STATE OF TRAVANCORE-COCHIN AND OTHERS vs SHANMUGHA VILAS CASHEW NUT FACTORYAND OTHERS.

The Supreme Court held that under Article 286(1)(b) of the Constitution of India, sales and purchases that occasion the export or import of goods are exempt from state taxation. However, purchases made within the state for the purpose of export do not qualify for this exemption. The Court clarified that sales occurring during the export process must be connected to the export activities, while mere preparatory purchases do not meet this criterion. The Court ruled that the respondents' local purchases were taxable, while certain transactions involving shipping documents were exempt, depending on their connection to the export process.