RAY INDIA LIMITED Vs. PICKER X STATE OF TAMIL NADU

JUDGEMENT

(1.) THE appellant/assessee declared a total and taxable turnover of Rs. 3, 29, 697 and nil, respectively, for the assessment year 1975-76. On checking the accounts, the assessing authority, among other things, found that a turnover of Rs. 3, 24, 697 was claimed as representing sales in the course of import. THE assessing authority proposed to reject the claim and after issuing notice confirmed the same and held that the turnover of Rs. 3, 24, 697 was exigible to tax at 10 per cent. On appeal to the Appellate Assistant Commissioner, the assessee contended that certain goods were imported on the strength of they actual user's licence issued to and in favour of M/s. Kasturba Medical College, Manipal, and on the strength of the letter of authority issued by the Controller of Imports and Exports. On the College placing an order on the assessee, the assessee placed an order with the foreign suppliers for the supply of equipment. THE consignment was cleared at Madras and then despatched from Madras to Manipal for delivery to the licensee (College). THE assessee filed a copy of licence issued in favour of the Kasturba Medical College, the letter of authority issued by the Chief Controller of Imports and Exports and a copy of invoice issued by the assessee. THE letter of authority contained specific clause that the assessee had no liberty to dispose of the goods imported according to their own desire, but should be only deliver the same to the licensee. THE letter of authority authorised the assessee to act as the agent of the licence-holder (College). THEre was a further direction that the goods imported shall remain the property of the licence-holder, both at the time of clearance through the customs and subsequent thereto. THE Appellate Assistant Commissioner therefore held that the transaction was not exigible to tax. He also relied on the decision of the Tribunal in I.B.M. World Trade Corporation in Tax Appeal No. 492, 546 and 547 of 1976 dated November 24, 1976.

(2.) THE erstwhile Board of Revenue after perusing the records came to the conclusion that the decision of the appellate authority was not correct and issued notice to the assessee under section 34 of the Tamil Nadu General Sales Tax Act, 1959. THE assessee put forward the same contentions and claimed exemption under section 5(2) of the Central Sales Tax Act, 1956 (hereinafter called "the CST Act"). THE Board found that it was the assessee who entered into a contract with the foreign seller and that there was no agreement or contract between the foreign seller and the College. THE Board, therefore, took the view that the privity of the contract was between the assessee and the foreign seller and that there was no privity of contract between the College and the foreign seller. THE import of the goods was caused as a result of the contract of the assessee with the foreign seller. Referring to Deputy Commissioner of Agricultural Income-tax and Sales Tax v. Kotak & Co. 1973 AIR(SC) 2491, 1973 (32) STC 6, 1974 (3) SCC 148, 1973 (3) SCR 883, 1973 TaxLR 2466, 1973 (2) CTR 355, 1973 (2) CTR(SC) 355, 1970 KLT 1062, 1973 SCC(Tax) 512, 1973 (2) CTR 355 (SC) the Board observed, that the assessee in that case acted merely as an agent rendering service. THE Board also held that there was no evidence to show that the assessee agreed to act merely as an agent notwithstanding the stipulation in the letter of authority issued by the Chief Controller of Imports and Exports. THE Board therefore thought that the transaction would be governed by the ratio of the judgment in Binani Bros. (P.) Ltd. v. Union of India 1974 (3) CTR 18, 1974 AIR(SC) 1510, 1974 (33) STC 254, 1974 (1) SCC 459, 1974 (2) SCR 619, 1974 TaxLR 1999, 1974 SCC(Tax) 183 (SC). Consequently the Board set aside the order of the Appellate Assistant Commissioner and held that the turnover of Rs. 3, 24, 697 was exigible to tax at 10 per cent.

(3.) FOR all the above reasons we hold that the transactions clearly amounted to a sale in the course of the import. We, therefore, set aside the order of the Board of Revenue and restore the order of the Appellate Assistant Commissioner. The tax appeal is allowed. There will, however, be no order as to costs.