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Report No. 30

13. Constitution Amendment Act, 1956.- By the Constitution (Sixth Amendment) Act, 1956 Articles 269 and 286 were amended. In exercise of the authority conferred upon the Parliament by the articles so amended, Parliament enacted the Central Sales Tax Act (No. 74 of 1956). The Act was enacted as its Preamble recites-

"to formulate principles for determining when a sale or purchase takes place in the course of inter-State trade or commerce or outside a State or in the course of import into or export from India ....."

14. Sections 3, 4 and 5 of the said Act formulated these principles. Section 5(2) upon which reliance was placed by the Supreme Court and which is material for our present purpose, is as under:-

"A sale or purchase of goods shall be deemed to take place in the course of the import of the goods into the territory of India, only if the sale or purchase either occasions such import or is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India."

15. The Supreme Court was of the view that it was in accordance with the principles laid down in this sub-section that it had to determine the question, namely, whether the sale in the instant case, that is to say, the sale by the Assessee in favour of the Director-General of Supplies and Disposals had occasioned the import of the goods into the territory of India from Belgium. If the sale had occasioned the import, then there was no difficulty in holding that it had taken place in the course of such import so as to be exempt from taxation under Article 286(1)(b).

16. In construing this sub-section (2) of section 5, reliance was placed upon the interpretation which had been put by the Supreme Court in one of its previous decisions (Tata Iron and Steel Co. Ltd., Bombay v. S.R. Sarkar, AIR 1961 SC 65) on the analogous provisions contained in section 3 (a) of the Central Sales Tax Act. That sub-section reads as follows:-

"A sale or purchase of goods shall be deemed to take place in the course of inter State trade or commerce if the sale or purchase (a) occasions the movement of goods from one State to another."

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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