Export sale requires a direct causal link; intermediary resale breaks exemption, while delayed-return penalty needs express central authority.

A sale is in the course of export only when the export is directly occasioned by that sale and forms a single integrated transaction; sales to an Indian intermediary or other Indian buyers who later exported the goods were therefore not exempt under section 5(1) of the Central Sales Tax Act. Sales of manganese ore moved from Madhya Pradesh to buyers in other States were inter-State sales under section 3(a), and the appropriation of goods in Madhya Pradesh also satisfied section 4(2)(b) as inside sales. Where the Central Sales Tax Act contained no specific penalty for delayed return filing, a State penalty provision could not be imported through section 9(2) to sustain penalty.

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Issues: (i) Whether sales made to an Indian intermediary who in turn exported the goods, and sales made to Indian buyers under canalised export arrangements, were sales in the course of export under section 5(1) of the Central Sales Tax Act, 1956. (ii) Whether sales of manganese ore dispatched from Madhya Pradesh to buyers in other States were inter-State sales under section 3(a) of the Central Sales Tax Act, 1956 and inside sales in Madhya Pradesh under section 4(2)(b) of that Act. (iii) Whether the penalty imposed for late filing of return under the Central Sales Tax Act could be sustained by invoking the State penalty provision through section 9(2) of the Central Sales Tax Act, 1956.

Issue (i): Whether sales made to an Indian intermediary who in turn exported the goods, and sales made to Indian buyers under canalised export arrangements, were sales in the course of export under section 5(1) of the Central Sales Tax Act, 1956.

Analysis: A sale falls within the course of export only where the export is occasioned by that very sale, or where the sale is directly and integrally connected with the export so as to constitute a single sale between exporter and foreign importer. Where an Indian intermediary purchases the goods and thereafter exports them, the link is broken by the intermediary's independent sale. The FOB character of the contract does not by itself make the seller's sale a sale in the course of export when the property passes in India and the export is brought about by a subsequent sale to the foreign buyer.

Conclusion: The sales to M.M.T.C. and to other Indian buyers who thereafter exported the goods were not sales in the course of export and were not exempt under section 5(1); this issue was decided against the appellant.

Issue (ii): Whether sales of manganese ore dispatched from Madhya Pradesh to buyers in other States were inter-State sales under section 3(a) of the Central Sales Tax Act, 1956 and inside sales in Madhya Pradesh under section 4(2)(b) of that Act.

Analysis: A sale is inter-State when the movement of goods from one State to another is under a covenant of, or is incidental to, the contract of sale. The contracts showed that the goods were appropriated in Madhya Pradesh and then moved to another State pursuant to the bargain. The goods sold were manganese ore itself, and the stated specifications did not convert the commodity into a different commercial product. The appropriation at the mine sidings satisfied section 4(2)(b), while the movement across State boundaries satisfied section 3(a).

Conclusion: The sales were inter-State sales taxable in Madhya Pradesh under the Central Sales Tax Act, and they were also inside sales within Madhya Pradesh for the purpose of section 4(2)(b); this issue was decided against the appellant.

Issue (iii): Whether the penalty imposed for late filing of return under the Central Sales Tax Act could be sustained by invoking the State penalty provision through section 9(2) of the Central Sales Tax Act, 1956.

Analysis: In the absence of a specific penalty provision in the Central Sales Tax Act applicable to the default in question, the State penalty provision cannot be imported through section 9(2) to create liability for penalty under the Central enactment.

Conclusion: The penalty was unsustainable and was quashed; this issue was decided in favour of the appellant.

Final Conclusion: The assessment on the export-linked sales to Indian intermediaries and the inter-State sales was upheld, but the penalty component was set aside, leaving the appeal successful only to that limited extent.

Ratio Decidendi: A sale is in the course of export only when it is the immediate and direct cause of export, and a State penalty provision cannot be used to impose penalty under the Central Sales Tax Act where the Central Act does not itself provide for the default.

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