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2019 (12) TMI 932 - HC - VAT and Sales TaxLevy of Additional tax - Section 3(4) of the TNGST Act - goods manufactured by the Assessee and sold in the course of export - HELD THAT - The controversy involved in the case on hand is squarely covered by the decision of this Court in 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 Tamil Nadu and by virtue of the said factual position the applicability of Section 3(4) stands excluded for the exigibility of tax. There is no merit in the present Revision Cases filed by the State - revision dismissed - decided against Revenue.
Issues:
1. Interpretation of Section 3(4) of the TNGST Act regarding additional tax on goods manufactured and sold in the course of export. 2. Applicability of concessional rate of tax under Section 3(3) of the TNGST Act to export sales. 3. Comparison of relevant case laws to determine tax liability on export sales. Issue 1: Interpretation of Section 3(4) of the TNGST Act The State filed Tax Revision Cases challenging the orders of the Sales Tax Appellate Tribunals, which allowed appeals by Assessees M/s.Fisher Sanmar Limited and M/s.Saravana Engineering Traders, holding that additional tax under Section 3(4) of the TNGST Act was not applicable to goods manufactured and sold in the course of export. The Tribunal relied on the decision in Tube Investments of India Ltd. v. State of Tamil Nadu ((2010) 36 VST 67) to support its conclusion. Issue 2: Applicability of Concessional Rate of Tax to Export Sales The controversy revolved around whether export sales qualify for the concessional rate of tax under Section 3(3) of the TNGST Act. The Tribunal, following the Tube Investments case, held that export sales are considered sales under Section 3(4) and thus eligible for the concessional rate of tax on raw materials purchased for manufacturing goods for export. Issue 3: Comparison of Relevant Case Laws The Tribunal compared case laws such as "ELGI" Equipments vs. Assistant Commissioner of Commercial Taxes and State of Karnataka vs. B.M.Ashraf and Co. cited by the State Representative with the decision in Tube Investments of India Ltd. case. It emphasized that the interpretation of Section 3(4) of the TNGST Act, specifically regarding tax liability on export sales, was clarified by the Madras High Court in the Tube Investments case. The Tribunal held that the decision in Tube Investments case was binding and export sales should not be subject to tax under Section 3(4) of the Act. In the Tube Investments of India Ltd. case, it was established that export sales fall within the definition of "sale" under the TNGST Act and are not subject to tax under Section 3(4). The court emphasized that the legislative competence to levy tax on export sales was lacking, and any tax liability on inputs purchased for export sales was impermissible. The decision in Tube Investments case was further upheld in State of Tamil Nadu v. Essar Inc. and another ((2015) 79 VST 588), reinforcing the applicability of the ruling to subsequent cases. The State's Revision Cases were dismissed as the Tribunal correctly applied the law based on the Tube Investments case, leading to the rejection of the State's claims and the dismissal of the cases without costs.
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