Export sale exemption applies only when the sale itself occasions export, not merely customs clearance for export procedures.

Sales of goods are exempt from sales tax only when the transaction itself occasions export or is completed by transfer of title after the goods cross the customs frontiers under section 5 of the Central Sales Tax Act, 1956. The Andhra Pradesh High Court held that the decisive test is whether the sale causes movement of the goods to a foreign destination. Goods sold and delivered at Visakhapatnam to trawler owners, later taken to the high seas, did not become export sales merely because they were cleared under customs export procedures. Customs definitions under sections 68 and 69 of the Customs Act, 1962 did not control sales tax characterisation.

---

---

Issues: Whether the disputed turnover was exempt from sales tax as a sale in the course of export, and whether clearance of bonded goods under customs export procedures made the sale an export sale for sales tax purposes.

Analysis: Section 38 of the State Act excludes from tax sales taking place in the course of export, and the Explanation directs determination by reference to Chapter II of the Central Sales Tax Act, 1956. Under section 5 of the Central Sales Tax Act, 1956, a sale is in the course of export only if it occasions the export or is effected by transfer of documents of title after the goods cross the customs frontiers of India. The decisive test is whether the sale itself causes movement of the goods from India to a foreign destination. On the facts, the spares were sold and delivered at Visakhapatnam to trawler owners, and the subsequent taking of the goods to high seas for use did not mean that the sale had occasioned export. The customs definition of export and clearance under sections 68 and 69 of the Customs Act, 1962 were held to operate for customs purposes and not to control the sales tax characterization of the transaction.

Conclusion: The turnover was not exempt under section 38 of the State Act, because the sales were not export sales within section 5 of the Central Sales Tax Act, 1956. The challenge to recovery also failed, though time was granted for payment of the balance tax.

Ratio Decidendi: For a sale to fall within the export exemption, the sale must itself occasion export to a foreign destination; customs clearance for export purposes does not by itself make the transaction a sale in the course of export under sales tax law.

---