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2014 (9) TMI 893 - HC - VAT and Sales TaxAvailment of concessional rate of tax under Section 3(3) of the Tamil Nadu General Sales Tax Act - Liability to tax in terms of sub-section (4) of Section 3 of the Tamil Nadu General Sales Tax Act. - Held that - ratio laid down in Tube Investments case (2010 (10) TMI 938 - MADRAS HIGH COURT), is equally applicable to the case on hand, following the said ratio, this tax case revision is also liable to be dismissed. - Decided against Revenue.
Issues:
- Interpretation of expression "does not sell the goods so manufactured" in sub-section (4) of Section 3 of the Tamil Nadu General Sales Tax Act, 1959. - Application of the principle of situs for interpreting the said expression. - Distinction between intrastate sale and export sale based on legal precedents. - Validity of levy of tax on export sale under Section 3(4) and its compliance with Article 286 of the Constitution. - Inclusion of export sale within the ambit of expression "in any other manner" under sub-section (4) of Section 3. - Analysis of Sections 3(3) and 3(4) of the Tamil Nadu General Sales Tax Act, 1959 as charging provisions. - Consideration of the legislative intent behind the enactment of the Tamil Nadu General Sales Tax Act, 1959. Detailed Analysis: 1. Interpretation of Expression "Does Not Sell the Goods So Manufactured": The primary issue involves the interpretation of the expression "does not sell the goods so manufactured" as per sub-section (4) of Section 3 of the Tamil Nadu General Sales Tax Act, 1959. The Tribunal, in line with a previous judgment, held that export constitutes a sale under this provision, thereby exempting the purchase turnover of raw materials corresponding to export turnover from taxation under Section 3(4) of the Act. 2. Application of Principle of Situs and Legal Precedents: The Appellate Tribunal's decision also raised questions regarding the application of the principle of situs as per Explanation 3(a) to Section 2(n) of the Act for interpreting the said expression. Additionally, the Tribunal's distinction between intrastate sale and export sale, drawing on the judgment in the case of State of Karnataka Vs B.M. Ashraf & Co., was challenged for its legal correctness. 3. Validity of Levy of Tax on Export Sale: Another significant issue raised was whether the levy of tax under Section 3(4) on export sale of manufactured goods constitutes a direct levy on the export sale itself, potentially conflicting with Article 286 of the Constitution. This question delves into the constitutional validity of taxing export transactions under the State Sales Tax Act. 4. Inclusion of Export Sale within Ambit of Section 3(4): The Tribunal's construction of the expression "in any other manner" under sub-section (4) of Section 3 was also scrutinized to determine whether it encompasses export sales within its scope. This analysis aims to clarify the extent of applicability of Section 3(4) to different modes of sales transactions. 5. Analysis of Charging Provisions and Legislative Intent: The Tribunal's understanding of Sections 3(3) and 3(4) of the Act as not being designed as charging provisions was debated, particularly in light of the non-obstante clause in Section 3(3). Furthermore, the legislative intent behind the enactment of the Tamil Nadu General Sales Tax Act, 1959 was examined to ascertain whether the Act was intended solely for levying tax on sales or purchases within the State of Tamil Nadu. Overall, the judgment addressed various complex legal issues concerning the taxation of export sales under the Tamil Nadu General Sales Tax Act, emphasizing the need for a nuanced interpretation of statutory provisions and adherence to legal precedents and constitutional principles.
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