The main legal point established in the judgment is that the sales in question were deemed to be in the course of export under Section 5(3) of the Central Sales Tax Act, 1956, and therefore, the petitioners were not liable to pay purchase tax under Section 6 of the State Act.

( 1 ) IN these Writ Petitions the petitioners have questioned the validity of Section 6 (ii) of the Karnataka Sales Tax Act, 1957 ('the State Act' for short ). They are also questioning the applicability of Section 6 of the said Act to the turnover in question.

( 2 ) THE substance of the case is that the petitioners purchased silk fabrics from unregistered dealers and sold them to dealers outside the state of Karnataka and the said dealers purchased these silk fabrics from the petitioners for the purpose of exporting the same into foreign countries and accordingly the said purchasers exported them. In other words, the purchasers of the silk fabrics from the petitioners purchased them for the purpose of complying with the agreement or order for export of silk fabrics. However, the transaction between the petitioners who sold silk fabrics to the purchasers outside the State of karnataka were sales in the course of inter-state trade or commerce and the silk fabrics moved from State of Karnataka to outside the state of Karnataka, occasioned by the sales effected by these petitioners to the outside purchasers. The petitioners contend that the purchase tax under Section 6 of the State Act was not attracted for two reasons : (1) They purchased the silk fabrics from handloom or power loom weavers, whose establishments did not fall within the definition of a factory under the Factories Act, 1948, who had manufactured those silk fabrics in Karnataka. Such transactions of purchases fall outside the definition of "sales" for all purposes of the state Act in view of Section 5 (3) (c) read with its proviso, as it stood during the relevant period. If there was no sale there cannot a purchase. (2) Section 6 is attracted in respect of the purchases made by a dealer of any taxable goods in circumstances in which no tax under Section 5 is leviable on the sale price of such goods and those goods are despatched to a place outside the State except as a direct result of sale or purchase in the course of inter-state trade or commerce. Therefore, if the purchased goods are dispatched to a place outside the State in the course of inter-State trade or commerce section 6 is not attracted. In these cases, according to the petitioners, the silk fabrics were despatched as a direct result of sales in the course of inter-state trade or commerce.

( 3 ) THE second question also arises in a few more Writ Petitions wherein the petitioners had purchased goods like handicrafts in the state of Karnataka. Those sales under which they purchased handicrafts were not exigible to sales tax under Section 5. Subsequently these petitioners sold the goods to dealers outside the state of Karnataka and the said sales occasioned the movement of goods from the State of Karnataka to other states like State of maharashtra or Tamilnadu. These are also inter-state sales according to the petitioners and if so, Section 6 of the State Act is not attracted by virtue of clause (ii) thereof. The State however contends that in all these cases the purchasers were outside the State of Karnataka and purchased these goods to comply with the export orders and therefore the respective sales by the petitioners were penultimate sales falling within Section 5 (3) of the Central Sales Tax Act, 1956 ('the Central Act' for short) and this is practically admitted by the petitioners by producing 'h' forms prescribed under the Rules framed under the Central Act. Therefore the goods moved from State of karnataka in the course of export and not in the course of inter-state trade or commerce.

( 4 ) THE first question pertaining to the silk fabrics does not pose much difficulty. To appreciate the said contention it is necessary to read the proviso to Section 5 (3) (c ).

( 5 ) SECTION 5 of the State Act levies tax, on sale or purchase of goods. As per sub-section (1), a general rate of tax is levied on the taxable turnover. However, the subsequent sub-sections provide separate rates of t