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)

 

Note:-

 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)

And

Only for international flights (not domestic flights)

 

  1. Indirect Tax
  2. CST
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About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 8 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .
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