Sales to a unit in an SEZ from the DTA do not qualify as export sales for taxation purposes under the KVAT Act.

1. The petitioner in this writ petition runs a unit in the Madras Export Processing Zone, Tambaram, Chennai. The said unit is engaged in the manufacture of essential oils, natural extracts and products of sandalwood. As part of its business operations, the petitioner sources sandalwood from Marayoor in Kerala, where it participates in auctions conducted by the Forest Department of the State of Kerala and purchases sandalwood. The issue in the present writ petition is regarding the liability of the petitioner to pay tax under the Kerala Value Added Tax Act, hereinafter referred to as the 'KVAT Act', on the purchases of sandalwood. While the petitioner maintains that she is not liable to pay local tax on the sandalwood purchased by her at the auction, since the goods so purchased are taken by her directly to the unit in the Madras Export Processing Zone, it is the case of the respondents that the transaction of sale would attract tax under the KVAT Act since the sale was concluded in the State of Kerala.

2. The brief facts that are necessary for a disposal of this case may now be noticed;
The petitioner, who is a registered dealer under the Tamil Nadu Value Added Tax Act as well as the Central Sales Tax Act (hereinafter referred to as the 'CST Act'), is an exporter of articles like pre Indian Sandalwood chips and chips powder. These items are procured from the Domestic Tariff Area (hereinafter referred to as the 'DTA') and then exported to various countries against export orders placed by foreign buyers. Against Exts. P2 to P4 purchase orders obtained by the petitioner, she wanted to purchase sandalwood from the respondents and she, accordingly, participated in the e - auction held by the respondents pursuant to Ext. P5 auction notice. The State Government through Ext. P6 Government Order dated 18.03.2014 notified the terms of the e - auction of sandalwood at Marayoor. At the auction so held, the petitioner's bid was found to be the highest in respect of three lots viz. Lot No. 76/2015, 101/2015 and 106/2015 and she was given a letter of acceptance of her bid in respect of the said three lots. Later, the bids were formally confirmed in favour of the petitioner, as evidenced by Exts. P7 to P10 and she was asked to pay the value of the goods as also the applicable tax under the KVAT Act in respect of the goods. This was paid by the petitioner and she took delivery of the goods. Thereafter, the petitioner filed W.P.(C)No. 9096/2015 praying for a declaration that no tax under the KVAT Act would be payable in respect of the purchases effected by her. By Ext. P17 interim order in the said writ petition, the petitioner was permitted to approach the 2nd respondent with an application for exemption from tax on the sales effected to her. She accordingly preferred Ext. P18 representation before the 2nd respondent. The said representation was, however, rejected by Ext. P19 communication informing the petitioner that no exemption was available. The petitioner, therefore, withdrew W.P.(C).No. 9096/2015 without prejudice to her right to file a fresh writ petition challenging the order denying exemption. This writ petition was then filed challenging Exts. P9, P10, P14, P16 and P19 to the extent they contemplate a payment of tax under the KVAT Act on the sale value of goods sold to the petitioner, and seeking, inter alia, a declaration to the effect that a sale effected to a unit in the Special Economic Zone established under the Special Economic Zone Act, 2005, by any dealer in the DTA, is an export sale and no value added tax can be levied or collected by the respondents in respect of such a sale.

3. A statement has been filed on beh