(1) Every sale in the course of export shall be a zero rate sale.

(2) Where input tax has been paid in respect of purchase of any goods including capital goods, except those goods coming under the Fourth Schedule, and such goods are either-

(i). sold in the course of export; or

(ii) sold in the course of inter-State trade or commerce; or

(iii). sent to outside the State otherwise than by way of sale in the course of inter-State trade; or

(iv) (a) used or consumed in the manufacture of goods, other than those falling under the Fourth Schedule, or used as containers or as packing materials for such goods and such manufactured goods are sold in the course of export; or

(b) used or consumed in the manufacture of taxable goods or used as containers or as packing materials of such goods manufactured and such manufactured goods are sent outside the state either by way of sale in the course of inter-state trade or commerce or otherwise; or:

(v) Used as Capital goods; the input tax paid on such goods shall be refunded to the person making such sales in the course of export or in the course of inter-State trade or commerce or sending such goods to outside the State, as the case may be, in such manner and subject to such manner and subject to such conditions as may be prescribed:

Provided that the dealer claiming such refund shall not claim input tax credit on such purchases for any return period:

Provided further that where the goods are sent to outside the State otherwise than by way of sale in the course of inter-State trade or exempted from tax , the refund under this section shall be limited to the amount of input tax paid in excess of five percent on the purchase turnover of such goods sent to outside the state, resold or used in the manufacture, as the case may be:

Provided also that in the case of capital goods, the refund of input tax will be allowed in such instalments as may be prescribed.

Explanation .- For the removal of doubt it is hereby clarified that where input tax is paid on the purchase of Duty Entitlement Pass Book or any similar licence for the import of any goods and goods so imported are used, consumed or disposed of in the manner specified in this sub-section, the input tax paid on the purchase of such Duty Entitlement Pass Book or any similar licence shall for the purpose of this section and section 11, be deemed to be the input tax paid on the goods imported.

(3) Nothing contained in sub-section (2) shall be construed as preventing the assessing authority from adjusting any amount due as refund under sub-section (1) towards any tax or other amount due from the dealer, under this Act or under the provisions of the Kerala General Sales Tax Act, 1963 (15 of 1963) or the Central Sales Tax Act, 1956 (Central Act 74 of 1956) or The Kerala Tax on Entry of Goods into Local Areas Act, 1994 (15 of 1994).

(4)The provisions of this section shall apply to goods purchased by a dealer during a period of one year immediately preceding the date of commencement of the Act and held by such dealers as opening stock on such date.

Explanation: For the purpose of this section, -

(a) a 'sale in the course of export' means a sale falling under sub-section (1) or sub-section (3) of section 5 of Central Sales Tax Act 1956 (Central Act 74 of 1956).

(b) "input tax" includes tax paid under sub-section (2) of section 6, input tax covered by the Explanation to sub-section (13) of section 11 and the tax paid under the Tax on Entry of Goods into Local Areas Act, 1994 (15 of 1994) on any taxable goods.