2014 (8) TMI 935 - HC - VAT and Sales Tax

Liability to tax in terms of sub-section (4) of Section 3 of the Tamil Nadu General Sales Tax Act - held that - In view of the statement made by the learned Addl. Government Pleader (Taxes) that the ratio laid down in Tube Investments case (2010 (10) TMI 938 - MADRAS HIGH COURT), is equally applicable to the cases on hand, following the said ratio, these tax case revisions are also liable to be dismissed. - Decided against Revenue.

Summary

Issues:
1. Interpretation of the expression 'does not sell the goods so manufactured' in sub-section (4) of Section 3 of the Tamil Nadu General Sales Tax Act.
2. Application of the principle of situs for interpreting the said expression.
3. Distinction of judgment in State of Karnataka - Vs - B.M. Ashraf & Co.
4. Levy of tax on export sale and its compliance with Article 286 of the Constitution.
5. Inclusion of export sale within the ambit of 'in any other manner' under sub-section (4) of Section 3.
6. Understanding of Sections 3 (3) and 3 (4) as charging provisions.
7. Consideration of the territorial scope of the Tamil Nadu General Sales Tax Act.

Analysis:
The judgment pertains to tax revisions filed by the Department against orders of the Tamil Nadu Sales Tax Appellate Tribunal. In the first case, the assessee, a dealer in rubber automobile spares, purchased raw materials at a concessional rate for export. The assessing authority levied tax under Section 3 (4) of the Act as the goods were not sold locally or outside the State. The Tribunal, following a previous judgment, held that export constitutes a sale under the Act. In the second case, the assessee, dealing in dairy and telephone books, faced a similar issue. The Tribunal, relying on a different judgment, ruled in favor of the assessee, stating that export sales cannot be considered as goods disposed of other than by way of sale.

The substantial questions of law raised in both appeals primarily revolved around the interpretation of Section 3 (4) of the Act concerning the liability to tax on export sales. The Appellate Tribunal's decisions were challenged on various grounds, including the understanding of export sales as part of the ambit of the Act, compliance with constitutional provisions, and the applicability of specific legal principles and judgments. However, the Addl. Government Pleader (Taxes) acknowledged the precedent set in a previous case, Tube Investment of India Ltd., where the issue of tax liability on export sales was extensively discussed and decided.

Given the precedent cited and the Addl. Government Pleader's concession, the High Court concluded that the issues raised in the appeals were already addressed in the Tube Investments case. Consequently, the Court dismissed the tax revisions, stating that no substantial questions of law arose for consideration in the present cases. The judgment reaffirmed the applicability of the Tube Investments case's ratio in determining the tax liability on export sales under Section 3 (4) of the Tamil Nadu General Sales Tax Act, thereby upholding the decisions of the Appellate Tribunal in favor of the assessees.