Export sale exemption and revision powers clarified: only the immediate export-linked transaction is protected, and concurrent orders may be revised.
Only the sale or purchase immediately preceding an export, and linked to the export order or agreement, qualifies as a transaction in the course of export under Article 286 and section 5(3) of the Central Sales Tax Act; an earlier purchase from unregistered sellers does not, so sales tax remains payable on that purchase. Revisional proceedings under section 22A of the Karnataka Sales Tax Act are timely if initiated within the prescribed period, with limitation counted from initiation rather than notice. The revisional authority may also set aside both the assessment order and the appellate order where they form part of the same concurrent adjudicatory chain.
Issues: (i) whether the purchase made by a dealer for sale to an exporter for further sale to a foreign country is exempt from sales tax as being in the course of export; (ii) whether the revisional proceedings were barred by limitation; and (iii) whether the revisional authority could set aside both the assessment order and the appellate order.
Issue (i): whether the purchase made by a dealer for sale to an exporter for further sale to a foreign country is exempt from sales tax as being in the course of export.
Analysis: Article 286 of the Constitution of India and section 5(3) of the Central Sales Tax Act operate to exempt only the last sale or purchase preceding the export sale, provided it is linked to the export order or agreement. The dealer's purchase from unregistered sellers in Karnataka was an earlier purchase and not the preceding transaction in the export chain. Only the sale to the Delhi exporter and the exporter's purchase could fall within the protected category of transactions in the course of export.
Conclusion: The dealer was not entitled to exemption on the initial purchase, and the levy of sales tax was upheld.
Issue (ii): whether the revisional proceedings were barred by limitation.
Analysis: Under section 22A of the Karnataka Sales Tax Act, the limitation period was to be reckoned from the date of initiation of proceedings, not from the date of notice. Since the proceedings had been initiated within the prescribed period, the revisional exercise was within time.
Conclusion: The challenge based on limitation failed.
Issue (iii): whether the revisional authority could set aside both the assessment order and the appellate order.
Analysis: Section 22A of the Karnataka Sales Tax Act confers revisional jurisdiction to pass such order as the circumstances justify, including cancellation or modification of assessment. Where the assessment order and appellate order are concurrent, setting aside both orders is permissible because both form part of the same chain of concurrent adjudication. The revisional authority was therefore competent to interfere with both orders.
Conclusion: The revisional authority acted within jurisdiction in setting aside both orders.
Final Conclusion: The assessment and revisional action were sustained, and the taxpayer obtained no relief on any of the substantial issues decided.
Ratio Decidendi: Only the sale or purchase immediately preceding the export, and linked to the export arrangement, is protected as a transaction in the course of export; limitation for revision runs from initiation of proceedings; and revisional jurisdiction may extend to concurrent orders of the assessing and appellate authorities.
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AI Drafter ✕
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