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Report No. 30

144. Taxation Enquiry Commission and foreign trade.-

It is true that the Taxation Enquiry Commission 1 made these observations regarding import and export sales:-

"In regard to foreign trade, i.e., sales which constitute import and export in terms of the country as a whole, the present position under the Constitution may be regarded as satisfactory. As interpreted by the Supreme Court, this position is briefly that those sales and purchases which themselves occasion the export or import, and those sales in the State which are effected by the importer by transfer of shipping documents while the goods are still beyond the customs frontier are excluded from the sales tax jurisdiction of the States.

Purchases in the State by the exporter for the purpose of export and sales in the State by the importer after the goods have crossed the customs frontier are held to be not within the exemption. Hardly any State has complained about the particular provision of the Constitution which concerns this aspect. We consider the position under the Constitution to be perfectly satisfactory so far as foreign trade is concerned.".

1. Taxation Enquiry Commission Report, (1953-54), Vol. 3, p. 48, para. 7.

145. But, again, those observations were not addressed with reference to a sale which stipulates movement. Rather, the test of "occasions the movement" was approved, and that is exactly the test embodied in section 5 of the Central Sales Tax Act, 1956.

Section 5 of the Central Sales Tax Act, 1956 - Taxation by the States of Sales in the Course of Import Back

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