Export exemption cannot be narrowed to section 5(1) alone where penultimate sales form part of the export chain.

Entry tax exemption for 100 per cent export oriented units could not be narrowed by an explanatory definition that confined "export" to section 5(1) of the Central Sales Tax Act, 1956. The text states that section 5(3) treats the penultimate sale preceding the export sale, when made in compliance with the export order, as part of the course of export, so that sale forms an integral part of the export chain. A notification under the entry tax law that conflicts with the industrial policy and the statutory understanding of export was said not to stand, and the restrictive words were quashed.

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Issues: Whether the explanatory definition of "export" in the entry tax notification could be confined to section 5(1) of the Central Sales Tax Act, 1956, thereby excluding penultimate sales covered by section 5(3), and whether the notification was liable to be quashed to that extent.

Analysis: The industrial policy granted entry tax exemption for 100 per cent export oriented units. The notification issued under the entry tax enactment was required to implement that policy and could not narrow the scope of export by a restricted explanation. Section 5(3) of the Central Sales Tax Act, 1956 treats the last sale preceding the export sale, when made in compliance with the export order, as part of the course of export. That penultimate sale forms an integral and inseparable part of the export chain. A notification contrary to the policy, and inconsistent with the statutory understanding of export, cannot stand.

Conclusion: The restrictive words confining export to section 5(1) were quashed, and export was directed to be understood in the full sense of section 5 of the Central Sales Tax Act, 1956. The assessee succeeded.

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