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Report No. 30

55. Contract.-The necessity of the existence of such an agreement of sale (or of purchase as in the case of import) was stressed and explained in the Second Travancore Case, both in a positive and in a negative way. This is clear from the manner in which the Supreme Court dealt with certain types of dealings of purchases in respect of which the Respondents claimed exemption under Article 286(1)(b) as having been effected in the course of the import appreciate the views of the Supreme Court on such dealings and how they disposed of them by invoking the principle of privity of contract.

Respondents placed orders with a Bombay party for purchase of cashew-nuts from Africa. Certain purchases were made from African sellers by the Bombay party acting only as Agents for the Respondents. In regard to certain other dealings, the Bombay party indented the goods on their own account, and placed orders for these goods with African sellers. The African sellers shipped the goods direct to Cochin or Quilon on C.I.F. terms.

The shipping documents were made out in the name of the Bombay party as consignees and were delivered to them against payment through bankers at Bombay. The Bombay party cleared the goods through their own representatives at the port of destination, and issued separate delivery orders to the respondents for the respective quantities ordered. Thus, the Bombay party sold the goods as principals to the Respondents.

Section 5 of the Central Sales Tax Act, 1956 - Taxation by the States of Sales in the Course of Import Back

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