K.G. KHOSLA & CO. versus DEPUTY COMMISSIONER OF COMMERCIAL TAXES

Citation: [1966] 3 S.C.R. 352 · Decided: 18-01-1966 · Supreme Court of India · Bench: P.B. GAJENDRAGADKAR · Disposal: Appeal(s) allowed

Cited by 5 judgment(s) · cites 3 · see the full citation network in Lexace

Judgment (excerpt)

K. G. KHOSLA & CO. 
I'. 
DEPUTY COMMISSIONER o•· COMMERCIAL TAXES 
January 18, 1966 
[P. B. GAJENDRAGADKAR, c. J., J. c. SHAH, s. M. SIKRI 
V. RAMASWAMI AND SATYASARAYA1'A RAJU, JJ.) 
Central Sc.In Ta.t Act, 1956 (64 of 1956), s. 5(2)-Sai<r in tlu courSI 
of i1nport 
1"1t•a11in~ of. 
The ap_pellant enlered into a contract 
wj1h the Direclor-General ot 
Civil Su~phe"· New Delhi far the supply of .xle bodies manufactured by 
1t5 pnnc1pals 1n Belgium. 
-rhc goods 
1,1,·crc in:;pectctl 
on behalf of the 
buyer~ in Bel~iun1 but under the contract they 
were liable to rejection 
after further in,;pe...:tion in India. In pur5uance of the contract the appel-
lant supplied 
axle·bodie• to the Southern Railway at 
Perambur and 
Mysore. 
'fhe Joint Comn1l!rcial Tax ~)nicer Madras 
rejectt.-d the con. 
tention of the appellant th;,i,t the salel ~ere in the cour~e of import. 
He 
held that the said sales \Vere intra-State sales because the seller wa-; 
thlJ 
consignee of the good:; and the buyer h41.d reserved the right to reject the 
goods even afler their arriv;i( in lndi:i. 
He made ;,in assessment under the 
Madras General Sale-; Tax Act in respect of 1he -;upplics at Pcr<unbur and 
another a~ssmcnt under ihc- Central Sales ·rax Ac1 in respect of the 
supplies at Myo;orc. 
·rhe ;ippellant tiled ;1ppealo; against the as.;e-;~menl! 
but the Appellant Assi~tant Comn1bsioner rejected 
them. 'fhe Tribunal 
held that part of' the gooJ_, ,~·ere sold in the course of import. 
Again~t the 
Tribunal's orders both parties file<l tv•o revi~ion:; each in the High Court. 
The High Court allO\\·ed the petitioni filed by the State and rejcc;eJ tho~e 
filed hy the asses,ee. It held that '"before a sale c:in he s<iid to h;1\'e occa-
sioned the import it is nece .. -;ary that the S<1le c;hould have prcccc.led 
tho 
import" and as the sale had not taken placl! at Belgium there "-'<l'i no quc~­
tion of sale occasioning the import of the 
good<:;. 
The appellant then 
came to this C'-0urt by speci.:il leave. 
On behalf of the re.;pondents 
two 
preliminary objection" v.·e-e r.liscd : 
( 1) The appr.:llant had no£ complied 
with O.Xlll r. 2 of the Supreme Court Rules, 1950 before coming to this 
Court; (2) The appellant h;id filed only two appeal< in this Court whilo 
the High Court's judgment !..:overed four re\'ision pctition'i. 
HELD : (i) 'lhe appellant had not filed a petition for certificale before 
the Madras High Court as required hy O.XllI r. 2 becau'ie 
of the view 
of that High Court that no c;uch petition lay in Revenue matters. There· 
fore non-compliance wilh 0.Xlll r. 2 could he condoned. 
(ii) Two revisions were filed in the High Court by the •ppellont and 
two by the State in respect of tY.'O assessment orders and they were dis-
posed of by a common judgn1ent. The subject matler of lhe four revisions 
were two assegsmcnts, one under the Madras General Sates Tax Act and 
the other under the Central Sal"' Tax Act. The appellant was quite right 
in tiling two appeals before this Court. [356 B-D] 
"(tii) Section 5(2) of the Central Sales Tax Act does not lay down any 
condilion that before a sa1e could be said to have occasil)fled import it i! 
A 
I 
~ 
B 
c 
D 
E 
F 
G 
,..
H 
K. G. KHOSLA v. DY. COMMR. (Sikri, J.) 
353 
A 
necessary that the sale should have preceded the import. Tho High Court 
wrongly held so. [358 D-E] 
B 
c 
D 
Tata Iron & Steel Co. Ltd. v. S. R. Sarkar, [1961] I S. C. R. 379, 
relied on. 
· 
The Cement Marketing Co. of India v. State of Mysore, [1963] 3 S.C.R. 
777 State Trading Corporation of India v. State of Mysore, [1963] 3 S.C.R. 
792 and Singareni Collieries Co, v. Commissioner of Commercial Taxes, 
Hyderabad, [1966] 2 S.C.R. 190, referred to. 
(iv) Jn the present case it was quite clear from the contract that it 
wa-s incidental to the contract that the axle-box bodies. would be manufac-
tured in Belgium, inspected 
there, and imported into India for the con-
signee. 
Movement of goods from Belgium to India wa5 in -pursuance of 
the conditions of the contract between the assessee and the D!fector-Gene-
ral of Supplies. There was no possibility of those good• being diverted by 
the assessee for any other purpose. Consequently the saleg took place in the 
couroe of import of goods within •· 5(2) of the Act and were therefore 
exempt from taxation. [358 Fi 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 143 and 
144 of 1965. 
Appeal by special leave from the judgment and order date 
August 16, 1963 of the Ma

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