Penultimate sale for export: qualifying transactions fall within export sale treatment, not inter-State tax liability.

A penultimate sale can qualify as a sale in the course of export under section 5(3) of the Central Sales Tax Act if there is a prior export agreement or order and the last sale is made to comply with it. Where those statutory conditions are satisfied, the transaction is not to be treated as an inter-State sale for liability under section 3-AAAA of the U.P. Sales Tax Act. The Tribunal's decision was set aside because it had not recorded findings on the section 5(3) requirements, and the matter was remitted for fresh adjudication on those factual issues.

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Issues: Whether the penultimate sale to the State Trading Corporation could be treated as a sale in the course of export under section 5(3) of the Central Sales Tax Act, and if so, whether it would still be an inter-State sale attracting liability under section 3-AAAA of the U.P. Sales Tax Act.

Analysis: Section 5(3) applies where there is a prior agreement or order for export, the last sale or purchase occurs after that agreement, and it is for complying with that agreement or order. The provision was inserted after the earlier decisions relied on by the Tribunal, and those decisions did not consider its effect. The binding construction placed on section 5(3) is that a qualifying penultimate sale is to be regarded as being in the course of export. On that basis, where the statutory conditions are established, the sale cannot be treated as an inter-State sale for the purpose of section 3-AAAA. As the Tribunal did not record findings on the statutory conditions under section 5(3), its conclusion could not stand.

Conclusion: The Tribunal's order was set aside and the matter was remitted for fresh decision on the factual requirements of section 5(3) and the corresponding liability under section 3-AAAA.

Final Conclusion: The legal position was clarified in favour of the Revenue, but the assessment dispute itself was sent back for fresh adjudication on the existing record.

Ratio Decidendi: A penultimate sale satisfying section 5(3) of the Central Sales Tax Act is to be treated as a sale in the course of export and not as an inter-State sale for the purpose of sales tax liability under the State Act.

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