A sale or purchase of goods shall be deemed to take place in course of export of goods out of the territory of India only if:-

  • Sale or purchase occasions such export, or

(Example-Direct export from India to some other country)

  • Sale or purchase is effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India, or

(Example-Goods are going outside India and Sale made during their movement outside India)

  • it is penultimate sales prior to export

(Sale to exporter who sells it outside state)



 Central Sales tax is not imposed on Sale in course of export

 Penultimate sale is exempt if

  • There is pre-existing agreement with foreign party for export
  • Penultimate sale is made after such agreement
  • Same goods which are sold in penultimate sale must be exported. However, it may not be in same form (some processing or packaging may be allowed)
  • Buyer (Exporter) has to give H form to Seller


Special Case in case of Aeroplane

If a designated Indian career purchases aviation turbine fuel for purpose of its international flight, it will be deemed to be penultimate sale and hence exempt.

No VAT/CST will be imposed as it is a penultimate sale and hence considered Sale in course of Import

This exemption is only for

Indian careers (Indian airline companies)


Only for international flights (not domestic flights)


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CA Maninder Singh

CA Maninder Singh is a Chartered Accountant for the past 14 years. He also provides Accounts Tax GST Training in Delhi, Kerala and online.