2018 (3) TMI 161 - HC - VAT and Sales Tax

Export sale - Whether the export sale will also be a sale which does not attract the levy of tax under Section 3(4) of the Act? - Held that - identical issue decided in the case of Tube Investments of India Ltd. (Formerly known as M/s. TI Diamond Chain Ltd.) Versus The State of Tamil Nadu, represented by the Commercial Tax Officer 2010 (10) TMI 938 - MADRAS HIGH COURT , where it was held that Section 3(4) of the Act will have no application since situs of the export sales of the petitioners for the purpose of said Section was the State of Tamilnadu and by virtue of the said factual position, the applicability of Section 3(4) stands excluded for the exigibility of tax - tax revision dismissed.

Issues involved:
1. Interpretation of the expression "does not sell the goods so manufactured" in Section 3(4) of the Tamil Nadu General Sales Tax Act, 1959.
2. Application of the principle of situs for interpreting the said expression.
3. Distinction between intra-state sale and export sale as per legal judgments.
4. Examination of the levy of tax on export sale under Section 3(4) and its compliance with Article 286 of the Constitution.
5. Inclusion of export sale within the scope of the expression "in any other manner" in Section 3(4).
6. Analysis of Sections 3(3) and 3(4) as charging provisions.
7. Consideration of the legislative intent behind the Tamil Nadu General Sales Tax Act, 1959.

Detailed Analysis:

1. The primary issue in this case revolves around the interpretation of the expression "does not sell the goods so manufactured" as found in Section 3(4) of the Tamil Nadu General Sales Tax Act, 1959. The tribunal allowed the appeal based on a previous court decision, emphasizing that export should also be considered a sale under this provision.

2. The second issue pertains to the application of the principle of situs in interpreting the expression in question. The tribunal invoked explanation 3(a) to Section 2(n) of the Act to determine whether the sale in question falls within the ambit of intra-state or export transactions.

3. The third issue involves a comparison with the judgment in the case of State of Karnataka Vs. B.M.Asraf and Co, where the distinction between intra-state sale and export sale was discussed. The tribunal's decision is scrutinized in light of this legal precedent.

4. The next issue examines the levy of tax under Section 3(4) on export sales and its conformity with Article 286 of the Constitution. The tribunal's decision is questioned regarding whether taxing export sales directly violates constitutional provisions.

5. The fifth issue delves into whether export sales should be included within the scope of the phrase "in any other manner" in Section 3(4) of the Act. The tribunal's interpretation of this phrase is under scrutiny.

6. Issue six involves an analysis of Sections 3(3) and 3(4) as charging provisions. The court evaluates whether these sections are intended to serve as charging provisions based on the language and structure of the Act.

7. The final issue concerns the legislative intent behind the Tamil Nadu General Sales Tax Act, 1959. The court is called upon to consider whether the Act was primarily designed to levy taxes on sales and purchases within the state boundaries, as indicated by the pre-factory explanation.

In conclusion, the court dismissed the Tax Case (Revision) based on precedents and previous decisions, highlighting consistency in legal interpretation. The judgment underscores the significance of legal principles and precedents in tax matters, ensuring uniformity and adherence to established legal norms.

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