V. N. Khare, J. - (1.) The short question that arises for consideration in this appeal is whether the expression "sale or purchase occasions such import" occurring in sub-section (2) of Section 5 of the Central Sales Tax Act (in short the Act) requires that a completed sale should precede the import.
(2.) The material facts which have given rise to the aforesaid question are these: In response to the tender invited by the Directorate General of Supplies and Disposal (for short 'DGSandD'), Government of India, New Delhi, the respondent M/s. Embee Corporation, Bombay (hereinafter referred to as the 'assessee') who carries on the business of buying and selling chemicals, had submitted a tender for supply of Carbamite for use in the manufacture of different types of propellant explosive as per specifications. The assessee in its tender mentioned the name of M/s. Chemiches Werk Lowi, West Germany as the supplier and from whom the materials were to be imported for which necessary import recommendation certificate was to be provided by the DGSandD for the value of the material to be imported. The total price quoted in the tender was Rs. 23.50 per kg. F.O.R. Bombay and the full break-up thereof was disclosed therein. The DGSandD accepted the tender of the assessee vide letter dated May 27, 1971 subject, inter alia, to the condition that the contract would be governed by the conditions of the contract as contained in form DGSandD-68 (revised) including clause 24 thereof as amended up to date. It was also a condition that the contracted material was to be inspected by the Chief Inspector, C.I.M.E., Kirkee, Pune at Bombay Port and the General Manager, Cordite Factory, Aruvankadu was mentioned as the indentor. The assessee thereafter requested the DGSandD to furnish the import recommendation certificate to enable it to import the material as Carbamite was a strategic material which also required an export permit to be granted by the West Germany Government to the assessee's principal. The DGSandD issued the import recommendation certificate in favour of the assessee for procuring the aforesaid material from West Germany and recommended that the import licence might be issued as per particulars. Against the said order of the DGSandD, the Controller (Import Trade Control) issued licence as requested for. One of the conditions of the licence was that the goods imported shall be utilised or disposed of in the manner stipulated in DGSandD letter dated June 17, 1971 and the imported materials shall not be utilised or disposed of in any other manner. The DGSandD had also furnished end-use certificate to the effect that Carbamite be allowed to be imported by the Indian Government as it was intended for consumption in India and not re-exported or re-utilised for any purpose other than consumption by the Government factory. In the Bill of Lading the name of assessee was shown as a party to be notified and the General Manager, Cordite Factory Aruvankadu was described as the consignee of Carbamite. After the consignment arrived, the same was forwarded to the consignee named in the contract, viz., Cordite Factory, Aruvankadu.
(3.) After the goods were supplied to DGSandD, the assessee claimed exemption before the Sales Tax Officer from levy of sales tax as, according to it, the supply under the contract was a sale in course of import of the goods into India. This plea of the assessee was rejected by the Sales Tax Officer and the same was upheld in appeal. The tribunal also substantially rejected the second appeal of the assessee. At the instance of the assessee, the tribunal referred three questions to the High Court at Bombay for answer. The High Court while answering the questions referred to it held that in the present case there were two sales viz., the sale between the assessee and DGSandD and the foreign supplier and the assessee, but both the sales were integrated or inter-linked so as to form one transaction and, as such, the sale had occasioned the import of material liable for exemption from sales tax under the Act.;