No additional levy on concessional purchases where inputs used in export goods

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HC rules out levy of additional 1% tax on purchases at concessional rate u/s 3(3) of Tamil Nadu General Sales Tax Act upon export of goods, reiterating that ‘export’ also constitutes a “sale” as contemplated u/s 3(4); Notes that as per Section 3(4), “where any dealer, after availing concessional rate of tax under sub-section (3), does not sell the goods so manufactured, but despatches them to a place outside the State either by branch transfer or by transfer to an agent, by whatever name called, for sale, or in any other manner, except as a direct result of sale or purchase in the course of inter-State trade or commerce, shall pay in addition to the concessional rate of tax already paid under sub-section (3), tax at one per cent on the value of the goods so purchased”;

Applying coordinate bench ratio in case of Tube Investment of India Ltd, HC rejects Revenue contention that only local sale of manufactured goods will qualify for purchase of raw material at a concessional rate u/s 3(3) and that Tribunal had erred in interpreting the expression “does not sell the goods so manufactured” occurring in Section 3(4) as including not only intrastate but also export sale;

Upholds Tribunal’s act of distinguishing SC ruling in B.M. Ashraf & Co. wherein it was held that a sale deemed to be in course of export u/s 5(2) of CST Act cannot be regarded as intrastate sale; On the other hand, refers to rulings in Saint Gobain Glass India Ltd and Essar Inc. while stating, “as per the laws of precedent, decision of this Court binds a coordinate Bench”

Citation: [TS-368-HC-2017(MAD)-VAT]