2018 (3) TMI 596 - HC - VAT and Sales Tax

Purchase tax - Section 3(4) of TNGST Act - Form XVII - the respondent had purchased goods against Form XVII declarations and used the same in the manufacture of goods which were sold to a place outside the State - 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 - revision dismissed.

Issues:
1. Interpretation of the expression "does not sell the goods so manufacture" in Section 3(4) of the Tamil Nadu General Sales Tax Act, 1959.
2. Invocation of the principle of situs for interpreting the expression "does not sell the goods manufactured" in Section 3(4) of the Act.
3. Distinction of the judgment in State of Karnataka Vs. B.M.Asraf and Co regarding sales deemed to be in the course of export.
4. Construction of the levy of tax under Section 3(4) as a direct levy on export sales and its compliance with Article 286 of the Constitution.
5. Inclusion of export sale within the ambit of the expression "in any other manner" in Section 3(4).
6. Understanding of Sections 3(3) and 3(4) as non-charging provisions.
7. Consideration of the scope of the Tamil Nadu General Sales Tax Act, 1959.

Analysis:
1. The issue revolves around the interpretation of the expression "does not sell the goods so manufacture" in Section 3(4) of the Act. The tribunal allowed the appeal based on a previous decision stating that export is also a sale under this provision. The State challenged this interpretation, raising questions on the inclusion of export sales within the scope of Section 3(4).

2. The next issue concerns the invocation of the principle of situs for interpreting the expression "does not sell the goods manufactured" in Section 3(4). The tribunal's decision to consider the situs for determining the applicability of the provision is questioned, highlighting the need for clarity on the legal interpretation in such cases.

3. The judgment in State of Karnataka Vs. B.M.Asraf and Co regarding sales deemed to be in the course of export is brought into question. The State challenges the tribunal's distinction of this judgment, emphasizing the need for consistency in interpreting similar legal principles across different cases.

4. The construction of the levy of tax under Section 3(4) as a direct levy on export sales and its compliance with Article 286 of the Constitution is a significant issue. The State raises concerns about the potential contravention of constitutional provisions, questioning the tribunal's understanding of the tax levy in the context of export sales.

5. The issue of whether export sales are included within the ambit of the expression "in any other manner" in Section 3(4) is crucial. The tribunal's interpretation of this phrase and its implications for export sales are challenged, highlighting the need for a clear understanding of the legislative intent behind such provisions.

6. The understanding of Sections 3(3) and 3(4) as non-charging provisions is another key issue. The State questions the tribunal's interpretation of these sections, emphasizing the need to clarify the legislative intent behind these provisions and their implications for tax liability.

7. Lastly, the consideration of the scope of the Tamil Nadu General Sales Tax Act, 1959 is raised as an issue. The State emphasizes the need to assess the legislative purpose behind the Act and its applicability to sales and purchases within the State, underscoring the importance of interpreting the Act in line with its intended scope and objectives.

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