Export sales protection and declaration compliance defeated sales tax demand on resold goods at Paradeep.

Declarations requiring resale within Orissa were not contravened where the goods were in fact resold at Paradeep and property passed there, so the proviso to section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act was not attracted. The transactions with Japanese buyers were separate and independent from the assessee's prior purchases, and the immediate and direct cause of export was the contract with the foreign buyers; on that basis, the sales were protected as export sales and were not taxable under the Orissa Act by reason of article 286(1)(b) of the Constitution read with section 5 of the Central Sales Tax Act. The demand therefore could not be sustained on either ground.

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Issues: (i) Whether there was contravention of the declarations furnished under rule 27(2) so as to attract the proviso to section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act, 1947. (ii) Whether the sales to the Japanese buyers, though completed at Paradeep, were sales in the course of export and therefore not exigible to tax under the Orissa Act.

Issue (i): Whether there was contravention of the declarations furnished under rule 27(2) so as to attract the proviso to section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act, 1947.

Analysis: The declarations required resale within Orissa. On the contract terms and the manner of performance, the goods were resold at Paradeep and the property passed there. A resale within the State was therefore established, and there was no use of the goods for a purpose other than that specified in the certificate of registration.

Conclusion: There was no contravention of the declarations, and the proviso to section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act, 1947 was not attracted.

Issue (ii): Whether the sales to the Japanese buyers, though completed at Paradeep, were sales in the course of export and therefore not exigible to tax under the Orissa Act.

Analysis: The transactions with the Japanese buyers were separate and independent from the assessee's prior purchases. The contract showed transfer of title and risk at Paradeep, but the immediate and direct cause of export was the contract between the assessee and the foreign buyers. On that footing, the sale fell within the constitutional protection against State taxation on export sales.

Conclusion: The sales were in the course of export and were not exigible to sales tax under the Orissa Act by reason of article 286(1)(b) of the Constitution of India read with section 5 of the Central Sales Tax Act.

Final Conclusion: The assessee succeeded on the substantive questions decided, and the demand could not be sustained on the footing of either violation of the declarations or taxability of the export sales.

Ratio Decidendi: Where a dealer has in fact resold goods within the State in accordance with the declaration, no breach of the declaration occurs merely because the resulting resale is independently protected from State taxation as a sale in the course of export.

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