The Anti-Dumping Duty paid by the buyer formed part of the sale price for tax levy, and the penalty was set aside due to lack of wilful non-disclosure of assessable turnover by the petitioner.

1. This Tax Case Revision is filed by the Assesee under Section 60 of the Tamil Nadu VAT Act, 2006. On 4.8.2014, the Tax Case Revision was admitted on the following substantial questions of law:

"(i) Whether on the facts and in the circumstances of the case, the learned Appellate Tribunal was correct in law in holding that the Anti-Dumping Duty on the imported components paid by the buyer (customer of the petitioner) formed part of the "sale price" of the goods manufactured and sold by the petitioner to the buyer under the provisions of the Tamil Nadu Value Added Tax Act, 2006?

(ii) Whether on the facts and in the circumstances of the case, the learned Appellate Tribunal was correct in law in holding that tax and penalty are imposable upon the petitioner under the provisions of the Tamil Nadu Value Added Act, 2006? and

(iii) Whether on the facts and in the circumstances of the case, the learned Appellate Tribunal was correct in law in holding that the petitioner is not entitled to refund of tax inadvertently paid on countervailing duty discharged on the finished goods cleared from the petitioner's SEZ unit?"

2. We have heard Mr.C.Natarajan, learned Senior Counsel assisted by Mrs.Hema Murali Krishnan, appearing for the petitioner/assessee and Dr.Anita Sumanth, Special Government Pleader (Taxes) appearing for the State of Tamil Nadu.

3. The petitioner herein is a company which is authorised to carry on certain operations in their unit located within the Special Economic Zone at the SIPCOT Industrial Park, Sriperumbudur, Kancheepuram District. In the course of the authorised operations, the petitioner manufactured and sold Optix OSN Series Intelligent Optical Transmission Platforms, referred to as "Optical Cabinets", to a company by name Huawei Telecommunications (India) Limited, hereinafter referred to as Huawei India, during the period from April 2010 to March 2011.

4. For the purpose of manufacturing the aforesaid Optical Cabinets, the petitioner imported various components from a company by name Huawei Tehnologies Co. Ltd., China. Since these imports were made to a company located in SEZ, no Duty of Importation was levied upon the petitioner, in view of the exemption contained in Sections 7 and 26 of the Special Economic Zones Act, 2005.

5. After importing the components without payment of basic Customs Duty and CVD, the petitioner manufactured Optical Components and sold them to Huawei India. The sale was subject to payment of appropriate VAT under the TNVAT Act, 2006 and Central Sales Tax Act under the CST Act, 1956.

6. The sale and supply of goods between the petitioner and Huawei India were on an "ex-works basis" in terms of a Supply Agreement dated 31.3.2010. Under Clause 3.2.2 of the Supply Agreement, the petitioner is obliged to sell and deliver the goods at the SEZ facility gate in Chennai. Thereafter, it is the obligation of the purchaser to clear the goods from the SEZ, upon payment of all applicable Duties and Taxes. As a matter of fact, the purchaser, namely Huawei India, filed Bills of Entry for Home Consumption and cleared the goods from the SEZ, by paying applicable Customs Duty, in their capacity as importer-buyer.

7. On 16.12.2010, the Ministry of Finance, Government of India issued a Notification No.125/2010-Customs, imposing Anti-Dumping Duty at the rate of 266% on the import of certain transmission equipments and subassemblies and components, when imported from China. The said notification was given retrospective effect from 8.12.2009, on account of the fact that a provisional levy had already been made earlier.

8. However, as the unit of the petitioner was located in the Special Economic Zone, the imported goods were not subjected to Anti-Dumping Duty at the hands of the petitioner. However, when the petitioner sold the goods manufactured in the SEZ, to Huawei India, a doubt arose as to whether the component of Anti-Dumping Duty should be included for the purpose of computing the liability of tax u