THE CROMPTON ENGINEERING COMPANY LIMITED Vs. STATE OF MADRAS, REPRESENTED BY THE ASSESSMENT COMMERCIAL TAX OFFICER I

JUDGEMENT

(1.) The Petitioners -company are carrying on business as electrical Engineers and Contractors. They manufacture varieties of electrical equipment as well. They also arrange import of machinery for their constituent -purchasers. In April 1955, India Cements Ltd., approached the Petitioners enquiring whether they could arrange for import of certain motors and machinery required by them from United Kingdom. There were oral discussions between the representatives of the Petitioners and Ina Cements Ltd. As a result thereof, the pet i agreed to import equipment and machinery by India Cements Ltd., on a condition that the latter agree to obtain the required import licence from the Government of India. In anticipation of the import licence, the Petitioners made preliminary arrangements for effecting the imports from their foreign principals. In due course, India Cements Ltd., obtained an actual user's licence, dated 9th September 1955 to import goods of the approximate value of Rs. 4,25,000 and also a letter of authority from the Chief Controller of Import and Exports authorising the Petitioners to import the goods on behalf of India Cements Ltd., against the actual user's license issued. The total value of the goods imported amounted to Rs. 4,73,056 of which goods of the value of Rs. 2,15,997 were received during the year 1957 -58. In the assessment for the year 1957 -58, the Petitioners claimed that the purchases from abroad were effected by the Petitioners as agents of India Cements Ltd., and in any case the transaction represented sales in the course of import and as such are not liable to sales tax. The Petitioners also claimed among other things that a sum of Rs. 2,22,31995 represented realization of works contract for electric installation work and produced as evidence the contract entered into by the Petitioners in respect of the same and claimed exemption from sales tax. The Petitioners also claimed a sum of Rs. 3,09,292 - 34 as representing realisation for carrying out electric installation work but in respect of this the Petitioners did not produce any contract.

(2.) It is seen from the correspondence between the Petitioners and India Cements Ltd. produced in this case that there was actually an agreement between these parties in respect of the goods imported and that the goods actually moved in pursuance of the contract and it is the contract that occasioned the import. In the letter, dated 12th April 1955 written to India Cements Ltd. the Petitioners had recorded the oral conversation they had with one Narayanaswami of India Cements and stated further that they thanked sincerely for placing the order with them for the meters, control gear and cables. They further stated that they had instructed the manufacturers to register the order and make preliminary arrangements with regard to the manufacture. There appeared to have been some discussions about the price and the payment of the same and giving of credit facilities. With regard to the letter, the Petitioners appeared to have expressly desired to consult their foreign principles and in fact wrote a letter on 3rd May 1955 to India Cements Ltd., requesting them to inform the Petitioners in the event of their deciding not to avail of the credit facilities. This letter again thanked India Cements Ltd., for the valuable order placed.

(3.) As agreed between the parties, India Cements Ltd. applied to the Government of India and obtained an actual user's licence on 9th September 1955. This licence is not transferable. India Cements Ltd. also obtained a letter of authority from the Chief Controller of Imports & Exports along with the actual user's licence, dated 9th September 1955 authorising India Cements Ltd. to permit the Petitioners to import the goods against the above licence. As already stated the goods were imported during the assessment year 1957 -58.