CST - Exemption - eligible for penultimate sale to exporter - Supreme Court (Constitution Bench) - yesterday's judgement today
IT is axiomatic that only goods and not taxes should be exported. There is an exemption from CST when goods are exported, but will this exemption be available if goods are sold to an exporter, who eventually exports the goods? And will it be available if the exporter does not actually export the same goods that he bought but processes them?
In the case on hand, the assessee got bus chassis on which it built body and sold the fully built bus to the exporter. Now is he eligible for the exemption for the bus bodies which he sold to the exporter? Should the exporter export the same goods which he bought? A Constitution Bench of the Supreme Court in a case decided yesterday, held that if it is clear that the local sale or purchase between the parties is inextricably linked with the export of the goods, then a claim under Section 5(3) for exemption from State Sales Tax is justified, in which case, the same goods theory has no application.
The Supreme Court held that to constitute a sale in the course of export there must be an intention on the part of both the buyer and the seller to export; There must be obligation to export, and there must be an actual export; The obligation may arise by reason of statute, contract between the parties, or from mutual understanding or agreement between them, or even from the nature of the transaction which links the sale to export.
Keeping in tune with the TIOL tradition, we bring you today this landmark judgement of the Supreme Court, delivered yesterday.