Export-linked sales tax exemption turns on an inextricable link between sale and actual export, not mere foreign exchange payment.

A sale is in the course of export only when it occasions the export or is so integrated with the export transaction that both form part of the same transaction under section 5 of the Central Sales Tax Act, 1956. A mere intention that goods will be taken out of India, payment in foreign exchange, or a condition prohibiting resale in India is not enough to establish export linkage. Where the sale is completed in India, title passes immediately, and the seller retains no control over the movement of goods, the sale is treated as a sale for export, not a sale in the course of export. The article states that such sales are not exempt from sales tax.

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Issues: Whether sales made to foreign tourists under an export promotion scheme against foreign exchange, with a prohibition on sale in India, were sales in the course of export and therefore exempt from sales tax.

Analysis: Section 5 of the Central Sales Tax Act, 1956 exempts only a sale that occasions export or is effected after the goods have crossed the customs frontiers. The expression "in the course of export" requires an integral and inextricable link between the contract of sale and the actual export, so that the sale is part of the same transaction as the export. A mere intention that the goods should be taken out of India, purchase against foreign exchange, or a condition prohibiting resale in India does not by itself establish that the sale occasioned the export. On the facts, the sales were complete in India, title passed immediately, the seller retained no control, and there was no bond between the sale and the export movement.

Conclusion: The sales were not in the course of export and were not exempt from sales tax; the revisions were allowed and the question of law was answered in favour of the Revenue.

Ratio Decidendi: A sale is in the course of export only when it occasions export or is so integrated with the export that both form part of the same transaction; a sale completed in India with no inextricable link to the export is merely a sale for export and does not qualify for exemption.

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