The main legal principle established is that the sale of goods in the course of export is not liable to sales tax within the territory of the State where the purchase took place.

Bal Raj Tuli, J.

1. The respondent to this appeal is Messrs Inter national Cotton (Waste) Corporation, Bombay, which is a partnership firm having its head office in Bombay and a branch office at Bhatinda. The main business of the firm is to buy cotton and cotton waste and to export it outside India. The cotton and cotton waste is generally purchased from the States of Punjab and Rajasthan. The firm is registered under the Punjab General Sales Tax Act, 1948 (hereinafter called "the Act") at Bhatinda with registration No. BAT. III. 6000. For the year 1961-62 which meant the period from 7th December, 1961, to 31st March, 1962, in the case of this firm, the assessing authority, Bhatinda, started assessment proceedings for the levy of sales tax. During that period the respondent firm claimed to have purchased cotton worth Rs. 4 lakhs for the purpose of export from India to other countries and furnished evidence in support of this submission. It was prayed on its behalf that the amount spent on purchase of cotton might be deducted from its gross turnover under Section 5(2)(a)(vi) of the Act but the prayer was not accepted by the assessing authority. By Order dated 1st February, 1963, the firm was assessed to sales tax of Rs. 7,937. The learned assessing authority was of the opinion that the sale of cotton had taken place at Bhatinda as the Bhatinda branch office simply transferred the goods to the head office, Bombay, which exported it to countries outside India. Since the branch office did not export the cotton to countries outside India, the deduction was not allowable. This reasoning was not accepted by the learned Single Judge and we think rightly. The cotton had been purchased at Bhatinda by the firm and after purchase it was transferred to Bombay. In so doing no sale had taken place within the territory of the State of Punjab. From Bombay the cotton was exported to countries outside India. The sale was thus in the course of export and was not liable to any sales tax at Bhatinda. The Order of the assessing authority had been rightly set aside by the learned Single Judge and we find no merit in this appeal under Clause 10 of the Letters Patent filed by the State of Punjab against the firm. The same is dismissed but without any Order as to costs as no one has appeared on behalf of the respondent-firm.

Mehar Singh, J.

2 I agree.