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2026-09-02 14:37:27
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Issue of Consideration

Whether the sales of axle bodies to Southern Railway were in the course of import within the meaning of Section 5(2) of the Central Sales Tax Act, 1956, so as to be exempt from state sales tax.

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Case Details

1966 LawText (SC) (01) 3

1966-01-18

S.M. SIKRI, P.B. GAJENDRAGADKAR (CJ), J.C. SHAH, V. RAMASWAMI, P. SATYANARAYANARAJU

1966 AIR 1216, 1966 SCR (3) 352

K. G. KHOSLA & CO.

DEPUTY COMMISSIONER OF COMMERCIAL TAXIES

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Nature of Litigation

Tax assessment on sales of imported axle bodies, with the assessee claiming exemption because the sales were in the course of import.

Remedy Sought

The appellant sought to have the sales declared as sales in the course of import under Section 5(2) of the Central Sales Tax Act, 1956, thereby avoiding liability under the Madras General Sales Tax Act and the Central Sales Tax Act.

Filing Reason

The Joint Commercial Tax Officer, Madras, assessed the supplies as intra-state sales, rejecting the appellant's claim that the sales had occasioned the import. The appellant challenged the assessments through appeals.

Previous Decisions

The Appellate Assistant Commissioner rejected the appeals. The Sales Tax Appellate Tribunal partly allowed the appeals, holding that some goods were sold in the course of import. Both parties filed revisions in the High Court. The High Court allowed the State's revisions and rejected the assessee's, holding that a sale must precede the import to occasion it, and since the sale did not take place in Belgium, the sales did not occasion the import.

Issues

Whether the sales of axle bodies to Southern Railway were in the course of import under Section 5(2) of the Central Sales Tax Act, 1956.

Submissions/Arguments

The appellant contended that the sales were in the course of import because the goods were shipped from Belgium against the contract and the import was occasioned by the sale. The Revenue argued that the sale was an intra-state sale because the seller was the consignee and the buyer retained the right to reject the goods after their arrival in India, indicating that the sale was completed only after import.

Judgment Excerpts

before a sale can be said to have occasioned the import it is necessary that the sale should have preceded the import the seller was the consignee of the goods and the buyer had reserved the right to reject the goods even after their arrival in India

Procedural History

The appellant supplied axle bodies to Southern Railway. The Joint Commercial Tax Officer, Madras, rejected the claim of sale in the course of import and assessed the supplies as intra-state sales under the Madras General Sales Tax Act (Perambur) and Central Sales Tax Act (Mysore). Appeals to the Appellate Assistant Commissioner were dismissed. The Sales Tax Appellate Tribunal held that part of the goods were sold in the course of import. Both parties filed revisions in the High Court. The High Court allowed the State's petitions and rejected the assessee's, holding that sale must precede import and since sale did not take place in Belgium, the sales were not in the course of import. The appellant then appealed to the Supreme Court by special leave.

Acts & Sections

  • Central Sales Tax Act, 1956: 5(2)
  • Madras General Sales Tax Act:
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sale in the course of import occasioning import right of rejection intra-state sale assessment axle bodies Central Sales Tax Act Section 5(2) imported goods

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