Report No. 30
50. The purchases of cashewnuts made by the Respondents fell into 3 groups-
(1) Purchases made in the local market;
(2) Purchases from the neighbouring Districts of the State of Madras;
(3) Purchases by way of imports.
In respect of all these three kinds of purchases the Respondents claimed exemption from the States General Sales Tax Act under Article 286(1)(b). Their contention was that the cashewnuts had been purchased with a view to exporting their kernels and oil to America. Of course, this contention assumed, and the majority of the Judges of the Supreme Court were also prepared to assume for the sake of argument, that the raw materials (cashewnuts) purchased in the three ways mentioned above were the same as the manufactured goods (kernels and oil) exported to America. On the contentions of the Respondents, the Supreme Court formulated the question for their consideration as follows (p. 336, para. 9):-
"The only question debated before us was whether in addition to the export-sale and import-purchase which were held in the previous decision to be covered by the exemption under clause (1)(b), the following two categories of sale or purchase would also fall within the scope of that exemption.-
(1) The last purchase of goods made by the exporter for the purpose of exporting them to implement orders already received from a foreign buyer or expected to be received subsequently in the course of business, and the first sale by the importer to fulfil orders pursuant to which the goods were imported or orders expected to be received after the import.
(2) Sales or purchases of goods effected within the State by transfer of shipping documents while the goods are in the course of transit.".