STATE OF TAMIL NADU Vs. VISWESWARADAS GOKULDASS

JUDGEMENT

(1.) THE respondents to this case are dealers in non-ferrous metals carrying on business at No. 122, Mint Street, Madras-1. THEy will be hereafter referred to as the importers. THEy had with them an import licence for importing a good quantity of zinc. THE distribution of imported zinc was controlled and it will have to be done under the directions of the Controller on Non-ferrous Metals. Established importers like the respondents have to distribute the zinc to such of those local purchasers to whom the Controller of Non-ferrous Metals had issued a permit. On 18th September, 1964, the Controller directed the importers to sell the zinc that would be imported by them to M/s. India Metal and Metallurgical Corporation (hereinafter referred to as the linked customer) and adviced the importers to contract the said corporation to ascertain their requirements as regards the quantity and specification of the materials and the programme of delivery. THEreafter, the linked customer placed a purchase order and paid a portion of the price. THE importers then placed an order with the foreign seller for the goods. Later on, the importers endorsed the bill of lading in favour of the linked customer who cleared the goods.

(2.) THE Joint Commercial Tax Officer while determining the taxable turnover for 1965-66 included in it a sum of Rs. 70, 333.97, which represented the sale value of the zinc imported by the respondent-importers. THE importers contended that the sale in favour of the linked customer was made in the course of import within the meaning of section 5(2) of the Central Sales Tax Act and that, therefore, such turnover could not be included in the taxable turnover. But this contention was not accepted by the Joint Commercial Tax Officer and the appellate authority. But on a further appeal, the Tribunal held that since the linked customer had placed a firm order for the import of goods by the appellants and in consequence of the order the goods were imported and the bills of lading were endorsed in favour of the linked customer, it is the sale in favour of the linked customer that occasioned the import of the goods into India and that, therefore, was not liable to be included in the taxable turnover. It is against this order, the State of Tamil Nadu has filed this petition.THE learned Government Pleader contended that the contract of sale between the importers and the linked customer did not occasion the import and it is only the contract between the importers and the foreign seller that had occasioned the import and that therefore the turnover is liable to be taxed under the Tamil Nadu General Sales Tax Act.