Penultimate sale exemption fails where goods sold and exported lack identity and commercial continuity.

Exemption under Section 5(3) of the Central Sales Tax Act, 1956 applies only where the penultimate sale is integrally connected with export of the very same goods. The sale here was of M.G. Plain Kraft Paper, while the merchant exporter exported Poly coated LDPE Kraft Paper in parcel leaf size; the invoices showed a change in commercial identity, so the goods sold and exported were not identical. Form H did not assist because it had expired before the relevant invoice date. The exemption claim was therefore not established, and the assessment review under Section 16(1) of the TNGST Act, 1951 read with Section 9(2) of the CST Act was sustained.

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Issues: Whether the petitioner was entitled to exemption under Section 5(3) of the Central Sales Tax Act, 1956 on the sale of M.G. Plain Kraft Paper to a merchant exporter, and whether the Tribunal was right in holding that the goods sold were not the same as the goods exported.

Analysis: The governing principle is that exemption under Section 5(3) is available only when the penultimate sale is inextricably connected with the export of the very same goods. On the materials produced, the sale by the petitioner was of M.G. Plain Kraft Paper, whereas the merchant exporter exported Poly coated LDPE Kraft Paper in parcel leaf size. The commercial invoices showed that the goods supplied by the petitioner and the goods exported were not identical and that there was a change in commercial identity. Form H also did not assist the petitioner, since it was valid only up to 31.03.2001, while the relevant invoice was dated 28.01.2002. The assessment review under Section 16(1) of the TNGST Act, 1951 read with Section 9(2) of the Central Sales Tax Act, 1956 was therefore sustained.

Conclusion: The claim for exemption under Section 5(3) of the Central Sales Tax Act, 1956 was not established, and the Tribunal's view was upheld.

Ratio Decidendi: Exemption for a penultimate sale under Section 5(3) of the Central Sales Tax Act, 1956 is available only when the goods sold and the goods exported are the same and retain their commercial identity.

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