Case: Deputy Commissioner of Agricultural Income Tax and Sales Tax, Central Zone, Ernakulam Vs. Kotak and Co

the price was subject to variation depending upon the import duty, freight rate, insurance premium and exchange rate, that it was specifically provided that the sale was subject to import licence to be provided by the mills, that the contract was irrevocable and that any difference between the parties had to be resolved through the arbitration machinery provided in the contract itself, that under the import control regulations, the importer is the mill, the authorisation and the import licence are issued to the mills only, that even under the letter of authority although the firm was authorised to import the goods the mills remained the importer and they were liable as importer, that the particulars necessary for inclusion in the bill of lading are furnished by the firm to the foreign suppliers before the shipment is effected, that after the goods were shipped at the foreign port the bill of lading is forwarded along with the invoice and other connected documents of title through their Bank to India, that these documents are received by the firm after due payment of the value to the Agent Bank, that after receiving this document, information is given to the mill when they made the payment in accordance with the contract, that thereafter the goods were cleared and delivered to the mills by clearing agents at Cochin and forward to the mills."3. In another portion of its order the Tribunal stated that the goods could not in any circumstances be diverted from its determined destination, once it is shipped from the foreign country.4. The facts set out by the Tribunal, quoted above, are stated by the Tribunal as admitted facts. Hence we cannot go into the correctness of those facts. Dr. Sayed Mohammed, the learned counsel for the department contended that the observation of the High Court that "one of the conditions in the con" tract is that the goods imported should not in any circumstance be diverted from its determined destination, i.e. the mills"is incorrect as there is no such term in the contract entered into between the respondents and the mills. This submission, though in a technical sense may be correct, has really no substance because as -could be seen from the letter of authority issued by the Government that one of the conditions of the letter of authority was, to quote the words of that letter,"the person or firm in whose favour it has been issued, will act purely as an agent of the licensee 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 licenceholder will have to ensure that the goods on importation will be delivered to him and shall not be disposed of otherwise. The licensee shall not cause or permit the holder of the letter of authority to dispose of the goods."5. This clause must be read as a part of the contract entered into between the respondents and the mills. Even if this clause had not been there, there would have been no difficulty in coming to the conclusion thatthe respondents were precluded from selling the goods to anybody other than the mills to whom the users import licence had been granted. From the facts set out above it is obvious that the respondents could not have sold the goods to anybody other than the licence-holders.6.From the facts set out above it is clear that this case clearly falls within the rule laid down by this Court in K. G. Khosla and Co. v. Deputy Commr. of Commercial Taxes (l966) 3 SCR 352 =(AIR 1966 SC 1216 ). The appellant therein imported certain goods from Belgium in order to fulfill a contract with certain buyers in India. The question arose whether the sale effected in this country occasioned the import. This court came to the conclusion that the sale in question occasioned the import and as such it is exempt under Section 5 (2) of the Central Sales Tax Act, 1956, which says."A sale or purchase of goods shall be deemed to take place in the course of the import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India".7. Dr. Sayed Mohammed tried to distinguish Khoslas case, (1966) 3 SCR 352 = (AIR 1966 SC 1216 ) from the present case on the plea that in Khoslas case there was only one sale whereas in the present case there were two sales. We are unable to accept this contention as correct. From the facts set out above, it is clear that the facts of this case are similar to those found in Khoslas case, (1970) SCR 352 = (AIR 1966 SC 1216).8. Reliance was placed by Dr. Sayed Mohammed on the decision of this court in Coffee Board, Bangalore v. Joint Commercial Tax Officer, Madras, (1970) 3 SCR 147 = (AIR 1971 SC 870 ). The facts of that case briefly stated, are as follows:The Coffee Board auctioned certain quantities of coffee for the purpose of being sold in foreign countries. The purchasers of those lots were required to export that quantity of coffee to one or the other of the foreign countries mentioned in the sale notice. They were precluded from selling the same inside India. The question arose whether the purchases made by them occasioned export. This court came to the conclusion that the purchases in question were purchases for the purpose of export and the same did not occasion export. This court did not differ from the view taken in Khoslas case, (1966) 3 SCR 352 = (AIR 1966 SC 1216 ). On the other hand it distinguished that decision. Hence the rule laid down in the Coffee Boards case, (1970) 3 SCR 147 = (AIR 1971 SC 870 ) is inapplicable to the present case.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]6.From the facts set out above it is clear that this case clearly falls within the rule laid down by this Court in K. G. Khosla and Co. v. Deputy Commr. of Commercial Taxes (l966) 3 SCR 352  =(AIR 1966 SC 1216  ). The appellant therein imported certain goods from Belgium in order to fulfill a contract with certain buyers in India. The question arose whether the sale effected in this country occasioned the import. This court came to the conclusion that the sale in question occasioned the import and as such it is exempt under Section 5 (2) of the Central Sales Tax Act,the facts set out above, it is clear that the facts of this case are similar to those found in Khoslas case, (1970) SCR 352 = (AIR 1966 SCcourt did not differ from the view taken in Khoslas case, (1966) 3 SCR 352  = (AIR 1966 SC 1216  ). On the other hand it distinguished that decision. Hence the rule laid down in the Coffee Boards case, (1970) 3 SCR 147   = (AIR 1971 SC 870  ) is inapplicable to theare unable to accept this contention as correct. Fromthe facts set out above, it is clear that the facts of this case are similar to those found in Khoslas case, (1970) SCR 352 = (AIR 1966 SCthe other hand it distinguished that decision. Hence the rule laid down in the Coffee Boards case, (1970) 3 SCR 147   = (AIR 1971 SC 870  ) is inapplicable to the