Penultimate sale exemption under sales tax law requires the immediate purchase preceding export, not an earlier intermediary transaction.

Exemption under section 5(3) of the Central Sales Tax Act, 1956 applies only to the immediate last sale or purchase preceding the export transaction, and only where the transaction is made after a pre-existing export agreement or order and in compliance with it. The dealer's purchase of groundnut from cultivators was not the penultimate purchase because the export houses later purchased the goods from the dealer and then exported them, making the dealer's purchase one step removed from the export occasioning sale. The purchase therefore did not satisfy the statutory conditions for exemption and was held taxable.

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Issues: Whether the dealer's purchase of groundnut from cultivators qualified for exemption as the penultimate purchase under section 5(3) of the Central Sales Tax Act, 1956.

Analysis: Exemption under section 5(3) applies only to the last sale or purchase preceding the export sale or purchase, and only if it takes place after a pre-existing agreement or order for export and for the purpose of complying with that agreement or order. The dealer's purchase from cultivators was not the immediate purchase preceding the export occasioning transaction. The Indian export houses purchased the goods from the dealer and then exported them, so the dealer's purchase was one step removed from the penultimate purchase. On that reasoning, the transaction did not satisfy the statutory conditions for exemption.

Conclusion: The purchase of groundnut by the dealer was not exempt under section 5(3) of the Central Sales Tax Act, 1956, and the question was answered in favour of the Revenue.

Ratio Decidendi: The exemption for penultimate sales or purchases in section 5(3) of the Central Sales Tax Act, 1956 is available only to the immediate last purchase or sale preceding the export transaction, made after a pre-existing export agreement and in compliance with it.

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