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Report No. 30

75. Bengal Immunity case.- We have already seen that the provisions regarding inter-State sales are analogous to the provisions dealing with export sales. While dealing with inter-State sales Mr. Justice Venkatarama Ayyar (in Bengal Immunity case) AIR 1955 SC 661 at p. 734, first defined as to what constituted a sale in the course of inter-State trade, and then, to bring home the principles that he was enunciating, gave an illustration:-

"If X, a merchant in State A, goes to State B, purchases goods there and transport them into A, there is undoubtedly a movement of goods in inter-State commerce but that is not under the contract of sale."

In the same way, it may be said that if a foreigner either by himself or through his agent comes to India and purchases goods (as in this case) and exports them to his own country, there is undoubtedly an export of goods. But that is not under the contract of sale which the Indian seller had entered into with the foreigner's Agent.

76. In regard to cases where there were at least two sales, the Supreme Court observed (p. 1756. para. 10):-

"It may be regarded as therefore settled law that where there are two sales leading to export the first under which the goods are procured for sale and the property in the goods passes within the territory of India, and the second by the buyer to a foreign party resulting in export-the first cannot be regarded as a sale in the course of export, for a sale in the course of export must be directly and integrally connected with the export."

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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