Page 209 - DCOM308_DCOM502_INDIRECT_TAX_LAWS

Indirect Tax Laws

Notes 12.7 Sale or Purchase of Goods in the Course of Import and
Export – Section 5

State Government cannot impose any tax on sale or purchase of goods in course of import and
export. In order to make our exports competitive no central sales tax are imposed, and tax is also
not imposed on imported goods because they are already subjected to custom duties.

12.7.1 Export of Goods Out of India – Section 5(1)

A sale or purchase of goods shall be deemed to take place in the course of export of goods
outside India if, such sale or purchase -
(i) either occasions such export, or
(ii) is effected by transfer of documents of title to the goods after the goods have crossed the
customs frontier of India.
As per section 5 (3), last sale or purchase of any goods preceding the sale or purchase occassioning
the export of these goods shall also be deemed to be in the course of such export, if following
conditions are satisfied –
(i) The last sale or purchase has been made after the purchaser of such goods has obtain the order
of export or agreement for export was entered into by him.

(ii) Such last sale or purchase has been made for the purpose of complying with such order of
export or agreement of export.
(iii) Form ‘H’ has been submitted by the dealer to the prescribed authority. The form should be
signed by the exporter to whom the goods are sold.

12.7.2 Deemed Exports Section 5(5)

If any designated Indian carrier purchases Aviation Turbine Fuel for the purpose of it’s
International flight such purchase shall be deemed to take place in the course of the export of
goods out of territory of India.

Self Assessment

Fill in the blanks:
1. According to the article ......................... of the constitution of India no tax of any nature can
be levied or collected by the central or State Governments except by the authority of law.
2. The .................................. of tax on declared goods are lower as compared to the rate of tax
on goods in the second category.
3. A factor, ..................................., commission agent who carries on business of buying, selling,
supplying or distributing goods belonging to any principal.

4. An ................................... who carrier on the business of selling or auctioning goods belonging
to any principal.

5. State Government cannot impose any tax on sale or purchase of goods in course of
................................... and export.

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