Export sale exemption upheld for airport transit passenger sales where transaction required goods to leave India.

The Bombay High Court held that the Deputy Commissioner did not exceed jurisdiction under section 52 of the Bombay Sales Tax Act, 1959 because examining whether the transaction was a sale in the course of export was part of deciding whether tax was payable on a sale within the State. It further held that sales of goods to foreign-bound transit passengers at the airport constituted sales in the course of export, since the transaction required the goods to be taken out of India and was supported by statutory and transactional controls linking the sale to export. The sale was therefore not taxable as an intra-State sale in Maharashtra, and the assessee obtained relief.

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Issues: (i) Whether the Deputy Commissioner exceeded jurisdiction under section 52 of the Bombay Sales Tax Act, 1959 by examining the assessee's contention that the transaction was a sale in the course of export. (ii) Whether the sale of goods to in-transit foreign passengers at the airport was a sale in the course of export and therefore not a sale within the State of Maharashtra liable to tax.

Issue (i): Whether the Deputy Commissioner exceeded jurisdiction under section 52 of the Bombay Sales Tax Act, 1959 by examining the assessee's contention that the transaction was a sale in the course of export.

Analysis: The jurisdiction under section 52(e) extended to determining whether tax was payable on a particular sale or purchase. Although the application referred to export, the order under challenge was directed to the question whether the transaction was a sale within the State. Consideration of the export contention formed part of the reasoning for answering that statutory question and did not amount to a separate adjudication beyond jurisdiction.

Conclusion: The objection to jurisdiction failed; the order was not liable to be set aside on that ground.

Issue (ii): Whether the sale of goods to in-transit foreign passengers at the airport was a sale in the course of export and therefore not a sale within the State of Maharashtra liable to tax.

Analysis: A sale in the course of export must occasion the export of goods out of India. The governing principle is that the sale and export must be so connected that the export is brought about by the sale, whether by statute, contract, mutual understanding, or the nature of the transaction. On the facts, the goods were kept for sale only to foreign-bound transit passengers, payment was received in foreign exchange, passport and flight particulars were recorded, the goods could not be diverted for any other purpose, and the applicable import-export procedure required the goods to move out of India. These statutory and transactional features established an obligation to export and a foreign destination for the goods.

Conclusion: The transaction was a sale in the course of export and was not taxable as a sale within the State of Maharashtra.

Final Conclusion: The appeal succeeded, the finding that the transaction was a sale within the State was set aside, and the assessee obtained relief from tax on the disputed sale.

Ratio Decidendi: Where statutory controls and the terms of the transaction require the goods sold to foreign-bound purchasers to be taken out of India, the sale occasions export and falls within the constitutional exemption for export sales.

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