2016 (11) TMI 897 - HC - VAT and Sales Tax

Taxability of transactions taking place beyond or outside the Customs Frontier of India - duty free shops at various international airports and seaports in India - Held that - The Hon ble Division Bench of this Court by order dated 08.10.2012, after taking into consideration the decision of the Hon ble Supreme Court in the case of Indian Tourist Development Corporation Limited Vs. Assistant Commissioner of Commercial Taxes and Another 2012 (2) TMI 62 - Supreme Court of India held that the goods of the petitioner had not been brought into the Customs Frontier of India before the transaction of sales had taken place and therefore, the transaction had taken place beyond or outside the Customs Frontier of India and they are not taxable under the Tamil Nadu General Sales Tax Act. The above decision has become final as no appeal has been preferred by the respondent. The ratio laid down by the Hon ble Supreme Court would be equally applicable to the present case also. There is nothing on record to show that there was some material available with the Officer to show that the petitioner had made domestic sales and goods have been removed in contravention of the Facilitation Licence. The para wise comments given to the Additional Government Pleader do not state anything except that there is prima case of tax evasion - petition allowed - decided in favor of petitioner.

Summary

Issues:
1. Jurisdiction of the impugned order dated 12.05.2015.

Analysis:

The petitioner, a Private Limited Company operating duty-free shops at international airports and seaports in India, challenged an impugned notice issued by the Enforcement Wing without disclosing reasons for calling certain particulars. The petitioner's business operations were within customs barriers, and the inspection in question likely took place at their warehouse in Trichy. The Facilitation Licence imposed stringent conditions on maintaining stock registers and transferring goods. The notice lacked disclosure of tangible material supporting tax evasion allegations, hindering the petitioner's defense. Previous judgments under the Tamil Nadu General Sales Tax Act and Karnataka Sales Tax Act, following the Supreme Court's decision in a similar case, supported the petitioner's position. The High Court allowed the writ petition, setting aside the impugned order due to lack of jurisdiction, with no costs awarded.