2015 (7) TMI 549 - HC - VAT and Sales Tax

Levy of tax on export sales - Ambit and scope of the term does not sell the goods so manufactured and not only intra state but also export sale - Tamil Nadu General Sales Tax Act, 1959 - Held that - , as in the hierarchy of law, the Constitution provision will supersede any conflicting statutory provision, we hold that the interpretation sought to be laid on behalf of the State, to hold that Section 3(4) will apply to the export sale of the assesses will run counter to the well laid legal principles referred to above and the same cannot be countenanced. - Decision in case of M/s. Tube Investments of India Limited V. State of Tamil Nadu 2010 (10) TMI 938 - MADRAS HIGH COURT followed. - Decided in favor of assessee.

Issues involved:
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, 1959, in the context of intra-state and export sales. Application of the principle of situs for the interpretation of the said expression. Examination of the levy of tax on export sale under Section 3(4) and its compliance with Article 286 of the Constitution. Construction of the expression "in any other manner" in sub-section (4) of Section 3. Analysis of Sections 3(3) and 3(4) as charging provisions under the Tamil Nadu General Sales Tax Act, 1959. Consideration of the legislative intent behind the Act to levy tax on sales or purchases within the State of Tamil Nadu.

Detailed Analysis:

1. Interpretation of the expression "does not sell the goods so manufactured":
The primary issue in this case pertains to the correct interpretation of the expression "does not sell the goods so manufactured" as found in sub-section (4) of Section 3 of the Tamil Nadu General Sales Tax Act, 1959. The Tribunal's interpretation regarding the inclusion of export sales within this provision was challenged by the Revenue. The Court analyzed the legislative intent and the implications of this interpretation, particularly in the context of intra-state and export sales.

2. Application of the principle of situs:
Another significant issue raised was whether the Appellate Tribunal correctly applied the principle of situs as envisaged in Explanation 3(a) to Section 2(n) of the Act for the interpretation of the expression in question. The Court examined the legal validity and relevance of invoking this principle in determining the applicability of tax on export sales under Section 3(4) of the Act.

3. Compliance with Article 286 of the Constitution:
The Court further delved into the aspect of whether the levy of tax on export sale of manufactured goods under Section 3(4) constituted a direct levy on the export sale itself, thereby potentially contravening Article 286 of the Constitution. This issue required a thorough analysis of the constitutional provisions and their implications on the taxation of export sales under the relevant statutory framework.

4. Construction of the expression "in any other manner":
A specific question arose regarding the construction of the expression "in any other manner" as contained in sub-section (4) of Section 3. The Court scrutinized the scope and limitations of this provision concerning the inclusion or exclusion of export sales within its ambit, thereby addressing the interpretational challenges posed by this phrase.

5. Sections 3(3) and 3(4) as charging provisions:
The Court also examined the nature of Sections 3(3) and 3(4) of the Tamil Nadu General Sales Tax Act, 1959, to determine whether these sections functioned as charging provisions. The presence of a non-obstante clause at the beginning of Section 3(3) added complexity to the analysis, requiring a nuanced understanding of the legal implications of these provisions within the statutory framework.

6. Legislative intent behind the Act:
Lastly, the Court considered the legislative intent behind the enactment of the Tamil Nadu General Sales Tax Act, 1959, emphasizing that the Act was designed to levy tax on sales or purchases within the State of Tamil Nadu exclusively. This examination aimed to clarify the scope and purpose of the Act in light of the specific provisions and interpretations under scrutiny in the present case.

By addressing these multifaceted legal issues and providing a detailed analysis of each aspect, the Court arrived at a comprehensive decision dismissing the Tax Case (Revision) based on the legal principles and precedents established in previous judgments, thereby upholding the interpretation and application of the relevant provisions under the Tamil Nadu General Sales Tax Act, 1959.

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