Export sale and inter-State sale tests fail for supplies to Mumbai High under the Central Sales Tax Act.

Supplies of helium gas from Maharashtra to Mumbai High were held not to be sales in the course of export, because Mumbai High in the continental shelf and exclusive economic zone is not a foreign destination and does not lie beyond the customs frontier for section 5(1) of the Central Sales Tax Act, 1956. The Court also rejected the Revenue's alternative inter-State sale theory, holding that movement from Maharashtra to Mumbai High was not movement from one State to another under section 3, since Mumbai High is not part of any State. The reference was answered against the Revenue and in favour of the assessee.

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Issues: Whether the sale of helium gas made to a purchaser for delivery to Mumbai High was a sale in the course of export out of India under section 5(1) of the Central Sales Tax Act, 1956 and, alternatively, whether it was an inter-State sale attracting tax under the Central Sales Tax Act, 1956.

Analysis: Mumbai High, situated in the continental shelf and exclusive economic zone, is not a foreign destination and does not lie beyond the customs frontier in the sense required by article 286(1)(b) and section 5(1) of the Central Sales Tax Act, 1956. The legal fiction under sections 6(6) and 7(7) of the Maritime Zones Act operates only when enactments are extended to those areas and cannot be used to treat the continental shelf as part of a State for all purposes. The movement of goods from Maharashtra to Mumbai High is not a movement from one State to another within section 3 of the Central Sales Tax Act, 1956, because Mumbai High is not part of any State. The sale therefore does not answer the statutory test of an inter-State sale. Applying the constitutional and statutory scheme, the Court held that the transaction was not a sale in the course of export and also not an inter-State sale on the footing adopted by the Revenue.

Conclusion: The reference was answered against the Revenue and in favour of the assessee; the sale to Mumbai High was not an export sale under section 5(1) of the Central Sales Tax Act, 1956 and was not liable to be assessed as an inter-State sale on the case pleaded by the Revenue.

Final Conclusion: The legal effect of the decision is that supplies made from Maharashtra to Mumbai High, on the facts found, did not constitute export sales under the Central Sales Tax Act, 1956, while the Revenue's inter-State sales theory also failed on the statutory scheme.

Ratio Decidendi: A sale is in the course of export only if the goods are sent to a foreign destination beyond the customs frontier, and a movement from a State to Mumbai High in the continental shelf is neither a movement to another State nor an export out of India within the meaning of the constitutional and statutory provisions.

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