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Issues: (i) Whether sales made to Nepal buyers were sales in the course of export and covered by Article 286(1)(b) of the Constitution of India. (ii) Whether delivery of goods at Nepalganj, treated as the only available place of delivery, amounted to actual delivery within the State so as to make the sales taxable under the U.P. Sales Tax Act.
Issue (i): Whether sales made to Nepal buyers were sales in the course of export and covered by Article 286(1)(b) of the Constitution of India.
Analysis: A sale is in the course of export only when the sale and the export are so integrated that the export is occasioned by the sale and there is a direct and inextricable connection between them. The facts showed that the Nepal buyer was free either to take the goods into Nepal or to resell them at Nepalganj, which was within India. In the absence of proof of a common intention to export or of a binding obligation that the goods must be exported, the sale could not be treated as having occasioned export.
Conclusion: The first question was answered in the negative and against the assessee.
Issue (ii): Whether delivery of goods at Nepalganj, treated as the only available place of delivery, amounted to actual delivery within the State so as to make the sales taxable under the U.P. Sales Tax Act.
Analysis: The stated facts showed that delivery was taken at Nepalganj and that the buyer had the freedom to deal with the goods there itself. That circumstance did not establish that the transaction had crossed into a completed export sale. On the facts stated, the local delivery within India remained sufficient to support taxability under the State law.
Conclusion: The second question was answered in the affirmative and against the assessee.
Final Conclusion: The reference was disposed of by holding that the impugned sales were not sales in the course of export, and the turnover was liable to be dealt with as taxable under the State enactment.
Ratio Decidendi: A sale is not in the course of export unless the sale itself occasions the export and the transaction is so inseparably linked with the actual export that the buyer has no freedom to interrupt the export chain by dealing with the goods within India.
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