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2022 (4) TMI 126 - HC - VAT and Sales TaxProcess amounting to manufacture or not - interpretation of expression does not sell the goods so manufactured occurring in sub Section (4) of Section 3 of the Tamil Nadu General Sales Tax Act, 1959 - inclusion of intra state or export sale or both - export sale of the manufactured goods as being a direct levy on the export sale itself and thus contravening Article 286 of the Constitution - HELD THAT - The issues involved in the present case are squarely covered in favour of the assessee, as per the earlier decision of this Court rendered in TC No.59 of 2019 dated 06.12.2019 in the case of The State of Tamil Nadu Rep., by the Joint Commissioner (CT), Chennai (South) Division, Chennai v. Tvl.Blue Diamond Leders 2019 (12) TMI 886 - MADRAS HIGH COURT , wherein it was held that the process of conversion of wet blue leather into finished leather amounts to 'manufacture' within the meaning of Section 3 and therefore, there was no misuse of declaration in Form 17 by the assessee, while purchasing chemicals for processing the leather and the assessee was not liable to pay higher rate of tax on such purchase of materials . The substantial questions of law are answered in favour of the respondent / assessee and against the Revenue - Application dismissed.
Issues involved:
Interpretation of statutory provisions regarding the levy of tax on export sales of manufactured goods under the Tamil Nadu General Sales Tax Act, 1959. Analysis: 1. The primary issue in the judgment revolves around the interpretation of the expression "does not sell the goods so manufactured" under sub Section (4) of Section 3 of the Tamil Nadu General Sales Tax Act, 1959. The Revenue challenged the order of the Appellate Tribunal, questioning whether export sales should be included in this provision. The court deliberated on whether the levy of tax on export sales directly contravenes Article 286 of the Constitution, which prohibits states from imposing taxes on the sale or purchase of goods outside the state. 2. Another significant issue addressed in the judgment was the invocation of the principle of situs as envisaged in explanation 3 (a) to section 2(n) of the Act for interpreting the expression "does not sell the goods so manufactured." The court analyzed whether the Tribunal's interpretation aligns with the legislative intent and statutory framework of the Tamil Nadu General Sales Tax Act, 1959. 3. The judgment also scrutinized the construction of the expression "in any other manner" under sub Section (4) of Section 3 of the Act to determine whether it encompasses export sales within its ambit. The court assessed the scope and applicability of this provision in the context of the specific case and relevant legal principles. 4. Furthermore, the court examined the applicability of sections 3(3) and 3(4) of the Tamil Nadu General Sales Tax Act, 1959, emphasizing that these provisions are not designed as charging provisions but rather govern the tax liability based on specific conditions related to manufacturing activities within the state. The judgment highlighted the legislative intent behind these sections and their implications for tax assessment. 5. The judgment referenced a previous decision of the court in a similar case, emphasizing that the process of converting wet blue leather into finished leather constitutes "manufacture" within the meaning of Section 3. The court reiterated the conditions under which the concessional tax rate applies and clarified the tax liability in cases where goods are manufactured within the state for sale. 6. Ultimately, based on the precedent and legal principles established in previous cases, the court dismissed the tax case in favor of the respondent/assessee, affirming that the Tribunal's decision aligned with the statutory provisions and judicial interpretations regarding the levy of tax on manufactured goods, including export sales.
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