Export sale test under section 5(1) requires transfer of title documents after customs clearance, not merely a foreign buyer.

The second limb of section 5(1) of the Central Sales Tax Act applies only where the sale is effected by transfer of documents of title and that transfer occurs after the goods have crossed the customs frontiers of India. A sale to a foreign buyer alone is not enough to satisfy this export-sale test. The Board of Revenue applied the wrong legal standard by treating the existence of a foreign buyer as decisive instead of checking whether both statutory conditions were met, and its view that the sales were outside section 5(1) was therefore unjustified.

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Issues: Whether sales could be treated as sales in the course of export under the second part of section 5(1) of the Central Sales Tax Act without first finding that the sales were effected by transfer of documents of title after the goods had crossed the customs frontiers of India.

Analysis: The second part of section 5(1) requires satisfaction of two distinct conditions, namely, that the sale is effected by transfer of documents of title to the goods and that such transfer takes place after the goods have crossed the customs frontiers of India. A finding that the sale was made to a foreign buyer is not, by itself, sufficient to attract the second limb of the provision. The Board of Revenue proceeded on an erroneous legal test by treating the existence of a foreign buyer as necessary for the applicability of the second part of section 5(1), instead of examining whether the statutory conditions for export sale were fulfilled.

Conclusion: The Board of Revenue was not justified in holding that the sales of Rs. 1,21,96,490 were outside the second part of section 5(1) of the Central Sales Tax Act and were not sales in the course of export.

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