Export sale exemption requires a direct causal nexus between sale and export; mere local purchase for later export is insufficient.

Sales are treated as in the course of export only when the sale itself occasions the export, or when sale and export form an integrated and inextricable transaction under Article 286(1)(b) and section 5(1) of the Central Sales Tax Act, 1956. A mere local purchase made with a view to later export is insufficient unless the contract of sale creates a real and intimate causal nexus with the movement of goods out of India. On the stated facts, tea sold to local agents of foreign buyers involved no contractual obligation to export and no movement under the sale contracts, so the sales were not exempt from tax.

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Issues: Whether sales of tea made to local agents of foreign buyers, followed by actual export, were sales in the course of export out of the territory of India and therefore exempt from tax.

Analysis: Exemption under Article 286(1)(b) of the Constitution and section 5(1) of the Central Sales Tax Act, 1956 is attracted only when the sale itself occasions the export or is so closely connected with it that the sale and export form integrated and inextricable parts of a single transaction. A mere purchase within the State with a view to export, followed by later export, is not enough. There must be a real and intimate causal nexus between the sale and the export, and the contract of sale must itself impose or produce the movement of goods out of India. The tea sales in question involved no contractual obligation to export and no movement under the contracts of sale.

Conclusion: The sales were not in the course of export and were not exempt from taxation. The claim for exemption failed.

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