Export sales remain constitutionally protected, and Section 3(4) cannot be used to tax them indirectly.

Section 3(4) of the Tamil Nadu General Sales Tax Act, 1959 could not be applied to export sales of manufactured goods, because export sales are protected by Article 286 and the State cannot indirectly impose tax on such sales through a levy on manufactured goods. The Court followed its earlier binding precedent and noted that taxing the value of goods purchased for manufacture, where the resulting goods are exported, would effectively bypass the constitutional bar. On that basis, Section 3(4) was held inapplicable to the export turnover and the Revenue's challenge failed.

---

---

Issues: Whether Section 3(4) of the Tamil Nadu General Sales Tax Act, 1959 could be applied to export sales of manufactured goods so as to justify deletion of the turnover.

Analysis: The dispute turned on whether the levy under Section 3(4) could be sustained when the manufactured goods were exported. The Court followed its earlier decision holding that export sales are protected by the constitutional restriction in Article 286 and that the State cannot indirectly create tax liability on such export sales by invoking Section 3(4). It also noticed that a levy on the value of goods purchased for manufacture, where the goods are exported, would negate the constitutional bar and could not be countenanced. Since the issue was already covered by binding precedent, no contrary view was possible.

Conclusion: Section 3(4) could not be invoked to levy tax in relation to the export sales, and the Revenue's challenge failed.

---