Bombay HC upholds the exemption under section 5(3) of the CST Act by treating the local sale as penultimate sale for export, since an inextricable link was established between local sale and export of goods

 

We are pleased to release a Tax Alert which gives an update on the recent decision of the Bombay High Court in the case of M/s. Exide Industries Limited vs. State of Maharashtra and Others [TS-315-HC-2014(BOM)-VAT]. The decision upholds the exemption under Section 5(3) of CST Act in case of penultimate sale of goods for exports.

High Court has reaffirmed that as long as inextricable link is established between the local sale of goods and their subsequent exports, benefit of exemption u/s. 5(3) of CST Act cannot be denied.

Revenue contented that purchase order/agreement entered into by local parties for sale of goods be treated as 'last sale' as contemplated in Section 5(3) of CST Act. This contention was quashed by High Court by concluding that 'Agreement to sell' cannot be said to be included in the definition of 'sale' as per section 2(g) of CST Act.

Court has also dealt with the issue of maintainability of writ in case the alternate remedy is available with the petitioner and concluded that writs can be maintained where the issue involved is legal one and based on merits.