Export-linked sales tax exemption covers cotton cloth sold for export even after later printing or processing.

Sales tax exemption applied to cotton cloth manufactured in Uttar Pradesh and sold with a view to export, provided actual export took place. The notification under the Uttar Pradesh Sales Tax Act had statutory force, and the exemption was not confined to cloth specially manufactured for export from the outset; cloth already manufactured and later sold for export also qualified. The expression "such cloth" was read as referring to the manufactured cloth sold, and subsequent printing, dyeing or processing did not destroy its identity for exemption purposes. The sales tax levy for 1953-54 was therefore without jurisdiction and liable to be quashed.

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Issues: Whether sales tax could be levied on cotton cloth sold in Uttar Pradesh for hand-printing and export outside India, where the sales were claimed to fall within the statutory exemption for sales made with a view to export and actually exported.

Analysis: The notification issued under the Uttar Pradesh Sales Tax Act had statutory force and exempted sales of cotton cloth or yarn manufactured in Uttar Pradesh and sold on or after 1 December 1949 with a view to export, provided there was actual export. The essential requirements were that the cloth be manufactured in Uttar Pradesh, the sale be made with a view to export, and actual export take place. The Court held that the exemption was not limited to cloth specially manufactured for export from the outset; it was sufficient if cloth already manufactured was sold for export. The expression "such cloth" was construed to mean the cloth manufactured and sold, and the later printing, dyeing or processing did not destroy the identity of the goods for purposes of the exemption.

Conclusion: The exemption applied and the disputed sales tax levy for 1953-54 was without jurisdiction and liable to be quashed in favour of the assessee.

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