Export-linked tax exemption fails where processed goods lose identity with the original purchase.

Section 5(3) of the Central Sales Tax Act, 1956 protects a purchase only where the local purchase is inseparably linked to a pre-existing export order and the goods exported remain identifiable with the goods purchased. Where raw hides and skins were bought without tax, processed into dressed hides and skins, and then exported, the change in character broke the required identity and no sufficient export nexus was shown. The purchase tax liability under Section 7-A of the Tamil Nadu General Sales Tax Act, 1959 therefore remained applicable, and the exemption claim failed.

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Issues: Whether the petitioner was entitled to exemption from purchase tax under Section 7-A of the Tamil Nadu General Sales Tax Act, 1959 on the footing that the purchase of raw hides and skins was in the course of export and protected by Section 5(3) of the Central Sales Tax Act, 1956.

Analysis: The liability to purchase tax arose because the petitioner bought raw hides and skins without tax, converted them into dressed hides and skins, and then exported them. The statutory protection under Section 5(3) of the Central Sales Tax Act, 1956 is available only where the last purchase or sale preceding export is made for complying with a pre-existing export order and is inextricably linked to the actual export. The governing principle remains that the goods purchased and the goods exported must retain their identity unless the facts establish a legally sufficient link between the local purchase and the export. On the facts found, there was no material to show such a link, and the goods exported were not the same as the goods purchased because of the change in character caused by processing.

Conclusion: The petitioner was not entitled to exemption from purchase tax, and the levy under Section 7-A was upheld.

Final Conclusion: The writ petition failed on merits because the export-linked exemption could not be claimed after transformation of the purchased goods, and the assessment and appellate orders were sustained.

Ratio Decidendi: Exemption under Section 5(3) of the Central Sales Tax Act, 1956 is available only when the local purchase and the export are inseverably connected and the goods exported are identifiable with the goods purchased; transformation of the goods breaks that claim.

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