Commercial identity test keeps processed shrimps, prawns and lobsters within export-linked purchase exemption under sales tax law.

Processed shrimps, prawns and lobsters retain their original identity for section 5(3) of the Central Sales Tax Act, 1956 where cutting, peeling, deveining, cleaning and freezing do not create a commercially new and distinct commodity. The decisive test is commercial identity in trade and common parlance, not the State sales tax classification of the processed goods under local law. On that basis, purchases used to fulfil export contracts are treated as purchases in the course of export and are not liable to State purchase tax.

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Issues: Whether shrimps, prawns and lobsters subjected to cutting of heads and tails, peeling, deveining, cleaning and freezing remain the same commodity for the purpose of section 5(3) of the Central Sales Tax Act, 1956, so that the purchases used to fulfil export contracts are deemed to be in the course of export and exempt from State sales tax.

Analysis: Section 5(3) applies only where the goods purchased and the goods exported are the same goods. The controlling test is whether, in commercial parlance, the processed article is regarded as a distinct commodity or continues to be known as the original commodity. Processing does not necessarily alter identity; only when the change is such that the commodity is commercially recognised as new and distinct does the original identity disappear. On the facts, processed or frozen shrimps, prawns and lobsters are still understood in trade and common parlance as shrimps, prawns and lobsters. The State sales tax classification in the Karnataka Act did not govern the meaning of the expression in the Central Sales Tax Act.

Conclusion: The processed or frozen products retained the identity of the original goods, and the purchases made to fulfil export contracts were purchases in the course of export and not liable to State purchase tax.

Ratio Decidendi: For section 5(3) of the Central Sales Tax Act, 1956, the decisive test is commercial identity of the goods; if processing does not create a commercially new and distinct commodity, the original purchase is deemed to be in the course of export.

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