The division bench of the Madras High Court, in a recent decision, held that export sales are outside the ambit of section 3(4) of the Tamil Nadu General Sales Tax Act, 1959.
In the instant case, the appellant-assessee are manufacturer and exporter of Shoes and Shoe uppers in Tamil Nadu. In the process of manufacture, it purchases the necessary materials availing concessional rate of tax as provided for under Section 3(3) of the Tamil Nadu General Sales Tax Act, 1959. As per s. 3(4) of the Act, where a dealer, after availing the concessional rate of tax under sub-section (3), does not sell the goods so manufactured, but dispatches them to a place outside the State either by branch transfer, or by transfer to an agent, for sale, or for disposal in any other manner, except as a direct result of sale or purchase in the course of inter-state trade or commerce, is required to pay in addition to the concessional rate of tax paid under sub-section (3), tax at one percent on the value of the goods so purchased.The assessing Officer imposed tax on the assessee by invoking the above provision. On appeal, the appellate authorities upheld the same.
In the instant case, the assessee approached the Court raising a question that, “whether the Tribunal is justified in drawing its impugned finding sustaining the tax levy by interpreting / understanding the word “sell” in Sec. 3(4), by interpolating the phrase “sale in the State” into it when it is not in the Statute, which amounts to rewriting the law by the Revenue?”
The division bench comprising of Justice Nooty Ramamohana Rao and Justice Anita Sumanth noticed the decision in the case of Tube Investments of India Ltd., vs. State of Tamil Nadu reported in (2010) 36 VST 67 (Mad), in which it was held that Section 3(4) of the Act will have no application to export sales. We are in complete agreement with the reasons assigned by the Division Bench in Tube Investments of India Limited and subscribe to the same reason.
Relying on the decision, the Court held that the sales effected by the petitioner by way of export sub-section (4) of Section 3 of the Act would not get attracted.
Read the full text of the Judgment below.
