Sale in the course of export depends on integrated obligation and actual export; delivery inside India does not defeat exemption.

Sales of goods destined for Nepal remained sales in the course of export under Article 286(1)(b) where the transaction occasioned the export and the sale and export were part of one integrated arrangement. The governing test requires intention to export, an obligation linking the sale to export, and actual movement of the goods out of India. Physical delivery to the purchasers inside India did not by itself break the export character of the sales because the goods were ordered by Nepal dealers, moved under export-related excise documentation, and were in fact exported to Nepal. The sales therefore qualified for the constitutional export protection.

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Issues: Whether sales of goods ultimately exported to Nepal remained sales in the course of export within Article 286(1)(b) of the Constitution despite delivery being taken by the purchasers inside India.

Analysis: The controlling test is whether the sale occasioned the export and whether the sale and export were so integrated that the connection between them could not be broken without breach of the obligation arising from contract, mutual understanding, or the nature of the transaction. A sale in the course of export requires intention to export, an obligation to export, and actual export. Physical delivery to the purchaser within India is not by itself decisive if the transaction shows that the goods were meant to move out of India and in fact did so. On the facts, the goods were ordered by Nepal dealers, were despatched under export-related excise documentation, and were actually exported to Nepal; the delivery point inside India did not sever the export character of the sales.

Conclusion: The sales were in the course of export and the assessee was entitled to the benefit of Article 286(1)(b) of the Constitution.

Ratio Decidendi: A sale qualifies as being in the course of export when it occasions the export and is supported by an integrated obligation and actual movement of the goods out of India; mere delivery to the purchaser within India does not defeat the exemption if the export is part of the same transaction.

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