Purchase tax on goods despatched outside the State applies even where the destination is for export.

Despatch of goods purchased in exempt circumstances to any place outside the State attracts purchase tax under section 7-A(1)(c) of the Madras General Sales Tax Act, 1959. The provision was read to cover movement beyond State boundaries whether the destination is in India or abroad, and the only relevant exclusion is despatch in the course of inter-State trade or commerce. The export-related constitutional explanation was treated as inapplicable because it operated in a different context and did not restrict section 7-A(1)(c). On that construction, goods purchased from agriculturists and sent outside the State for export were held taxable.

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Issues: Whether goods purchased from agriculturists and despatched to a place outside the State for export attracted purchase tax under section 7-A(1)(c) of the Madras General Sales Tax Act, 1959.

Analysis: Section 7-A imposes purchase tax where a dealer purchases goods in circumstances in which no tax is payable under section 3, 4 or 5 and thereafter consumes, disposes of, or despatches them outside the State otherwise than as a direct result of sale or purchase in the course of inter-State trade or commerce. The expression "despatches them to a place outside the State" was read as covering any movement beyond the State boundaries, regardless of whether the destination was within India or abroad. The exclusion for inter-State trade or commerce was held to be the only relevant exception, and export sales were not treated as excluded from the charge. The reliance placed on the constitutional export-related explanation was held to be inapposite because that provision was concerned with a different setting and did not control section 7-A(1)(c).

Conclusion: The transaction was held to fall within section 7-A(1)(c), and purchase tax was rightly levied against the assessee.

Ratio Decidendi: For the purpose of purchase tax under section 7-A(1)(c), despatch of goods to any place outside the State satisfies the statutory condition, and the only relevant exclusion is despatch in the course of inter-State trade or commerce.

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