2026-VIL-56-MAD
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VAT High Court Cases

Tamil Nadu General Sales Tax Act, 1959 - Dispute over tax rate on sale of car audio systems, Whether 12.5% as domestic product or 20% as imported goods - For the assessment year 2003-04, assessee had offered to tax the turnover from sales of car audio systems at the rate of 12.5% under Entry 14(vi)/Part D/First Schedule of the TNGST Act, 1959. However, the assessing authority revised the assessment proposing to levy 20% tax plus surcharge on the ground that the product sold under the 'Kenwood car audio' logo constitutes an imported product - Whether the car audio systems sold by the assessee should be taxed at the rate of 12.5% as a domestic product or 20% as an imported good - HELD - The assessee had entered into a license agreement with Kenwood Corporation, Japan to manufacture and assemble the car audio systems in India. While some key components were imported from Kenwood, the final product was an amalgamation of both imported and domestically sourced materials. The assessee is a manufacturing concern and the car audio systems had been cleared after remittance of excise duty. The parts imported by the assessee were distinct, commercially saleable goods in their own right, and did not by themselves constitute a complete car audio system as contemplated under the higher tax rate for imported goods. What was ultimately sold was a complete car audio system, which fell under the entry for domestic sound equipment attracting 12.5% tax - The order of the first appellate authority is confirmed answering the substantial questions of law in favour of the assessee and against the Revenue – The revision is allowed
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