Export sale status depends on direct causation and post-customs transfer of title, not shipment alone.

Sales by a manufacturer to an export promoter under a separate contract with foreign buyers do not qualify as export sales under the first limb of section 5(1) of the Central Sales Tax Act, 1956, because the export must be directly occasioned by the sale itself. The article further notes that such sales may still fall within the second limb if documents of title were transferred only after the goods crossed the customs frontiers. Where the seller reserved disposal of the goods and title was contractually postponed until negotiation of documents and receipt of payment, the question must be determined on evidence, not on shipment alone.

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Issues: (i) whether sales by the manufacturer to export promoters, under contracts separate from the foreign buyers' contracts, qualified as export sales under the first limb of section 5(1) of the Central Sales Tax Act, 1956; (ii) whether those sales could still qualify under the second limb of section 5(1) as sales effected by transfer of documents of title after the goods crossed the customs frontiers of India.

Issue (i): Whether sales by the manufacturer to export promoters, under contracts separate from the foreign buyers' contracts, qualified as export sales under the first limb of section 5(1) of the Central Sales Tax Act, 1956.

Analysis: A sale falls within the first limb only if it is the immediate and direct cause of export. Where the Indian exporter contracts separately with the foreign buyer, the export is occasioned by the contract between them and not by the prior sale by the manufacturer to the exporter. On the admitted facts, the petitioner had no direct contract with the foreign buyers in respect of the disputed sales.

Conclusion: The disputed sales did not qualify as export sales under the first limb, and the disallowance of exemption on that ground was correct.

Issue (ii): Whether those sales could still qualify under the second limb of section 5(1) as sales effected by transfer of documents of title after the goods crossed the customs frontiers of India.

Analysis: Under the contract, the bill of lading was taken in the seller's name, payment was made against documents through the bank, and title was stipulated to pass only when the documents were negotiated and proceeds received. Under sections 23 and 25 of the Sale of Goods Act, 1930, the seller had reserved the right of disposal, so property did not pass on shipment merely because the contract was f.o.b. Risk passing on shipment did not control the passing of title, and the irrevocable letter of credit did not negate the contractual postponement of title. Since the authority proceeded on the erroneous view that title passed on shipment, the petitioner was wrongly denied an opportunity to prove that in each case the documents were negotiated only after the goods had crossed the customs frontiers.

Conclusion: The second limb remained open for reconsideration, and the matter had to be examined afresh on evidence as to whether the goods had crossed the customs frontiers before transfer of the documents of title.

Final Conclusion: The tax exemption claim failed under the first limb of section 5(1), but the assessment on the disputed sales could not stand without a fresh inquiry under the second limb; the matter was remitted for that limited determination.

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