Duty drawback as money cannot be taxed as goods or included in taxable turnover under sales tax law.

Duty drawback received by an exporter, being a refund of customs duty in money form, could not be treated as "goods" under the Tamil Nadu General Sales Tax Act, 1959, because legal tender is not goods and there was no sale of the refunded amount. The amount also could not be included in taxable turnover under section 2(r), even if connected with export activity, since export sales were exempt and the notice proceeded on an incorrect jurisdictional premise. The Madras HC therefore held that continuation of the proposed levy was unwarranted and quashed the pre-assessment notice.

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Issues: Whether duty drawback received by an exporter could be treated as "goods" and brought to sales tax as part of taxable turnover under the Tamil Nadu General Sales Tax Act, 1959, and whether the pre-assessment notice proposing such levy was without jurisdiction.

Analysis: Duty drawback was held to be a refund of customs duty already paid, effected by payment of money to the exporter. Money in the form of legal tender is not "goods" under the Act, and there was no sale of the refunded amount. Even if the amount could be viewed as connected with export activity, export sales were exempt and the refunded sum could not be treated as part of "taxable turnover" as defined under section 2(r). The notice proceeded on the erroneous premise that an amount not sold, and not capable in law of being treated as goods in the circumstances, formed part of turnover. On that basis, continuation of the proceedings was held to be unwarranted and without jurisdiction.

Conclusion: The duty drawback could not be taxed as goods or included in taxable turnover, and the pre-assessment notice was quashed.

Ratio Decidendi: A refund of customs duty paid by an exporter, being money and not the subject of any sale, cannot be treated as "goods" or included in taxable turnover for sales tax purposes.

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