2018 (3) TMI 1216 - HC - VAT and Sales Tax

Liability under Section 3(4) of TNGST Act - Form XVII - According to the Revenue, it was found that the respondent had purchased goods against Form XVII declarations and used the same, in the manufacture of goods, sold to a place outside the State - Held that - identical issue decided in the decision of this Court in Tube Investment of India Ltd., v. State of Tamil Nadu 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 - decided against Revenue.

Summary

Issues: Appeal against order of Tamil Nadu Sales Tax Appellate Tribunal regarding taxation on goods sold outside the State.

Analysis:
1. The appeal was filed against the order of the Tamil Nadu Sales Tax Appellate Tribunal regarding the taxation of goods sold outside the State. The respondent, a manufacturer of Rough Castings, was assessed for the assessment year 2002-2003 under the Tamil Nadu General Sales Tax Act, 1959. The Assessing Officer determined the turnover based on purchases against Form XVII declarations used in manufacturing goods sold outside the State. The liability was calculated under Section 3(4) of the Act at 1% of the purchase value against Form XVII.

2. The respondent appealed the Assessing Officer's order to the Appellate Assistant Commissioner (CT) who confirmed the assessment. Subsequently, the appellant filed an appeal before the Tamil Nadu Sales Tax Appellate Tribunal (AB) in CTA No.218 of 2004. The Tribunal allowed the appeal, citing that the sale outside the State fell under the definition of sale under Section 2(n) of the TNGST Act, and therefore, the Assessing authority could not levy tax under Section 3(4) of the Act.

3. The State filed a Tax Case (Revision) challenging the Tribunal's decision on substantial questions of law. These questions included the interpretation of the expression "does not sell the goods so manufactured" in Section 3(4) of the Act, the application of the principle of situs, the distinction between export sales and interstate sales, the constitutionality of levying tax on export sales under Section 3(4), and the scope of the expression "in any other manner" in Section 3(4).

4. The Court, considering previous decisions on similar issues, dismissed the Tax Case (Revision) based on the precedent set in Tube Investment of India Ltd. v. State of Tamil Nadu. The Court held that the substantial questions of law were answered against the Revenue, and no costs were awarded. The decision was in line with previous judgments dismissing similar cases at the admission stage.

In conclusion, the High Court of Madras upheld the Tribunal's decision, emphasizing that the sale of goods outside the State fell within the definition of sale under the TNGST Act, and therefore, the levy of tax under Section 3(4) was not applicable in such cases.