2015 (5) TMI 414 - HC - VAT and Sales Tax

Levy of tax under Section 3(4) of the Tamil Nadu General Sales Tax Act - Tribunal sustained the levy of tax under Section 3(4) of the Tamil Nadu General Sales Tax Act in respect of turnover relating to stock transfer and deleted the levy of tax under Section 3(4) of the Act on the sales to exporters - whether the Tribunal was justified in deleting the turnover in terms of Section 3(4) of the Tamil Nadu General Sales Tax Act. - Held that - Following decision of M/s.Tube Investments of India Limited V. State of Tamil Nadu 2010 (10) TMI 938 - MADRAS HIGH COURT - no tax can be collected without the authority of law. Therefore, following the above-said decision, we find no question of law, much less any substantial question of law, for consideration in this revision - Decided against Revenue.

Summary

Issues Involved:
Interpretation of expression in Section 3 of Tamil Nadu General Sales Tax Act, 1959 regarding export sales, invoking principle of situs, distinguishing previous judgments, levy of tax on export sales, construction of expression 'in any other manner,' and understanding Sections 3(3) and 3(4) of the Act.

Issue 1: Interpretation of Expression Regarding Export Sales
The revision challenged the Appellate Tribunal's interpretation of the expression 'does not sell the goods so manufactured' in Section 3 of the Tamil Nadu General Sales Tax Act, 1959. The Tribunal's decision included both intra-state and export sales within this expression. The revision raised a substantial question of law on whether export sales fall under this provision.

Issue 2: Invoking Principle of Situs
Another issue was whether the Appellate Tribunal was correct in applying the principle of situs as per Explanation 3(a) to Section 2(n) of the Act to interpret the same expression in Section 3. This raised a question on the applicability of situs in determining the scope of the provision.

Issue 3: Distinguishing Previous Judgments
The revision questioned the Tribunal's differentiation from a Supreme Court judgment regarding sales deemed to be in the course of export. The Tribunal's distinction raised a legal query on the treatment of export sales under the Act compared to other statutes.

Issue 4: Levy of Tax on Export Sales
A significant issue was whether the levy of tax under Section 3(4) of the Act on export sales amounted to a direct tax on the export sale itself, potentially conflicting with Article 286 of the Constitution. This issue delved into the constitutional validity of taxing export transactions.

Issue 5: Construction of Expression 'In Any Other Manner'
The Tribunal's construction of the phrase 'in any other manner' in Section 3 was also challenged. The question arose on whether this expression encompasses export sales within its ambit, leading to a debate on the interpretation of the provision.

Issue 6: Understanding Sections 3(3) and 3(4) of the Act
Lastly, the revision raised a query on the nature of Sections 3(3) and 3(4) of the Act. It questioned whether these sections were charging provisions, especially considering the non-obstante clause in Section 3(3). This issue aimed to clarify the legislative intent behind these sections.

In the judgment, the Court reviewed the facts of the case involving the manufacture of electrical porcelain insulators and the disputed turnover related to tax assessments. The Tribunal's decision to sustain the levy of tax on stock transfers but delete the tax on sales to exporters and direct sales was challenged by the Department. The Special Government Pleader argued that the Tribunal lacked jurisdiction to delete the turnover, but the Court disagreed.

The Court extensively analyzed the legal principles and previous decisions, particularly citing the M/s.Tube Investments of India Limited case. This precedent emphasized the constitutional restrictions on taxing export sales and highlighted the hierarchy of laws, giving precedence to the Constitution over conflicting statutory provisions. The Court reiterated that no tax could be collected without proper legal authority, emphasizing the importance of adhering to legal principles.

Ultimately, the Court dismissed the Tax Case (Revision) based on the established legal principles and the precedent set by previous decisions. The judgment clarified the interpretation of relevant provisions in the Act, addressing the issues raised by the revision and providing a comprehensive legal analysis to resolve the dispute.