Export-sale exemption requires direct contractual obligation; intermediary contracts do not bring purchases within the course of export.
Purchase tax exemption for goods claimed to be bought in the course of export was denied because the dealer was not directly bound by an export obligation. The arrangement was treated as a sale to the State Trading Corporation, followed by a separate export sale to the foreign buyer, so the purchases were not the immediate and direct cause of export. A separate intermediary contract was insufficient to bring the purchases within the export-sale principle. The operative test is direct contractual obligation and an integrated export transaction; absent that nexus, the purchase remains taxable.
Issues: Whether purchases of footwear by the dealer were exempt from purchase tax on the ground that they were made in the course of export outside India.
Analysis: The claim to exemption depended on whether the dealer was under a direct contractual obligation to export the goods and whether the purchases formed part of an integrated export transaction. The arrangement with the State Trading Corporation, read with the foreign buyer's contract, was held to amount in substance to a sale by the dealer to the Corporation, followed by a separate export sale by the Corporation to the foreign buyer. The dealer was not found to have undertaken a direct obligation to the foreign buyer, and the purchases were not treated as the immediate and direct cause of export. The facts were held to be indistinguishable from the governing principle applied in the earlier export-sales decision and different from cases where the dealer itself was contractually bound to move the goods abroad.
Conclusion: The purchases were not in the course of export and were not exempt from purchase tax. The claim failed.
Final Conclusion: Exemption under the export-sale principle was denied because the dealer's purchases were not part of a direct and integrated export obligation.
Ratio Decidendi: For a purchase or sale to qualify as being in the course of export, the dealer must be directly bound by the export obligation and the transaction must itself be the immediate and direct cause of export; a separate intermediary contract does not confer exemption.
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AI Drafter ✕
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