in an appeal from a judgment of this court, namely, Deputy Commissioner of Agricultural Income-tax and Sales Tax, Central Zone, Ernakulam v. M/s. Kotak Co., Bombay[1973] 32 S.T.C. 6 (S.C.)., their Lordships of the Supreme Court had occasion to consider a transaction of sale entered into by making use of an actual user's import licence. In that case, their Lordships came to the conclusion that if the terms of the contract read along with the import licence and letter of authority precluded the importer from selling the goods to anybody other than the person with whom he has contracted to sell, such a transaction will be a sale in the course of import. The facts of this case clearly come within ..... X X X X Extracts X X X X X X X X Extracts X X X X
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