2026-VIL-735-MAD
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VAT High Court Cases

Tamil Nadu General Sales Tax Act, 1959 - Taxation of Imported Goods - Determination of Situs of Sale in High Seas Sales - Petitioner contended that sales of imported cars were effected on high seas before goods entered Indian customs territory and therefore not liable to tax under TNGST Act, 1959 - The goods directly moved from Mumbai port to customers in different States without entering Tamil Nadu, and invoice location at Tamil Nadu should not be treated as situs of sale when physical movement was from Mumbai - Whether levy of tax on imported cars claimed to be High Seas Sales is sustainable when invoices raised by dealer show factory address in Tamil Nadu and goods were delivered from Mumbai after entry into Indian territory – HELD - The situs of sale for tax purposes is determined by the place where transfer is shown in sales invoice and not merely by the physical movement of goods or location of invoice addressee. In the absence of conclusive proof that transfer occurred while goods were on high seas, the place of transfer is to be determined from sales invoice which showed factory address in Tamil Nadu. The Customs duty was paid by the dealer and not by end users or dealers outside Tamil Nadu, therefore goods were taxable in Tamil Nadu - In the absence of proof that the transfer of the goods were affected while the goods where in high seas and in view of absolute proof that the sales of the cars imported were effected from Tamil Nadu through invoices showing the factory address at Tamil Nadu, the plea of the appellant-assessee that the sales were high seas sales is unsustainable - The alternate plea of inter-State sales is mutually destructive and proves suppression of turnover with intent to evade tax warranting penalty - The plea of petitioner regarding high seas sales is unsustainable and the order of Tribunal confirming assessment is affirmed – The appeal is dismissed - Violation of Conditions of Exemption Notification - Jurisdiction of Appellate Authority to set aside order of Assessing Officer - Petitioner claimed exemption under G.O.Ms.No.381 on purchase of goods to be used in manufacture of cars and availed tax benefit by furnishing declaration, but Assessing Officer found goods were not utilized for manufacturing but disposed otherwise and levied tax - Appellate Authority set aside assessment and remanded for levy of compounding fees, and Tribunal restored assessment order - Whether Tribunal was right in restoring order of Assessing Officer by overturning finding of Appellate Authority without appeal by Department challenging the exemption order – HELD - The exemption notification provides that goods purchased against declaration for manufacturing must be used for that purpose and if disposed otherwise, dealer must pay tax at applicable rate - When trader opts to avail exemption under Government notification after furnishing mandatory declaration, the trader is bound by conditions stipulated in the notification - Tribunal was right in considering error of Appellate Authority in misapplying Section 5(3) of CST Act to goods exempted under G.O.Ms.No.381 as the exemption under CST Act applies to sellers and not to dealers who availed exemption after declaration, and trader having failed to produce evidence that exempted goods were used in manufacturing as declared is estopped from raising plea contrary to own declaration - Tribunal was competent to correct error of law apparent in Appellate Authority order even without Department appeal as Tribunal was testing legality of Appellate order in dealer's appeal - The order of Tribunal restoring assessment order is correct and affirmed
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