Export-linked transfer to head office cannot attract purchase tax where goods are actually exported out of India.

Purchase tax under section 9 of the Haryana General Sales Tax Act, 1973 could not be levied on goods transferred to the assessee's head office and subsequently exported out of India, where the movement to the head office was integrally connected with the export transaction. The High Court applied the earlier binding view that such transfer formed part of the export movement when the goods were in fact exported, so the prior transfer did not justify taxation. On that basis, the levy of purchase tax was unsustainable and was set aside.

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Issues: Whether purchase tax under section 9 of the Haryana General Sales Tax Act, 1973 could be levied on goods transferred to the assessee's head office and thereafter exported out of India.

Analysis: The levy was based on the transfer of goods from the assessee's place of business in the State to its head office, from where the goods were exported. The Court applied the earlier binding view that where the movement of goods to the head office was integrally connected with the export and the goods were in fact exported out of India, such movement formed part of the export transaction. On that basis, the purchase tax could not be sustained merely because the transfer to the head office preceded the physical export.

Conclusion: The levy of purchase tax was not sustainable and was set aside.

Ratio Decidendi: Goods transferred to the head office for the purpose of export and actually exported out of India cannot be subjected to purchase tax under section 9 merely because the transfer to the head office preceded the export movement.

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