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Report No. 30

8. Judgment of Madras High Court, in Khosla's case.-The Assessee, thereafter filed two revisions before the High Court at Madras. The High Court also rejected the contention of the Assessee that the sale by the Assessee to the Government Department (Director-General of Supplies and Disposals) had occasioned the import. The High Court prefaced its judgment by setting out the same facts as had been mentioned by the lower Appellate Tribunal. The High Court stated:-

"The Assessee, M/s. Khosla and Company entered into a contract with the Director-General of Supplies and Disposals, New Delhi for the supply of 'axle box bodies. In order to fulfil the contract, the assessee had to enter into contract with manufacturers in Belgium. The goods were so got manufactured and imported into India and cleared at the Madras Harbour and supplied to certain parties on the instructions of the buyer, the Director-General of Supplies and Disposals as contained in the contract itself.

There was no privity of contract between the Belgium manufacturers and the Government Departments who ultimately received the supplies. The manufacturers consigned the goods to the Assessee under bills of lading which, after clearance at the Madras Harbour by the Assessee, were despatched for delivery to the ultimate consumers indicated by the Director­General 2."

9. Again, in the course of its judgment the High Court observed:-

"It is common ground that on entering into the contract with the Director-General of Supplies and Disposals the Assesses placed orders for manufacture with the Belgium company;..... That the goods were under consignment to the Assessee and that it took delivery of the goods and arranged for the despatch by rail or delivery locally to the consignees indicated in the contract is also clear2."

1. See the judgment of the High Court dated 16-8-1963 in T.C. Nos. 100, 219, 220, and 255 of 1962.

10. It may not be out of place also to mention here that the date of the acceptance of the contract which the assessee had entered into with the Director-General of Supplies and Disposals for the supply of axle box bodies in the manner stated above was 24-4-19561. It was thereafter that the Assessee in his turn placed an order on 30-4-1956, with the Belgium Manufacturers for the manufacture and the shipment of the axle box bodies which he had contracted to supply to the Director-General of Supplies and Disposals.

This order of the Assessee was accepted by the Belgium Manufacturers on 11-5-1956 and the Belgium Manufacturers in due course exported the manufactured goods to the Madras Harbour in three consignments, by three different ships and sent over the shipping documents, bills of lading etc. to the assessee, between the months of March and June 1958. They also requested him in their covering letters to make over the payment of the total amounts involved under the conditions agreed to between them2.

1. See p. 53 of the printed paper book of the Supreme Court. This date is the date of the Advance Acceptance notified in the Savingram No. SRI/17529-f/1 of the Office of the D.G.S.D., The same was confirmed on.-9-1956.

2. See the letters sent by the Belgium Manufacturers to the Assessee; printed at pp. 68 and 71 and the letters sent by the Assessee to the Punjab National Bank; pp. 65, 69 and 73 of the Supreme Court Paper Book in Khosla's case.

11. These, in brief, are the facts of the case and they do not appear to have been disputed by either party at any stage of the proceedings right from the time when the Joint Commercial Tax Officer proposed to levy taxes under the two Sales Tax Acts upto the stage when the matter came before the Supreme Court for final hearing.

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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