Import-sale exemption requires the sale to occasion import; Bihar sales remained taxable, while groundnut set-off was allowed.

Article 286(1)(b) exemption applies only where the sale itself occasions and forms part of the import movement; a sale made merely for import or preceding the import transaction does not qualify, so the claimed import-based exemption failed. Sales of goods delivered for consumption in Bihar remained taxable because the Article 286(2) restriction was treated as having been removed for the relevant assessment periods by the validation and continuance measures in force. On the set-off question, unshelled groundnuts and oil seeds were treated as the same commercial description, and refund or set-off was available where tax had already been paid on the earlier taxed commodity.

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Issues: (i) Whether the sales of machineries supplied to the Damodar Valley Corporation were exempt from tax as sales taking place in the course of import within Article 286(1)(b) of the Constitution. (ii) Whether the sales of goods delivered for consumption in Bihar were liable to tax in view of Article 286(2) of the Constitution. (iii) Whether the assessee was entitled to refund or set-off in respect of tax earlier paid on unshelled groundnuts under the Bombay sales tax set-off rules.

Issue (i): Whether the sales of machineries supplied to the Damodar Valley Corporation were exempt from tax as sales taking place in the course of import within Article 286(1)(b) of the Constitution.

Analysis: Exemption under Article 286(1)(b) applies only where the sale itself forms part of the import movement and occasions the import. A sale made for the purpose of import, or preceding the import transaction, is not enough. The asserted agency relationship and prior earmarking of goods did not establish that the assessee's sales were part of the import process in the constitutional sense.

Conclusion: The claim to exemption under Article 286(1)(b) failed and the issue was decided against the assessee.

Issue (ii): Whether the sales of goods delivered for consumption in Bihar were liable to tax in view of Article 286(2) of the Constitution.

Analysis: The governing principle treated the relevant sales as attracting only the constitutional restriction under Article 286(2), and that restriction stood removed for the assessment periods in question by the validation and continuance measures then in force. The sales therefore remained taxable.

Conclusion: The taxability of the sales was upheld and the issue was decided against the assessee.

Issue (iii): Whether the assessee was entitled to refund or set-off in respect of tax earlier paid on unshelled groundnuts under the Bombay sales tax set-off rules.

Analysis: Unshelled groundnuts and oil seeds were treated as the same commercial description for the purpose of the relevant schedule entry, and the set-off rule applied to the article on which tax had already been recovered. Since the later stock was merely the processed form of the earlier taxed goods, refund or set-off could not be denied.

Conclusion: The assessee was entitled to refund or set-off and the issue was decided in favour of the assessee.

Final Conclusion: The reference on the Bihar sales tax questions was answered against the assessee, while the Bombay sales tax matter resulted in allowance of refund or set-off for the earlier taxed goods.

Ratio Decidendi: For constitutional import/export exemption, the sale must itself occasion and form part of the import movement, and a sale merely connected with or preceding import does not qualify; for the set-off dispute, the processed form of the same taxed commodity remained eligible for refund where the schedule did not treat it differently.

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