Export sale exemption for processed cashew goods: binding precedent on identity of goods prevailed over contrary tax treatment.

Raw cashew-nuts purchased in the State and processed into kernel for export were treated as capable of qualifying for exemption under section 5(3) of the Central Sales Tax Act where the last purchase preceding export formed part of the export transaction and the goods were not to be treated as distinct for that purpose. The Court also held that its earlier Division Bench ruling on the identity of raw cashew-nuts and kernel remained binding on sales tax authorities, and that contrary views of other High Courts did not justify departure from that precedent or a Full Bench reference. The impugned assessment notices and provisional levy were set aside.

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Issues: (i) whether raw cashew-nuts purchased in the State and processed into kernel for export could qualify for exemption under section 5(3) of the Central Sales Tax Act, 1956; and (ii) whether the earlier Division Bench decision holding raw cashew-nuts and cashew-nut kernel to be the same goods continued to bind the sales tax authorities and justified refusal to refer the matter to a Full Bench.

Issue (i): whether raw cashew-nuts purchased in the State and processed into kernel for export could qualify for exemption under section 5(3) of the Central Sales Tax Act, 1956.

Analysis: Section 5(3) applies only where the last sale or purchase preceding export is of the same goods that are the subject of the export obligation. The core controversy was whether raw cashew-nuts and cashew-nut kernel are different commercial commodities or the same goods. The earlier binding view of the Court had held that they are not different commercial products for this purpose. In the present case, the assessment notices and provisional levy proceeded on the contrary view that the two were distinct commodities.

Conclusion: The exemption claim based on section 5(3) was held maintainable in principle, and the impugned action proceeding on the opposite premise was set aside.

Issue (ii): whether the earlier Division Bench decision binding the State authorities could be disregarded and the matter sent for reconsideration by a Full Bench.

Analysis: The Court held that the prior Division Bench ruling had already considered the Supreme Court authority and had remained the governing law in the State for several years. Mere existence of contrary views of other High Courts did not justify departure from that binding precedent or a Full Bench reference. Until displaced by a higher court, the earlier decision remained binding on all sales tax officers in Andhra Pradesh.

Conclusion: The earlier Division Bench decision was held to be binding, and no Full Bench reference was warranted.

Final Conclusion: The assessment notices for the two years and the provisional assessment were quashed, and the writ petitions were allowed.

Ratio Decidendi: A binding prior decision on the identity of goods for export exemption under section 5(3) of the Central Sales Tax Act must be followed by subordinate taxing authorities, and a contrary view of other High Courts alone does not justify departure or Full Bench reconsideration.

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