Export sales excluded from additional purchase tax levy under Tamil Nadu sales tax law, with indirect export taxation barred.

Export sales of manufactured goods were held outside the scope of the additional 1% levy under Section 3(4) of the Tamil Nadu General Sales Tax Act, 1959. The court reasoned that Section 3(4) applies only where a dealer, after availing the concessional purchase tax under Section 3(3), does not sell the manufactured goods and instead dispatches them outside the State in the specified modes; export sales do not fit that scheme. Explanation 3(a) to Section 2(n) treated the transaction as a sale for Act purposes, but Article 286 of the Constitution and Section 5(3) of the Central Sales Tax Act prevented indirect taxation of export transactions. The State's revisions were dismissed.

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Issues: Whether the export sale of manufactured goods fell within the expression in Section 3(4) of the Tamil Nadu General Sales Tax Act, 1959 so as to attract the additional 1% tax on purchases made under the concessional scheme.

Analysis: Section 3(3) grants concessional tax on purchases used in manufacture inside the State, while Section 3(4) fastens the additional levy only where the dealer, after availing the concession, does not sell the goods so manufactured and dispatches them outside the State in the modes specified. The Court held that Explanation 3(a) to Section 2(n) treats a transaction satisfying its conditions as a sale for the purposes of the Act, and that export sales, on the facts, answered that definition. It further held that the expression in Section 3(4) could not be stretched to cover export sales, since the provision, read with Article 286 of the Constitution of India and Section 5(3) of the Central Sales Tax Act, 1956, could not be applied so as to impose a levy indirectly on export transactions. The earlier reliance on State of Karnataka v. B.M. Ashraf & Co. was held inapposite because that decision turned on a different statutory setting.

Conclusion: Export sales were not liable to the additional levy under Section 3(4) of the Tamil Nadu General Sales Tax Act, 1959, and the revisions filed by the State were dismissed.

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