2017 Supreme(Mad) 3364

IN THE HIGH COURT OF JUDICATURE AT MADRAS
S. MANIKUMAR, R. SURESH KUMAR, JJ.
The State of Tamilnadu, rep. by the Joint Commissioner (CT) - Petitioner
Versus
Tvl. Baron Power Ltd. - Respondent
Tax Case (Revision) No. 44 of 2017
Decided On : 16-11-2017

Headnote:

TAMIL NADU GENERAL SALES TAX ACT, 1959 - SECTION 3(3) AND 3(4) - EXPORT SALE - INTERPRETATION - HELD, EXPORT SALE IS A SALE AS CONTEMPLATED IN THE FIRST PART OF SECTION 3(4) OF THE ACT AND CONSEQUENTLY THE EXIGIBILITY TO TAX AS PROVIDED UNDER THE SAID SECTION CANNOT BE APPLIED.

Fact of the Case:

The dealer had effected purchases of raw materials, availing concessional rate of tax, under Section 3(3) of the TNGST Act, 1959, by issue of Form XVII declaration and used them in the manufacture of goods and effected export sales. The assessing authority rejected the claim of the assessee that the purchase turnover, under Section 3(3), corresponding to the export turnover, would not be assessed to tax under Section 3(4) of the TNGST Act, 1959 and assessed the turnover of Rs.19,50,273/-, by adopting a formula at 1%, under Section 3(4) of the TNGST Act, 1959.

Finding of the Court:

Following the decision of this Court, in Tube Investment of India Ltd., v. State of Tamil Nadu reported in [2010] 36 VST 67 (Mad.), the Appellate Tribunal, vide order, dated 18.02.2013, has passed the following orders, "9. The learned State Representative would submit that a correct interpretation of Section 3(4) of the Tamil Nadu General Sales Tax Act, 1959 would make it abundantly clear that local sale of the manufactured goods alone will qualify for purchase of raw materials at the concessional rate of tax under Section 3(3) of the Tamil Nadu General Sales Tax Act, 1959. In support of this contention, the learned State Representative would rely upon the case law reported in (2004) 136 STC 215 in "ELGI Equipments vs. Assistant Commissioner of Commercial Taxes" and (1997) 107 STC 571 "State of Karnataka vs. B.M.Ashraf & Co.,". 10. The learned counsel for the appellant would simply and at the same time strenuously submit that the export sale is also a sale as mentioned in Section 3(4) of the Tall1il Nadu General Sales Tax Act, 1959 and hence export sale cannot be disallowed for the purpose of availing concessional rate of tax in respect of the corresponding purchase of raw materials. He would submit that recently Division Bench of the Honourable High Court of Madras, in the case of M/s.Tube Investment of India Ltd vs. State of Tamil Nadu reported in 36 VST 67 has held that "export sale" is also a "sale" as contemplated in the first part of Section 3(4) of the Act and hence not exigible to tax under section 3(4) of the Tamil Nadu General Sales Tax Act, 1959. 11. We are of the considered view that the case law relied upon by the learned State Representative viz., (1997) 107 STC 571 arose out of the interpretation of section 6 of Karnataka Sales Tax Act, 1957 in the matter of levy of purchase tax. But in our case, we are concerned about the tax liability under section 3(4) of the Tamil Nadu General Sales Tax Act, 1959 which has been specifically considered and answered by the Honourable High Court of Madras in the above stated case. In this case the Honourable High Court of Madras has held that the ratio held in 107 STC 571 could not be applied to the question involving levy of tax under section 3(4) of the Tamil Nadu General Sales Tax Act, 1959. We, by respectfully following the observation made by the Honourable High Court of Madras stated supra, hold that the case law in 107 STC 571 could not be applied to the question involved in our case. Further, the other case law relied upon by the learned State Representative (2004) 136 STC 215 in "ELGI Equipments cannot also advance the case of the Revenue inasmuch as it was rendered by the Honourable Tamil Nadu Taxation Special Tribunal and on the other hand, the case law relied on by the Counsel for the appellant (i.e.) 36 VST67, mentioned supra is the one rendered by the Honourable High Court of Madras and we are bound by the decision of the Division Bench of Honourable High Court of Madras only. 12. Though the State has contended in the grounds of appeal that the Appellate Deputy Commissioner (CT) ought to have seen that against the order of the Division Bench of the Honourable High Court of Madras, the State has filed SLP before the Honourable Supreme Court, the State has not filed any deferment petition to defer the hearing of the appeal and the learned State Representative is not able to furnish the Writ Appeal Number. He is not able to convince the Tribunal that the Writ Appeal has been taken on file. In such circumstances, since the State has not satisfied that SLPhas been filed and pending, the prayer sought for in this regard by the State is also not accepted. 13. Hence, we have no hesitation to hold, the first appellate authority following the ratio held by the Division Bench of Honourable Madras High Court of Madras in 36 VST 67 mentioned supra has given his findings that export is also a sale as contemplated in the first part of section 3(4) of the Tamil Nadu General Sales Tax Act, 1959 and consequently hence that purchase turnover of raw materials by issue of Form XVII declaration availing concessional rate of tax under section 3 (3) of the Tamil Nadu General Sales Tax Act, 1959 corresponding to the export of manufactured goods could not be assessed to tax under Section 3 (4) of the Tamil Nadu General Sales Tax Act, 1959 and accordingly he set aside the assessment made on Rs. 19,50,272/- at 1% We do not want to interfere with the order of the first appellate authority in this regard and we answer this point accordingly. In the result, the State Appeal is dismissed."

Issues: None

Ratio Decidendi: The export sale of the petitioners would squarely fall under the definition of 'sale'.

Final Decision: Tax Case Revision is dismissed.