Intra-State sale and export exemption rules: delivery within the State kept coffee sales taxable despite later export obligations.

Amounts collected as sales tax, including provisional collections, contingency deposits and excess collections, were held includible in taxable turnover because the underlying sales were taxable, and the validating statute curing objections to such inclusion was upheld. Sales of coffee completed by delivery within the State to registered exporters, and sales delivered within the State to out-of-State buyers or their agents, were held to remain intra-State sales. The later obligation to export, or subsequent movement outside the State, did not convert them into sales in the course of export or inter-State trade, so the Article 286 exemptions were unavailable and the assessment was sustained.

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Issues: (i) Whether the amounts collected by the assessee under the sales tax provision, including provisional collections and excess collections, were liable to be included in its taxable turnover and sustained by the validating statute; (ii) Whether sales of coffee to registered exporters, completed by delivery within the State for later export, and sales delivered within the State to out-of-State buyers or their agents, were exempt under Article 286 of the Constitution.

Issue (i): Whether the amounts collected by the assessee under the sales tax provision, including provisional collections and excess collections, were liable to be included in its taxable turnover and sustained by the validating statute.

Analysis: The collections made by the assessee by way of tax and the amounts taken as contingency deposits were held to fall within the scope of the sales tax provision because the underlying sales themselves were taxable. The validating statute removing objections to inclusion in turnover was upheld, and the excess collection was also treated as recoverable by the Government under the statutory provision governing excess collections.

Conclusion: The inclusion of these amounts in taxable turnover was upheld, and the assessee failed on this issue.

Issue (ii): Whether sales of coffee to registered exporters, completed by delivery within the State for later export, and sales delivered within the State to out-of-State buyers or their agents, were exempt under Article 286 of the Constitution.

Analysis: A sale completed within the State, with ownership passing on delivery, remains an intra-State sale even if the purchaser is obliged to export the goods later. Such a transaction is a sale for export and not a sale in the course of export. Likewise, where the sale and delivery are completed within the State and the purchaser subsequently transports the goods outside the State, the later movement does not convert the antecedent sale into inter-State trade or commerce. The constitutional exemptions were therefore unavailable.

Conclusion: The assessee was not entitled to exemption under Article 286(1)(b) or Article 286(2) of the Constitution.

Final Conclusion: The assessment was sustained in full, and the petition was dismissed with costs.

Ratio Decidendi: A sale completed within a State is not transformed into a sale in the course of export or inter-State trade merely because the purchaser is bound to export the goods or subsequently transports them outside the State.

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