Export sales protection bars indirect sales tax on inputs used for goods manufactured for export.

Export sales are protected by Article 286, and a State cannot use Section 3(4) of the Tamil Nadu General Sales Tax Act to impose an indirect tax on goods purchased against concessional declarations when those goods are used in manufacturing exports outside the State. The Court followed binding precedent and held that such a levy would, in substance, burden export sales and fall within the constitutional prohibition on taxing exports. As the issue was already covered, no substantial question of law survived, and the revision was dismissed in favour of the assessee.

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Issues: Whether tax under Section 3(4) of the Tamil Nadu General Sales Tax Act, 1959 could be levied on the value of goods purchased against concessional declarations and used in the manufacture of goods exported outside the State, and whether such levy would be inconsistent with Article 286 of the Constitution of India.

Analysis: The Court followed its earlier decision holding that export sales are protected by the constitutional restriction on State taxing power and that an indirect levy on inputs used for export production cannot be sustained where it would, in substance, burden export sales. It noted that the State cannot, by resort to Section 3(4), impose tax on transactions that fall within the constitutional prohibition against taxing exports. The Court also accepted that the issue stood covered by prior binding precedent and that no substantial question of law survived.

Conclusion: Section 3(4) could not be applied to the export sales in question, and the revision was dismissed in favour of the assessee.

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