Export-linked purchase exemption under CST Section 5(3) upheld despite an intermediary processing step

Purchase of horn meal and hoof meal for export qualified for exemption under Section 5(3) of the Central Sales Tax Act, 1956 where the purchases were made against a pre-existing export arrangement and the goods were actually exported. The intervening process relied on by the Revenue did not break the essential export nexus or change the character of the transaction as one in the course of export. The contention that the commodity was not manure was treated as a factual issue and did not displace the appellate findings establishing the statutory exemption. The dealer was therefore entitled to exemption, and the revision petitions failed.

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Issues: Whether the purchase of horn meal and hoof meal for export, followed by an intermediary process, qualified for exemption under Section 5(3) of the Central Sales Tax Act, 1956.

Analysis: The exemption under Section 5(3) applies where the last sale or purchase precedes the export and is made for the purpose of complying with a pre-existing export agreement or order. The factual findings of the appellate authorities showed that the dealer was an exporter, the purchases were made for export, and the goods were actually exported. The intervening process relied upon by the Revenue did not alter the essential character of the transaction as one in the course of export. The contention that the commodity was not manure was treated as a factual matter and did not dislodge the export nexus established on record.

Conclusion: The dealer was entitled to exemption under Section 5(3) of the Central Sales Tax Act, 1956, and the revision petitions failed.

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