JJUDGMENT

K. S. Radhakrishnan, J. —

The question that falls for consideration in this case is whether an assessee (local manufacturer) is eligible to get exemption under sub-section (3) of Section 5 of the Central Sales Tax Act, 1956 (for short ‘CST Act’), if the penultimate sale effected in favour of the exporter is inextricably connected with the export of goods outside the territory of India.

2. This Court in Md. Serajuddin & Others v. State of Orissa,1 (1975) 2 SCC 47, held that, under Article 286 of the Constitution, the sale which was not liable to tax under the State Sales Tax was only the actual sale by the exporter, but the benefit of export sale did not extend to the penultimate sale to the Indian exporter for the purpose of export. This led to the insertion of sub- section (3) of Section 5 of the CST Act by the Amending Act 103 of 1976 with effect from 1.4.1976, whereby the last sale or purchase occasioning the export of goods was granted exemption from the State levy.

Central Sales Tax Act, 1956 – Section 5(3) – a

3. The scope of the Amending Act later came up for consideration before a Constitution Bench of this Court in Consolidated Coffee Ltd. & Another v. Coffee Bo