BLUE STAR LIMITED Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) The question involved in both the tax cases is the same relating to the same assessee in respect of two assessment years, viz., 1970-71 and 1973-74 respectively, hence, a common judgment. T.C. No. 1397 of 1977 : This is an appeal against the order of the Board of Revenue which exercising suo motu power under section 34, set aside the order of the Appellate Assistant Commissioner who allowed exemption in respect of turnover for Rs. 1, 18, 865 holding that the same represented sales in the course of import and restored the order of the assessing officer. The appeal is thus directed against the inclusion of Rs. 1, 18, 865 as taxable turnover on rejection of the assessee's claim for exemption on the ground that they are sales in the course of import. The Board of Revenue reached its conclusion on the following facts as culled out from its order : (1) In all the five cases in respect of which exemption is claimed, the goods were imported from Germany by the assessee and then sold to the local buyers, though the goods were imported after orders were obtained by the assessee from local buyers. (2)(a) There is no stipulation in the contracts with the local buyers that the goods should be imported from the foreign country. (2)(b) One of the local buyers in his letter dated 30th July, 1969, requested the assessee to supply them with one Brusting Strength Tester DP. 30 with usual accompaniments and in that letter, there is no stipulation that the supply should be made only from any foreign country. (2)(c) In the letter dated 28th August, 1969, the assessee had written to the manufacturers in Berlin referring to the order placed already indicating at the bottom of the said letter the local buyer, viz., Madras paper Converters Industry. (3)(a) The foreign exporter has raised the invoice in the name of the assessee. (3)(b) So far as Hydraulics Limited, they had specifically stated that they do not have any licence and that the assessee shall arrange to get the machine and supply it to them. (4) In all these cases, the assessee did not possess any import licence and the import licence stood in the name of Project Equipment Corporation of India. (5) The contract for import was between the assessee and the foreign seller in Germany and it is this contract which had occasioned the import consequently, there were two sales based on two separate contracts.T.C. No. 196 of 1978 : This is a revision by the assessee aggrieved against the order of the Tamil Nadu Sales Tax Appellate Tribunal, which negatived the assessee's contention that the sales in respect of seven transactions aggregating to Rs. 1, 36, 005 are those held in the course of import, but held that they were local sales exigible to sales tax. It must be pointed out here that besides the above exemption, the assessee claimed exemption in respect of a sum of Rs. 2, 346 on the ground that the latter related to sales returns relating to the assessment year 1972-73 but claimed in the assessment year 1973-74 but this point was not pressed by the learned counsel for the assessee. Therefore, the only disputed turnover before us is Rs. 1, 36, 005. The facts relied on by the Tribunal are : (1)(a) It cannot be said that the machine supplied to the customer is the one specifically ordered for him in the purchase order. (1)(b) The transactions would not fall within the ambit of Khosla's case. (1)(c) Subsequent decision in the case of Binani Brothers (P.) Ltd. would apply to all these transactions, and therefore, they were not eligible for exemption. (2) In almost all these cases, the goods had been imported not against the actual user's licence held by the customers, but only on the basis of the recommendatory certificates issued by the Project Equipment Corporation of India which is a wing of State Trading Corporation of India. (3) The goods had been imported after the actual users' orders, but not by the actual users' licences. (4)(a) There was no privity of contract between the local buyers and the foreign seller and the movement of the goods from the foreign country was not occasioned on account of the actual user's licence, but only against the orders placed by the assessment with the foreign seller. (4)(b) In the case of Amaravathi Sri Venkateswara Paper Mills, the documents show that the assesses had sold the machinery from out of the stock held by it after import and as such, it is not a sale in the course of import, but only a sale from out of the stock held by the assessee. It is necessary to state here that this factual basis is disputed by the assessee (see ground No. 10).The common question to be determined is whether in the circumstances of the case, the sales for Rs. 1, 36, 005 and Rs. 1, 18, 865 were sales in the course of import falling within the ambit of section 5(2) of the CENTRAL SALES TAX ACT, 1956 or not. Section 5(1) and (2) runs thus :