By C. B. Thakar Advocate; G. G. Goya, Janak Vaghani Chartered Accountants
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Central Sales Tax Act-Sale in Course of Import – Contract for Supply of Coin Blanks to Government of India – Not Occasioned Import of Goods In to India – Where Under Another Independent Contract Coin Blanks are Converted and Supplied By Foreign Supplier to the respondent – In turn Supplied To Government of India Under Independent Contract – Not Exempt from payment of Tax, section 5(2) of The Central Sales Tax Act, 1956 M/S. Cheema Paper Ltd. vs. Commissioner Trade Tax, (2012) 55 VST 473 Entry Tax- Rate of Tax – Duplex Board – Ordinarily Used As Packing Material-Made out of Paper – Not Covered by Entry “ Paper of All Kinds”, section 4 of The Uttar Pradesh Tax on Entry of Goods into Local Areas Act, 2007
Facts
The respondent company entered into a contract with foreign supplier for conversion of still strips to blank coins at Italy. Thereafter, the company entered in to contract with Government of India for manufacture and supply of blank coins. The company claimed sale, to the Government of India, of blank coins as sale of goods in the course of import and exempt from payment of tax u/s. 5(2) of The Central Sales Tax Act, 1956. The Tribunal allowed the appeal against which the tax department filed a writ petition before the Madras High Court.
Held
In order to earn exemption from payment of tax as sale in the course of import of goods into India u/s. 5(2) of the Central Sales Tax Act, the goods must move from the foreign country to India in pursuance of condition of contract of sale between the foreign supplier and the local purchaser. In present case, the goods were imported from foreign country in pursuance of the contract between the foreign supplier and the first respondent. A conjunct reading of both agreements would make it clear that these two agreements are independent to one another and are different entities. The first respondent entered in to these agreements for import of goods for its own purpose and there is no privity of contract between the local purchaser, the Government and the foreign seller. Therefore the sale of goods by the respondent company to the local purchaser i.e. the Government of India is not exempt from payment of tax as sale in the course of import under section 5(2) of the act. The High Court accordingly allowed the writ petition filed by the department and the order of the Tribunal allowing the claim was set aside.
