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Report No. 61

3.51. Application of Khosla's case to export sales.-

In another recent case relating to export sales-Tata Engineering & Locomotive Co. Ltd. v. Assistant Commissioner of Commercial Taxes, (1970) 1 SCJ 622: 26 STC 354: AIR 1970 SC 1281: (1970) 3 SCR 862., the Supreme Court, after referring to the earlier decisions, observed-

"It has been laid down that the sale in the course of export predicated a connection between the sale and export, the two activities being so integrated that the connection between the two cannot be voluntarily interrupted without a breach of the contract or the compulsion arising from the nature of the transaction. To occasion export, there must exist such a bond between the contract of sale and the actual exportation that each link is inextricably connected with the one immediately preceding it. The principle1 thus admits of no doubt, according to the decisions of this court, that the sales to be exigible to tax under the Act (Central Sales Tax Act, 1956) must be shown to have occasioned the movement of the goods or articles from one State to another. The movement must be the result of a covenant or incident of the contract of sale."

It will be noticed that according to the judgments referred to above, the essential test is of an integral connection between the sale sought to be taxed and the import.

1. This Sentence relates to Inter-State sales.

Certain Problems connected with Powers of the States to Levy a Tax on the Sale of Goods and with the Central Sales Tax Act, 1956 Back

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