Purchase tax on exporter's purchases from unregistered dealers remains valid absent export-linked statutory protection.

A purchase by an exporter from an unregistered dealer does not, by itself, amount to a purchase in the course of export under section 5(1) of the Central Sales Tax Act, 1956. The protected category covers only the sale or purchase that occasions export or a transfer of title after the goods cross the customs frontiers. The later relief for penultimate sales under section 5(3) was noted, but it was not available for the period covered. Accordingly, purchase tax under the State sales tax law could be levied, and the challenged entry was not inconsistent with the Central Act.

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Issues: Whether the levy of purchase tax under entry 13a of the Third Schedule to the Karnataka Sales Tax Act on purchases of shrimps and prawns from unregistered dealers was invalid for alleged inconsistency with section 5(1) of the Central Sales Tax Act, 1956, and whether such purchases could be treated as purchases in the course of export.

Analysis: Section 5(1) of the Central Sales Tax Act, 1956 protects only a sale or purchase that occasions export or is effected by transfer of documents of title after the goods have crossed the customs frontiers of India. The Court applied the settled distinction between the sale that occasions export and the prior or penultimate transaction, holding that a purchase by an exporter from an unregistered dealer does not, by itself, amount to a purchase in the course of export. The later insertion of section 5(3) was noted as conferring a limited benefit on penultimate sales made to comply with an export order, but that statutory relief was not available for the period in question. Since the petitioners purchased from unregistered dealers, section 6 of the Karnataka Sales Tax Act, 1957 fastened purchase tax liability, and entry 13a was not contrary to section 5(1).

Conclusion: The challenge to the levy failed. The purchases were held taxable, and the validity of entry 13a was upheld for the relevant period.

Ratio Decidendi: A purchase by an exporter from an unregistered dealer does not qualify as a purchase in the course of export under section 5(1) of the Central Sales Tax Act, 1956, and purchase tax can be levied under the State sales tax law unless the transaction falls within the specific statutory protection later created by section 5(3).

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