Export exemption for paddy purchases is limited to the penultimate export transaction, not the miller's local purchase.

Section 5(3) of the Central Sales Tax Act extends export exemption only to the last sale or purchase preceding export, and only where that transaction itself occasions the export and complies with the export order. A miller's intra-State purchase of paddy for conversion into rice and later sale to an exporter is treated as a local transaction, not a sale that occasions export. Section 15(ca) creates only a limited deeming fiction for treating paddy and rice as one commodity for export of rice, and does not exempt the miller's earlier purchase of paddy from State purchase tax.

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Issues: Whether the purchase of paddy by a miller for conversion into rice and sale of the rice to an exporter is exempt from purchase tax under the local sales tax law by reason of section 5(3) read with section 15(ca) of the Central Sales Tax Act, 1956.

Analysis: Section 5(1) exempts direct export sales, while section 5(3) extends the benefit only to the last sale or purchase preceding the export, provided that transaction itself occasions export and is entered into in compliance with the export order. A purchase of paddy by a miller within the State, followed by conversion into rice and sale to an exporter, is a local transaction and is a sale for export rather than a sale which occasions export. The local levy scheme under the Haryana General Sales Tax Act, 1973 treated paddy and rice as separate taxable commodities and imposed a single-point levy at the purchase or sale stage, with set-off provisions preserving that structure. Section 15(ca) creates only a limited deeming fiction for the purpose of treating paddy and rice as one commodity where rice procured from paddy is exported, so as to exempt the exporter's transaction from tax under section 5(3); it does not extend the exemption to the miller's purchase of paddy.

Conclusion: The purchase of paddy by the miller is not exempt from purchase tax and remains taxable under the State law.

Ratio Decidendi: The exemption in section 5(3) applies only to the penultimate transaction that itself occasions export, and a deeming fiction enacted for export of rice procured from paddy cannot be expanded to exempt an earlier local purchase of paddy by the miller.

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