Zero-rated export sale classification: last sale to an export oriented unit qualifies for input-tax credit refund when export is proved.

A last sale to a 100 per cent export oriented unit, when supported by export documents and followed by actual export, qualifies as a sale in the course of export under section 5(3) of the Central Sales Tax Act, 1956. On that basis, the transaction falls within section 18(1) of the Tamil Nadu Value Added Tax Act, 2006 and attracts zero-rating with refund of input-tax credit. The authority's view that such a sale could never be treated as a zero-rated export sale was rejected as a misreading of the statutory scheme, and the refund claim was sustained.

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Issues: Whether the sale of goods to a 100 per cent export oriented unit, followed by export of the goods, constituted a zero-rated sale entitled to refund of input-tax credit under section 18(1) of the Tamil Nadu Value Added Tax Act, 2006, read with section 5(3) of the Central Sales Tax Act, 1956.

Analysis: Section 18(1) of the Tamil Nadu Value Added Tax Act, 2006 grants input-tax credit or refund where the sale is one specified under section 5(1) or section 5(3) of the Central Sales Tax Act, 1956. Section 5(3) deems the last sale or purchase preceding the sale occasioning export to be in the course of export if it is for the purpose of complying with the export order. The materials placed showed that the sale to the export oriented unit was supported by export documents and was the last sale preceding export. The authority's view that a sale to a 100 per cent export oriented unit could not qualify as zero-rated sale was held to be based on a misreading of the statutory scheme.

Conclusion: The sale was held to fall within section 5(3) of the Central Sales Tax Act, 1956 and therefore within section 18(1) of the Tamil Nadu Value Added Tax Act, 2006, entitling the assessee to refund of input-tax credit.

Final Conclusion: The impugned orders were set aside and the writ petitions were allowed, with the refund claim sustained on the footing that the transaction was a zero-rated export sale.

Ratio Decidendi: A last sale to an export oriented unit that is proved to be for the purpose of export and is followed by actual export qualifies as a sale in the course of export under section 5(3), and accordingly attracts zero-rating and refund under the relevant VAT provision.

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