Export sale taxation under sales law was held unsustainable where the statutory scheme did not permit levy on manufactured goods sold for export.

Section 3(4) of the Tamil Nadu General Sales Tax Act, 1959 was held not to support a levy on goods manufactured and then sold by way of export. The Court construed the provision in the context of export transactions and agreed with the tribunal's view that, although the sale fell within the statutory definition of sale under Section 2(n) and Explanation 3(a), that did not authorise the impugned levy. Following the earlier decision relied on below, the Court held that the export sale did not justify tax under Section 3(4), and the levy was not sustainable in light of the statutory scheme and Article 286 of the Constitution.

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Issues: Whether tax under Section 3(4) of the Tamil Nadu General Sales Tax Act, 1959 could be levied on goods manufactured and subsequently sold in export, and whether such levy was barred by the statutory scheme and Article 286 of the Constitution of India.

Analysis: The dispute turned on the construction of Section 3(4) in the context of sales of manufactured goods effected by way of export. The appellate tribunal had treated export sale as falling within the definition of sale under Section 2(n) and Explanation 3(a), and had held that the assessing authority could not levy tax under Section 3(4). The revision was considered in the light of the earlier decision relied on by the tribunal and the Court followed that view, holding that the export transaction did not justify the impugned levy under Section 3(4).

Conclusion: The levy under Section 3(4) on the export sale was not sustainable, and the questions of law were answered against the Revenue.

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