2026-VIL-58-KER
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VAT High Court Cases

Central Sales Tax Act, 1956 - Sale in the course of import - Petitioner received purchase orders for supply of medical equipment, accessories and installation. As per the terms of the purchase orders, the petitioner was required to procure the equipment from its counterpart in Germany and not from its stock in India - The petitioner placed a purchase order on the foreign supplier and the goods were imported and ultimately sold to the 4th respondent - Petitioner claimed exemption under Section 5(2) of the CST Act for the sale to the equipment as a "sale in the course of import". Respondent imposed a penalty on the petitioner under Section 67 of the KVAT Act for the assessment year 2016-17, on the ground that the transaction was not eligible for exemption - Whether the transaction between the petitioner and the 4th respondent is eligible for exemption under Section 5(2) of the CST Act as a "sale in the course of import" – HELD - Where there is an inextricable link between the purchase order, import, and the ultimate sale, the transaction would qualify as a "sale in the course of import" under Section 5(2) of the CST Act - In the present case, there was a clear link between the purchase order placed by the 4th respondent (Hospital), the import effected by the petitioner, and the ultimate sale to the customer in the State. The assessment of the petitioner for the relevant year had been completed by the Deputy Commissioner (Assessment) accepting the petitioner's claim of exemption, in line with the Court's earlier judgment - Further, the penalty under Section 67 of the KVAT Act cannot be imposed as the petitioner had declared the transaction in its return, claiming exemption, and there was no suppression of any material facts - The order imposing the penalty under Section 67 of the KVAT Act is set aside and the writ petition is allowed
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