Intangible goods tax: local, interstate or export sales?

By Rahul Jain, Economic Laws Practice

As held by the Supreme Court in 20th Century Finance Corporation v State of Maharashtra, the situs or site of sale of intangible goods is the place where the agreement is executed or signed. Accordingly, if the agreement for sale of intangible goods is executed outside India, it will be a “sale outside India”.

For such sales, according to section 4 of the Central Sales Tax Act, 1956 (CST Act), no tax can be levied as it is located beyond the territorial jurisdiction of the country.

However, in Duphar Interfran Limited v The State of Maharashtra the Maharashtra Sales Tax Tribunal held that even sale agreements executed outside India are liable to tax in respect of sale of trademarks in the state of Maharashtra. Further, it has applied the criterion of location of goods where these goods are available for use after sale in order to determine whether it was local or interstate or export sale.

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Economic Laws Practice is a full-service law firm headquartered in Mumbai with offices in New Delhi, Pune and Ahmedabad. Rahul Jain is an associate at the firm. He can be contacted at


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