Report No. 61

3.46. Khosla's case summarised.-

The propositions laid down in K.G. Khosla's case may be thus summarised:-

(1) Article 286(1)(b) of the Constitution read with section 5, Central Sales Tax Act, exempts transactions from sales tax where the sale occasions the movement of goods from or to a foreign country into or from the territories of India, the movement itself being the result of a covenant or an incident of the contract of sale.

(2) It is an erroneous view of the law to think that before a sale could occasion the import, the sale should have preceded it.

(3) The contract itself showed that it was an incident of the contract that axle-box bodies would be (a) manufactured in Belgium, (b) inspected there, and (c) imported for the consignee (the buyer).

(4) Movement of goods from Belgium to India was in pursuance of the conditions of the contract.

(5) There was no possibility of the goods being diverted by K.G. Khosla for any other purpose or to any other contract.

(6) As in inter-State sales where property in the goods could pass in either State, the property could pass in either country.