Export purchase exemption fails where local purchases are separate from export and not the immediate cause of shipment.

A purchase is in the course of export only where it occasions the export or is so integrally connected with it that the export is the immediate and direct result of that transaction. On that test, purchases of soap stone lumps from local dealers were separate from the assessee's later export sale, because the goods could have been diverted for domestic sale and there was no binding obligation linking the local purchase itself to the foreign buyer. The later insertion of section 5(3) of the Central Sales Tax Act did not apply retrospectively to 1969 transactions. The purchases were therefore not exempt as export purchases and remained liable to purchase tax under the Rajasthan Sales Tax Act, 1954.

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Issues: Whether the assessee's purchases of soap stone lumps from local dealers were purchases in the course of export so as to be exempt from purchase tax under the constitutional and statutory export exemption.

Analysis: Under Article 286(1)(b) of the Constitution and section 5 of the Central Sales Tax Act, a sale or purchase is in the course of export only when it occasions the export or is effected after the goods cross the customs frontiers. The decisive test is whether the sale and export are so integrally connected that the export is the immediate and direct result of that very transaction. Applying the settled principles on export sales, the Court held that the transaction between the local dealers and the assessee was distinct from the subsequent sale by the assessee to the foreign buyer. The local purchase could have been diverted within India, there was no binding obligation tying that purchase itself to the foreign export, and the mere fact that the goods were actually exported later did not convert the earlier local purchase into a transaction in the course of export. The later insertion of section 5(3) of the Central Sales Tax Act did not assist the assessee because it was prospective and did not apply to transactions of 1969.

Conclusion: The purchases from the local dealers were not purchases in the course of export and were liable to purchase tax under section 5A of the Rajasthan Sales Tax Act, 1954; the assessee was not entitled to exemption.

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