Penultimate export sale exemption applied where the transaction was directly linked to the export order and completed before export.

A writ petition challenging a sales tax levy was not barred by the alternate remedy rule where the dispute went to the taxing authority's competence and turned on undisputed facts and the construction of section 5(3) of the Central Sales Tax Act, 1956 and Article 286. The sale to the intermediate buyer was treated as a completed penultimate sale made after and for the purpose of complying with the export order, with a direct link to the actual export. It therefore fell within section 5(3) and was immune from local sales tax under the Bombay Sales Tax Act, 1959.

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Issues: (i) whether the writ petition was not maintainable for want of exhaustion of the alternate statutory remedy under the Bombay Sales Tax Act, 1959; (ii) whether the sale by the petitioner to the intermediate buyer was a penultimate sale in the course of export protected by section 5(3) of the Central Sales Tax Act, 1956 and therefore not taxable under the Bombay Sales Tax Act, 1959.

Issue (i): whether the writ petition was not maintainable for want of exhaustion of the alternate statutory remedy under the Bombay Sales Tax Act, 1959.

Analysis: The challenge went to the root of the taxing authority's competence to levy tax on the transaction. The facts were undisputed and the controversy turned on the legal construction of section 5(3) of the Central Sales Tax Act, 1956 and Article 286 of the Constitution of India. In such a case, the availability of a reference or other statutory remedy did not operate as an absolute bar to writ jurisdiction, and relegating the petitioner to the statutory hierarchy was unnecessary.

Conclusion: The preliminary objection on maintainability was rejected.

Issue (ii): whether the sale by the petitioner to the intermediate buyer was a penultimate sale in the course of export protected by section 5(3) of the Central Sales Tax Act, 1956 and therefore not taxable under the Bombay Sales Tax Act, 1959.

Analysis: Section 5(3) applies only where the last sale or purchase preceding the export is a completed sale under section 2(g) and is made after, and for the purpose of complying with, the export order or agreement. A mere agreement to sell is not enough. On the facts, the petitioner's supply was effected after the foreign end-user's order and was made to comply with that export requirement. The contractual documents and export papers showed a direct and inextricable link between the petitioner's sale and the actual export, satisfying the statutory test for a deemed export sale.

Conclusion: The transaction was covered by section 5(3) and could not be taxed as a local sale under the Bombay Sales Tax Act, 1959.

Final Conclusion: The demand and the orders of revision and appeal could not be sustained, and the writ petition succeeded with relief to the petitioner.

Ratio Decidendi: For section 5(3) of the Central Sales Tax Act, 1956, the relevant sale must be a completed sale that is inextricably linked to the export and made after, and for the purpose of complying with, the export order or agreement; such a transaction is immune from State sales tax by virtue of Article 286.

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