Export sale situs does not make the transaction a sale in the State for purchase tax purposes.

Goods purchased from unregistered dealers and later sold in the course of export were held not to escape purchase tax merely because the sale situs was within the State. The analysis distinguishes export sales under section 5(3) of the Central Sales Tax Act, 1956 from local or intra-State sales for purposes of section 7-A of the Tamil Nadu General Sales Tax Act. A sale protected as an export sale under Article 286(1) and section 5(3) is not a "sale in the State" simply because title passes there. The prior purchase therefore remained exigible to purchase tax under the State enactment, and the levy was upheld.

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Issues: Whether goods purchased from unregistered dealers and later sold in the course of export under section 5(3) of the Central Sales Tax Act, 1956 can escape purchase tax under section 7-A of the Tamil Nadu General Sales Tax Act on the footing that the sale has its situs within the State.

Analysis: The levy arose under section 7-A of the Tamil Nadu General Sales Tax Act, which fastens purchase tax where goods purchased without tax liability are subsequently disposed of otherwise than by way of sale in the State. The contention was that a sale which qualifies as a sale in the course of export under section 5(3) of the Central Sales Tax Act, 1956 still remains a sale within the State because its situs may be located there, and therefore the disposal would be by way of sale in the State. The Court rejected that approach by applying the later Supreme Court exposition that sales in the course of export are qualitatively distinct from intra-State sales for the purposes of State sales tax laws. It held that the expression "sale in the State" in the State enactment must be confined to local or intra-State sales, and that the situs of the sale is irrelevant where the transaction is otherwise an export sale protected by Article 286(1) of the Constitution of India and section 5(3) of the Central Sales Tax Act, 1956.

Conclusion: The export sale could not be treated as a sale in the State for the purpose of defeating purchase tax under section 7-A, and the levy was upheld against the assessee.

Final Conclusion: The writ petitions failed because the statutory immunity attached to export sales did not prevent the State from treating the prior purchase as exigible to purchase tax under the State enactment.

Ratio Decidendi: For State sales tax purposes, a transaction falling within section 5(3) of the Central Sales Tax Act, 1956 is not a sale in the State merely because the situs of title passes within the State; such export sales are outside the category of intra-State sales for purchase tax liability under the State Act.

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