Sales tax on export-linked sales remains distinct from export duty unless a specific constitutional bar applies.

Sales tax on a transaction of sale does not become an export duty merely because the goods are exported outside India. The constitutional distinction between sales tax and export duty remains intact, and a sale occasioning export is taxable unless specifically protected by the constitutional prohibition in Article 286(1)(b). The court also upheld clause (a) of Explanation 2 to section 2(h) of the Madras General Sales Tax Act, treating it as valid without requiring determination of the exact passing of title on the facts. The levy on the disputed turnover was therefore within power, and the assessment was sustained.

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Issues: Whether sales tax could validly be levied on sales of goods which resulted in export outside India, and whether such levy was in substance an export duty beyond the competence of the Provincial Legislature.

Analysis: Sales tax is a tax on the transaction of sale and not on the exported goods themselves. A sale occasioning export does not, merely for that reason, become an export duty or fall within the Union field relating to export duty. The constitutional distinction between sales tax and export duty is maintained by treating them as different imposts, and the protection against taxing sales by export was separately provided by Article 286(1)(b) of the Constitution of India. The Court also accepted the validity of clause (a) of Explanation 2 to section 2(h) of the Madras General Sales Tax Act, which made it unnecessary to determine the exact passing of title on the facts of the case.

Conclusion: The levy of sales tax on the disputed turnover was valid and within power, and the challenge to the assessment failed.

Final Conclusion: The appeal was dismissed, and the assessment to sales tax was upheld.

Ratio Decidendi: A tax imposed on the transaction of sale is not transformed into an export duty merely because the sale results in export; sales tax and export duty are distinct imposts, and a sale occasioning export remains taxable unless protected by a specific constitutional prohibition.

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