Purchase tax on export despatch outside the State attracts liability where the inter-State trade exception does not apply.

Purchase tax liability arose where goods purchased in the State were despatched outside the State by way of export and the transaction was not in the course of inter-State trade or commerce. Section 7-A(1)(b) was confined to disposal otherwise than by sale in the State, while section 7-A(1)(c) governed despatch outside the State. The Court treated export despatch as falling within section 7-A(1)(c), held the earlier Tribunal view distinguishable, and restored the levy of purchase tax. The contrary orders of the Tribunal and appellate authority were held unsustainable.

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Issues: Whether the assessee was liable to purchase tax under section 7-A of the Tamil Nadu General Sales Tax Act, 1959 on the despatch of crushed bones to foreign buyers outside the State.

Analysis: Section 7-A(1)(b) applies where the assessee disposes of the goods otherwise than by sale in the State, while section 7-A(1)(c) applies where the goods are despatched to a place outside the State except where the transaction is in the course of inter-State trade or commerce. The transaction in question involved despatch of the goods to a place outside the State by way of export, and the Court held that such export sale falls within the scope of section 7-A(1)(c). The earlier view relied upon by the Tribunal was held to be distinguishable, and the governing principle was that export despatch not protected by the inter-State trade or commerce exception attracts purchase tax.

Conclusion: The assessee was liable to purchase tax under section 7-A(1)(c), and the contrary orders of the Tribunal and the appellate authority were unsustainable.

Final Conclusion: The assessing authority's levy was restored, and the Revenue succeeded on the core tax issue.

Ratio Decidendi: Where goods are purchased in the State and then despatched outside the State by way of export, and the transaction is not in the course of inter-State trade or commerce, purchase tax liability arises under section 7-A(1)(c) of the Tamil Nadu General Sales Tax Act, 1959.

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