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2016 (8) TMI 400 - HC - VAT and Sales TaxSandalwood – restricted item - Penultimate sale - export of sandal wood flakes, chips/dust - Section 5(3) of the CST Act - whether an assessee (local manufacturer) is eligible to get exemption under sub-section (3) of Section 5 of the Central Sales Tax Act, 1956, if the penultimate sale effected in favour of the exporter is inextricably connected with the export of goods outside the territory of India. Held that: - The Apex Court made it clear that the test to be applied is, to see whether there is an inseverable link between the local sale or purchase and export and if it is found that it is inextricably linked together, then a claim under Section 5(3) for exemption from State sales tax would be justified and under such circumstance, the “same goods theory” will be having no application - entirely different commodities having different uses, which could never be regarded as the same goods, to have extended the benefit of Section 5(3) of the CST Act – manufacturing process involved for conversion of sandalwood (ineligible for export) to sandalwood flakes, chips, dust (eligible for export) – benefit of exemption not available. Burden of proof – Held that: - The burden is entirely on the assessee to establish the link in transactions relating to sale or purchase of goods and the export; that the penultimate sale is inextricably connected with the export of goods by the exporter to the foreign buyer. The appellants have not substantiated the position to tilt the balance in their favour. Appeal dismissed – decided against appellant.
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