9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (11) TMI 882 - HC - VAT and Sales TaxLevy of VAT on supply to SEZ units - Deemed export or not - Liability of the petitioner to pay tax under the Kerala Value Added Tax Act - purchases of sandalwood at the auction - Assessee contends that goods so purchased are taken by her directly to the unit in the Madras Export Processing Zone - case of the respondents that the transaction of sale would attract tax under the KVAT Act since the sale was concluded in the State of Kerala - Whether the movement of the goods from Kerala to the unit of the petitioner in the Madras Export Processing Zone, pursuant to the sale effected by the respondents, could be considered an export of the goods outside the territory of India - Held that - It will be seen from a reading of Section 53 of the SEZ Act that an SEZ is deemed to be a territory outside the customs territory of India only for the purposes of undertaking authorised operations. The term authorised operations is defined in Section 2(c) of the Act as meaning operations which may be authorised under Section 4(2) and Section 15(9) of the Act. Section 4(2) and Section 15(9) speak of such operations, which are authorised by the Central Government, and in respect of which the Developer of a unit has the authorisation of the Board of Approval. Further, an overview of the provisions of the SEZ Act indicates that it is a special law enacted with the specific object of providing an internationally competitive environment for exports and there are specific provisions therein that are tailored to provide tax exemptions and other benefits to the units situated in the SEZ s. The overriding effect given to provisions of the Act is only with a view to further the objects of the Act and cannot confer on the units in the SEZ a status other than what is contemplated for the purposes of their functioning under the Act. It is apparent, therefore, that while enacting the SEZ Act, the Parliament did not intend to treat a supply from the DTA to a unit in the SEZ as an export for the purposes of the CST Act or Article 286 of the Constitution. Had the Parliament any such intention, then it would not have been necessary to provide for an exemption from State taxes, levies and duties, at the discretion of State Legislatures for, any sale of goods to an SEZ unit, would have qualified as an export sale for the purpose of the CST Act, and there would have been no necessity for an exemption provision. As a matter of fact, even under the CST Act, through an amendment that was brought in with effect from 10.09.2004, Section 8(6) of the Act was amended to provide an exemption from CST in cases where there is an inter-state sale effected to registered dealers who are permitted to set up units in SEZ s. - legislative intention under the SEZ Act was to treat sales to units in the SEZ as taxable sales, subject to specific exemptions that were provided for, either under the CST Act or under the respective State legislations. In the absence of any exemption, therefore, such sales effected from the DTA to a unit in the SEZ would not qualify to be export sales for the purposes of S. 5 (1) of the CST Act or for the purposes of Art. 286 of the Constitution of India. Movement of the goods from Kerala to the unit of the petitioner in the SEZ would not qualify as an export for the purposes of Section 5(1) of the CST Act or for the purposes of Article 286 of the Constitution. It is also relevant to note that the express terms of Ext.P6 - Special Terms and Conditions of the e-auction of sandalwood at Marayoor Sandal Depot of Kerala Forest department , and in particular clauses 11 and 14(v) thereof, clearly contemplated that prevalent rates of KVAT would be applicable to all successful bidders irrespective of destination of transportation of materials and purpose. - Decided against assessee.
Issues Involved:
1. Whether the movement of the goods from Kerala to the unit of the petitioner in the Madras Export Processing Zone, pursuant to the sale effected by the respondents, could be considered an "export" of the goods outside the territory of India. 2. If so, whether the sale effected by the respondents occasioned the export for the purposes of Section 5(1) of the CST Act. Issue-wise Detailed Analysis: Issue No.1: The petitioner contended that, under the Special Economic Zones Act, 2005 (SEZ Act), SEZs are considered foreign territories for trade purposes. Consequently, goods transported from the Domestic Tariff Area (DTA) to the SEZ should be treated as exports under Article 286 of the Constitution and Section 5(1) of the CST Act. The petitioner argued that the SEZ Act should be seen as a law enacted under Article 286(2) of the Constitution, making its definition of "export" relevant. Legal Provisions Considered: - Article 286 of the Constitution of India: Prohibits state laws from imposing taxes on sales or purchases that occur outside the state or in the course of import/export. - Section 5 of the CST Act: Defines when a sale or purchase is considered to occur in the course of import or export, emphasizing that such transactions must either occasion the export or involve the transfer of documents after crossing customs frontiers. Court's Findings: The court noted that under the CST Act, an export starts when goods cross the customs frontiers of India and ends when they leave the territorial limits of India. The SEZ Act's definition of "export" includes supplying goods from one SEZ unit to another, which differs from the CST Act's definition. The SEZ Act's Section 7 provides tax exemptions but does not explicitly exempt customs duties or CST. Section 50 of the SEZ Act allows state governments to grant exemptions from state taxes, indicating that sales to SEZ units are taxable unless exempted. The court concluded that the legislative intent under the SEZ Act was to treat sales to SEZ units as taxable, subject to specific exemptions. Therefore, sales from the DTA to SEZ units do not qualify as export sales under Section 5(1) of the CST Act or Article 286 of the Constitution. Issue No.2: The petitioner argued that the sale and subsequent movement of goods to her unit in the Madras EPZ were integrally connected, implying that the sale occasioned the export. The petitioner highlighted that she had no business presence in Kerala, and all transactions were conducted from her SEZ unit. Court's Findings: The court found insufficient evidence to conclude that there was an understanding between the petitioner and the respondents that the goods would move to the SEZ unit as a direct result of the sale. Moreover, the court had already determined that such movement would not qualify as an export under Section 5(1) of the CST Act or Article 286 of the Constitution. The court also referred to the special terms of the e-auction, which stipulated that KVAT would apply irrespective of the destination of the goods. Additional Contentions: The petitioner suggested that the sale could be viewed as a penultimate sale prior to export under Section 5(3) of the CST Act or qualify for an exemption under Section 8(6) of the CST Act. However, the court found no supporting material in the writ petition and left these issues open for determination in separate proceedings. Conclusion: The writ petition was dismissed, with no order as to costs. The court concluded that the movement of goods from Kerala to the SEZ unit did not qualify as an export under the CST Act or the Constitution, and the sale was subject to KVAT.
|
