DTA to SEZ supplies are not automatically export sales; CST export treatment depends on statutory movement outside India.

A sale from the Domestic Tariff Area to a Special Economic Zone unit is not treated, by that fact alone, as an export under Article 286 of the Constitution or Section 5(1) of the Central Sales Tax Act, 1956. Export requires movement of goods outside the territory of India in the statutory sense, or a sale that directly occasions such export. The Special Economic Zones Act, 2005 provides distinct exemptions and definitions, but does not convert every DTA-to-SEZ supply into an export sale for CST or constitutional purposes. On that reasoning, the levy of value added tax was upheld and the writ petition was dismissed.

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Issues: (i) Whether movement of goods from Kerala to the petitioner's unit in the Special Economic Zone amounted to export outside the territory of India. (ii) Whether the sale occasioned export for the purposes of Section 5(1) of the Central Sales Tax Act, 1956.

Issue (i): Whether movement of goods from Kerala to the petitioner's unit in the Special Economic Zone amounted to export outside the territory of India.

Analysis: Under Article 286 of the Constitution of India and Section 5(1) of the Central Sales Tax Act, 1956, a sale is in the course of export only if it occasions export out of the territory of India or is effected by transfer of title after the goods cross the customs frontiers of India. The definition of export under the CST Act is tied to crossing the customs frontiers, and a sale to a unit in a Special Economic Zone does not, by that reason alone, become an export sale under the CST Act. The Special Economic Zones Act, 2005 provides its own special definitions and exemptions, but it does not evince an intention to treat every supply from the Domestic Tariff Area to an SEZ unit as an export for CST or constitutional purposes.

Conclusion: The movement of goods from Kerala to the petitioner's SEZ unit was not an export outside the territory of India for purposes of Article 286 or the CST Act.

Issue (ii): Whether the sale occasioned export for the purposes of Section 5(1) of the Central Sales Tax Act, 1956.

Analysis: A sale occasions export only where the export is the direct result of the sale. The statutory scheme of the SEZ Act, including the provisions for specific exemptions from taxes and the distinct treatment of SEZ transactions, indicates that a DTA sale to an SEZ unit is not, without more, a sale in the course of export under Section 5(1) of the CST Act. The Court found no basis to treat the transaction as an export occasioned by the sale, and the alternative contentions relating to penultimate sale and exemption were left open for appropriate proceedings.

Conclusion: The sale did not occasion export within the meaning of Section 5(1) of the Central Sales Tax Act, 1956.

Final Conclusion: The challenge to levy of value added tax on the sale transaction failed, and the writ petition was dismissed.

Ratio Decidendi: A sale from the Domestic Tariff Area to a Special Economic Zone unit is not, by that fact alone, an export sale under Article 286 of the Constitution or Section 5(1) of the Central Sales Tax Act, 1956; export requires movement of goods outside the territory of India in the statutory sense.

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