Penultimate export sale exemption requires a prior foreign buyer agreement and compliance with it; later exports do not suffice.

Section 5(3) of the Central Sales Tax Act applies only where the last sale or purchase precedes the export sale and is made after a specific agreement or order with the foreign buyer, and in compliance with that agreement or order; both conditions are cumulative. Purchases made before any such foreign buyer arrangement do not qualify merely because the goods were later exported or because of governmental protocol arrangements, so the claimed export exemption for mica was rejected. Mica transferred out of the State to Bihar was also not shown to have lost its last-purchase character within the State, and the turnover remained taxable on that basis.

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Issues: (i) Whether the assessee's last purchases of mica were exempt from tax as sales in the course of export under section 5(3) of the Central Sales Tax Act, 1956. (ii) Whether the turnover relating to mica transferred out of the State to Bihar could escape tax as mere inter-State transfer of the assessee's property.

Issue (i): Whether the assessee's last purchases of mica were exempt from tax as sales in the course of export under section 5(3) of the Central Sales Tax Act, 1956.

Analysis: Section 5(3) applies only when the last sale or purchase precedes the export sale and is made after an agreement or order for or in relation to such export, and also for the purpose of complying with that agreement or order. Both conditions are cumulative. The agreement contemplated is the agreement with the foreign buyer. Purchases made before any such agreement or order with the foreign buyer do not qualify merely because the goods were ultimately exported or because there were protocol or bilateral arrangements between governments.

Conclusion: The claim for exemption under section 5(3) was not sustainable and the finding was against the assessee.

Issue (ii): Whether the turnover relating to mica transferred out of the State to Bihar could escape tax as mere inter-State transfer of the assessee's property.

Analysis: The mica taken out of the State was not shown to have been brought back, and on the facts found the purchases in respect of that mica remained the last purchases within the State for the relevant assessment years. The mere assertion that the goods continued to be the assessee's property did not displace the tax consequence flowing from the last purchase point under the Act.

Conclusion: The tax on the turnover relating to such last purchases was rightly upheld, against the assessee.

Final Conclusion: The revision cases failed in their entirety, and the assessment orders and the Tribunal's view were sustained.

Ratio Decidendi: To attract exemption for penultimate sale or purchase in the course of export, the transaction must be completed after a specific agreement or order with the foreign buyer and must be in compliance with that agreement; both statutory conditions must coexist.

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