K. GOPINATHAN NAIR ETC. versus STATE OF KERALA

Citation: [1997] 3 S.C.R. 226 · Decided: 21-03-1997 · Supreme Court of India · Bench: A.M. AHMADI

Cited by 4 judgment(s) · cites 3 · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
K. GOPINATHAN NAIR ETC. 
v. 
STATE OF KERALA 
MARCH 21, 1997 
[A.M. AHMADI, CJ., S.B. MAJMUDAR AND 
SUJATA V. MANOHAR, JJ.] 
Sales tax---Central Sales Tax Act 1956, s.5 (2)-Kerala General Sales 
Tax Act, 1963-Karnataka Sales Tax Act, 1957-Wlzether import of raw 
C cashew nuts by canalising agency and its purchases by actual users in India 
could be said to be a transactio11 i11 the course of impo1t and, therefore, eligible 
for exemption-Held, per maj01ity, on facts, no; Held, per Sujata V. Manohar, 
J., dissenting, yes-Constitution of I11dia, A1ticle 286 (J)(b ). 
Central Sales Tax Act 1956, s.2 (ab )-'Crossing the customs frontiers 
D of India'-Held, per cwiam, being a substa11tive provision will have no 
retrospective effect and will not cover transactions in questio11-I11terpretation 
of Statues. 
The appellants, engaged in the purchase of raw cashewnuts and 
. E export of cashew kernels after processing, placed orders for import of raw 
cashewnuts from African countries through the Cashew Corporation of 
India (CCI) which was a canalising agency. Purs~ant to the said orders, . 
the CCI had imported raw cashewnuts and had ·made them available to 
the assessees. 
F 
· The contention of the appellants that these transactions, during 
assessment years 1970-71 to 1973· 7 4, were purchases by them in the course 
of import and therefore outside the sweep of the Central Sales Act, 1956 
by virtue of s. 5 (2) thereof was rejected by the Kerala Sales Tax Appellate 
Tribunal. The Tax Revision cases were also dismissed by a Division Bench 
G of the Kerala High Courts. 
CCl's contention that the sales made by it of imported raw 
cashewnuts to local users in Karnataka were in the course of import and 
therefore outside the purview of the Karnataka Sales Tax Act, 1957 was 
rejected by the Karnataka Appellate Tribunal as well as the High Court. 
H CCI then appealed to this Court. 
226 
j 
' ~-
! 
._. 
\ 
K.GOPINATIIANNAIR v. STATE 
'121 
Dismissing the appeals, th.is Court 
HELD: Per Majority (Majmudar, J. for himself and Ahmadi, CJ!.): 
1.1. Sales by the CCI to the local users were not in course of import 
of raw cashew from African countries and were therefore outside the sweep 
A 
of the exemption provisi_ons engrafted by s. 5(2) of the Central Sales Tax B 
Act. [251-E] 
._ 
1.2. There were two transactions. One was the import of raw cashew 
by CCI. The second transaction was the sale by CCI to local users. That 
sale would remain an independent transaction between the importer CCI 
and the local purchaser and there was no privily of contract between the C 
local users on the one hand and the foreign exporter on the other. These 
two transactions could not be said to be so integrally interconnected as to 
represent .,,one composite transaction in· the course of import of ~w 
cashewnuts. [251-B·D] 
.. 
Mis Binani Bros. (P) Ltd. v. Unio11 of India, [1974] 1 SCC 459 and 
. Md Serajuddin v. 17ze State of Orissa, [1975] 2 SCC 47, followed. 
D 
Be11 Grom Nilgiri Plantations Company, Coonoor v. Sales Tax Officer, 
Special Circle, Emakulam, [1964] 7 SCR 706; KG. Khosla & Co. v. Deputy 
Commissio11er of Commercial Taxes, [1966] 3 _SCR 352; Coffee Board, E 
Bangalore v.Joint Commercial TarO'fficer, .Madras, [1969] 3 SCC 349; 17ze 
State of Bihar v. Tata Engineering and Locomotive Co. Ltd., [1970] 3 SCC 
697; T71e Deputy Commissioner of Agricultural Income Tax and Sales Tax, 
Central Zone, Emakulam v. Mis Kotak & Co.,. [1974] 3 SCC 148; Deputy 
Commissioner of Agncultural Income Income Tax and Sales Tax,· Emakulam F 
. v. Indian Explosives Ltd., . [1985] 4 SCC 119 and CollSolidated Coffee Ltd. . 
v. Coffee Board, Bangalore, [1980] 3 SCR 625, referred to. 
Per Sujata V. Manohar, J; (dissenting) : 
1.3. The Sales in question were in the course of import and could not G 
be taxed under the Kerala General Sales Tax Act or the Kamataka Sales 
Tax Act. [268-C, E] 
1.4. There was an inseverable link as the import made by CCI was a 
·necessary consequence of the specific- requirements submitted by the 
processors and was a result of the obligations it had undertaken under H 
···':~ 
228 
SUPREME COURT REPORTS 
[1997] 3 S.C.R. 
A such arrangement with the local processors which had crystallised later in 
the form of the contract of sale. [267-E] 
KG. Khosla & Co. v. Deputy Commissioner of Commercial Taxes, 
[1966] 3 SCR 352; The Deputy Commissioner of A!Jlicultural Income Tax 
and Sales Tax, Central Zone, Emakulam v. Mis Kotak & Co., [197

Excerpt shown. Read the full judgment & AI analysis in Lexace.