TMI Blog1984 (4) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... und that the sales of IBM Computer System Type No. 370/155 with complete unit of data processing machines to the Indian Institute of Technology, Madras, are not in the course of import and therefore, those sales are to be taxed as local sales. The assessee took the matter in appeal to the Appellate Assistant Commissioner against the levy of sales tax, additional tax and surcharge imposed on the last item of the turnover of Rs. 1,50,06,766.75. The Appellate Assistant Commissioner had confirmed the assessment order and dismissed all the appeals. The matter was then taken by the assessee to the Sales Tax Appellate Tribunal inter alia questioning the assessment of the said turnover of Rs. 1,50,06,766.75. The Tribunal after considering the terms of the agreement of sale and the other documents held that the said disputed turnover represents sales in the course of import and therefore it is to be exempted from tax. Aggrieved by the decision of the Tribunal, the Revenue has come up before this Court by way of these tax revision petitions. The only question that arises for consideration before this Court is whether the turnover of Rs. 1,50,06,766 represents sales in the course of import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout additional charge and the purchaser shall make available a suitable place of installation with all facilities as specified in IBM's specification. The purchaser shall furnish all labour required for unpacking and placing each machine in the desired location. So far as title to the goods is concerned, it is stipulated in the agreement that the title should remain with the assessees until the full purchase price and transportation and importation charges and taxes are paid and the failure to pay the said price and charges would give the assessees the right without liability, to repossess the goods with or without notice. The question is whether having regard to the terms of the agreement the sale by IBM to Indian Institute of Technology of the various machines referred to in the agreement can be considered as sales in the course of import as has been held by the Tribunal. The clause in the agreement relating to price throws some light upon the nature of the sale. Clause (A)(ii) provides that the assessee or purchaser as the case may be obtaining the import licences for imports of complete machines from abroad and the price agreed to has been set out in annexures I and II. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arance through customs. Clause (iv) provides that the licensee shall also be subject to the conditions applicable to the class of importer concerned as contained in the relevant Import Trade Control Hand Book of Rules and Procedure in force on the date of the issue of the licence. Thus as per the terms of the import licence granted to the I.I.T. the goods imported thereunder shall be the property of the licensee at the time of the import as well as at the time of the clearance through customs. No doubt, in this case the import has actually been made by the IBM on the basis of a letter of authority issued in favour of IBM. In these circumstances the IBM has to be taken as having acted only as the agent of the I.I.T. for the import of the goods. On more or less similar facts, the Supreme Court in Deputy Commissioner of Agricultural Income-tax and Sales Tax v. Kotak Co. [1973] 32 STC 6 (SC) had held that the actual importer should be taken to be an agent of the purchaser as the import licence is in the name of the purchaser and the actual importer has been precluded from selling the goods to anyone other than the party to whom the import licence had been granted and the goods could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the right without liability to repossess the goods would indicate that the IBM has acted not as agent but as an independent dealer and that the title to the goods has passed from the foreign seller to IBM and there is a further passing of title from IBM to I.I.T. But it is significant to note that any stipulation deferring vesting of title or a default clause for non-payment of the price will not in any way alter the sale in the course of import into one of local sale or a local sale into a sale in the course of import. It is quite common in the commercial world to purchase goods on credit also and the right to repossess the goods on default of payment of the price will not alter the character of the sale. As a matter of fact this aspect of the matter has been touched upon by this Court in Bengal Corporation Private Ltd. v. State of Madras [1965] 16 STC 62 at page 84. In that case the argument advanced on behalf of the State was that even though the shipping documents were transferred to the buyer on payment of the price, the property in the goods did not pass in view of certain special conditions in the contract. But this was rejected on the ground that such conditions of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arly distinguishable from the facts of the present case as in this case the purchaser obtained not only the import licence but also a letter of authority authorising the assessees to import the goods on its behalf and at the same time precluding the assessees from dealing with the goods in any other manner than to bring them and instal them in the purchaser's premises. In the second case, the assessee who had no import licence has sold the goods to the State Trading Corporation which had entered into an agreement of sale with the foreign buyer. That was a case of an export by the State Trading Corporation on the basis of the licence obtained by them. Therefore the State Trading Corporation cannot be treated as agent of the assessee who had sold the goods for export. That case also is quite distinguishable. In the third case the assessee who is a licensed importer placed an order with a foreign seller and there was no privity of contract between the foreign seller and the local purchaser. It was on those facts it was held that there was two sales one by the foreign seller to the assessee and another by the assessee to the local purchaser. But here the facts are entirely different. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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