Export deduction under sales tax rules extends to intermediary transactions, not only direct exports by the dealer.

Rule 29(v) of the Punjab General Sales Tax Rules, 1949 was read as wider than section 5(1) of the Central Sales Tax Act, 1956 and was held to allow deduction from gross turnover where goods were proved to have been exported out of India, whether by the dealer directly or through intermediary or consecutive transactions. The interpretation in Mod. Serajuddin did not restrict the State rule in the same way. On the facts, the goods had admittedly moved through intermediary dealers before export, so the assessee's claim fell within the rule and the issue was answered in favour of the assessee and against the Revenue.

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Issues: Whether rule 29(v) of the Punjab General Sales Tax Rules, 1949 permitted deduction from gross turnover for goods exported out of India through an intermediary, and whether the assessee was barred from claiming such benefit for the period prior to 1 April 1976.

Analysis: The reference arose under section 42 of the Haryana General Sales Tax Act, 1973. The controversy concerned the scope of rule 29(v) and whether the interpretation of section 5(1) of the Central Sales Tax Act, 1956, as explained in Mod. Serajuddin, controlled the State rule. The Court followed its earlier decisions and held that rule 29 was wider in language and allowed deduction where goods were proved to have been exported out of India, whether directly by the dealer or through an intermediary or through consecutive transactions. Since the goods in question had admittedly been exported through intermediary dealers, the assessee's claim was covered by the State rule.

Conclusion: The question was answered in favour of the assessee and against the Revenue.

Ratio Decidendi: Where the State sales tax rule permits deduction for goods proved to have been exported out of India, the benefit is not confined to direct export by the dealer and can extend to export through intermediary transactions.

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