Course of export principle bars purchase tax where inter-office movement was part of the export arrangement.

Purchase tax under section 9 of the Haryana General Sales Tax Act, 1973 was not leviable where goods bought by a branch office in Haryana were moved to the head office and then exported pursuant to foreign orders. The Court treated the inter-office movement as occasioned by the export arrangement and not as a separate taxable movement between branch and head office. It held that the authorities had wrongly disconnected the Haryana-to-Calcutta transfer from the export transaction and had misapplied the export-sale principle without considering the factual setting. The movement was therefore in the course of export out of India and outside tax.

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Issues: Whether purchase tax under section 9 of the Haryana General Sales Tax Act, 1973 was leviable on goods purchased by the branch office and moved to the head office for export out of India, or whether such movement was in the course of export and therefore not exigible to tax.

Analysis: The goods were purchased in Haryana by the branch office, sent to the head office at Calcutta, and ultimately exported pursuant to foreign orders. The decisive question was whether the inter-office movement merely preceded export or was itself part of the export movement. The Court accepted the finding that the movement from Faridabad to Calcutta was occasioned by the export arrangement and that the branch office and head office could not be treated as effecting a taxable sale inter se for these goods. It held that the authorities had erred in treating the earlier movement as disconnected from the export and in applying the export-sale ratio without regard to the factual setting.

Conclusion: Purchase tax under section 9 of the Haryana General Sales Tax Act, 1973 was not leviable, as the movement of goods was in the course of export out of India.

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