Purchase turnover on last sale before export is taxable and not barred by the export protection clause.

A tax on the last purchase of untanned hides and skins by a licensed dealer was held valid where the statutory scheme treated the purchase, not the export sale, as the taxable event and fixed the point of levy at the last purchase in the State. The rules were treated as operating within the charging provisions and properly making the last purchaser liable on purchase turnover. The levy was also held not to offend Article 286(1)(b), because constitutional protection extends only to the transaction that occasions export, not to antecedent purchases made with export in view. The purchase turnover of goods later exported was therefore taxable.

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Issues: (i) Whether the levy of sales tax on untanned hides and skins purchased by licensed dealers and exported outside the State was authorised by the Act and the Rules. (ii) Whether such levy was prohibited by Article 286(1)(b) of the Constitution as a tax on sales or purchases in the course of export.

Issue (i): Whether the levy of sales tax on untanned hides and skins purchased by licensed dealers and exported outside the State was authorised by the Act and the Rules.

Analysis: The statutory scheme treated turnover as capable of being constituted by either purchases or sales, and section 5(vi) contemplated a single point of levy in the series of sales of hides and skins. Rules 4(2)(d) and 16(2)(ii) fixed that point, for exported untanned hides and skins, at the last purchase by the dealer in the State and made tax payable on the purchase price. The taxable event was therefore the purchase preceding export, not the export sale itself. The rules merely worked out the charging provisions and validly selected the last purchaser as the person liable.

Conclusion: The levy was authorised by the Act and the Rules and was valid as a tax on purchase turnover.

Issue (ii): Whether such levy was prohibited by Article 286(1)(b) of the Constitution as a tax on sales or purchases in the course of export.

Analysis: Article 286(1)(b) protects only the transaction which occasions the export, and not earlier purchases made for the purpose of export. The controlling decisions of the Supreme Court had already settled that a purchase for export is only preparatory to export and does not itself occur in the course of export. The fact that the goods were ultimately exported through outside commission agents, or that the dealer intended export when purchasing, did not attract the constitutional prohibition, because the tax was imposed on the antecedent purchase and not on the export sale.

Conclusion: The levy was not repugnant to Article 286(1)(b) and was constitutionally valid.

Final Conclusion: The revision petitions by the State succeeded to the extent that the purchase turnover of untanned hides and skins exported outside the State was taxable, while the assessees' challenge to the levy failed on the constitutional question.

Ratio Decidendi: A tax imposed on the last purchase of goods by a dealer, though the goods are later exported, is not a tax on a sale or purchase in the course of export and is not barred by Article 286(1)(b).

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