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2018 (3) TMI 1217 - HC - VAT and Sales TaxLiability under Section 3(4) of TNGST Act - Form XVII - export sale is neither a local sale nor an inter-state sale, the assessing officer arrived at the value of purchases made against Form XVII which were used in the manufacture of goods exported - 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.
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. Invocation of the principle of situs for interpreting the expression in Section 3(4) of the Act. 3. Whether the levy of tax on export sale contravenes Article 286 of the Constitution. 4. Construction of the expression "in any other manner" in Section 3(4) and its inclusion of export sale. 5. Understanding the nature of Sections 3(3) and 3(4) as charging provisions. 6. Consideration of the scope of the Tamil Nadu General Sales Tax Act, 1959. Issue 1: The case involves the interpretation of the expression "does not sell the goods so manufactured" in Section 3(4) of the Tamil Nadu General Sales Tax Act, 1959. The Appellate Tribunal held that the dealer is eligible to claim a concessional rate of tax under Form XVII for chemicals used in the manufacturing process, as the chemicals are consumed in the process. The Tribunal referred to a previous decision where it was established that the conversion of wet blue leather into finished leather constitutes a manufacturing process, and the chemicals used are consumable. Consequently, the Appellate Assistant Commissioner's deletion of the tax levy on the turnover was upheld. Issue 2: Regarding the invocation of the principle of situs for interpreting the expression in Section 3(4) of the Act, the Appellate Tribunal considered the dealer's compliance with the declaration form for chemicals purchased against Form XVII. The Tribunal found no violation in the usage of chemicals declared in Form XVII, emphasizing that the chemicals were consumed in the manufacturing process. Consequently, the penalty imposed under Section 23(b) of the Tamil Nadu General Sales Tax Act, 1959 was deleted by the Appellate Assistant Commissioner and upheld by the Tribunal. Issue 3: The question of whether the levy of tax on export sale of manufactured goods violates Article 286 of the Constitution was raised. The Appellate Tribunal dismissed the State's appeal, emphasizing that the chemicals used in the manufacturing process were consumed, making the dealer eligible for a concessional rate of tax under Form XVII. The Tribunal concurred with the Appellate Assistant Commissioner's decision to delete the penalty under Section 23(b), as there was no violation in the dealer's declaration form. Issue 4: The construction of the expression "in any other manner" in Section 3(4) of the Tamil Nadu General Sales Tax Act, 1959 was also considered. The Appellate Tribunal determined that this expression does not include export sale within its ambit. The Tribunal confirmed the Appellate Assistant Commissioner's decision to delete the tax levy on the turnover of chemicals used in the manufacturing process, as the chemicals were consumed in the process. Issue 5: The analysis of Sections 3(3) and 3(4) of the Tamil Nadu General Sales Tax Act, 1959 as charging provisions was undertaken. The Tribunal found that these sections are not designed as charging provisions, as evidenced by the non-obstante clause in Section 3(3) of the Act. The dismissal of the Tax Case Revision by the Tribunal was based on the similarity of facts and law with previous decisions. Issue 6: Finally, the scope of the Tamil Nadu General Sales Tax Act, 1959 was discussed. The Tribunal confirmed the Appellate Assistant Commissioner's decision and dismissed the Tax Case Revision, answering substantial questions of law against the Revenue. The decision was made in line with previous judgments, indicating consistency in the interpretation and application of the law.
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