Export oriented unit exemption upheld where raw material purchases for manufacture could not attract last purchase tax.

A registered 100 per cent export oriented unit purchasing raw rubber within the State for manufacture was entitled to the exemption granted under G.O. Ms. No. 528/CT & RE dated 21.11.1997. The Court held that the statutory levy at the last purchase point under item 33(ii) of Part C of the First Schedule could not override the exemption under section 17 and the Government Order, and the benefit was not confined to purchases from another export oriented unit. The assessment was therefore unsustainable and the exemption had to be granted.

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Issues: Whether a registered 100 per cent export oriented unit purchasing raw rubber within the State for manufacture was entitled to exemption under G.O. Ms. No. 528/CT & RE dated 21.11.1997, or whether tax at the last purchase point under item 33(ii) of Part C of the First Schedule was payable.

Analysis: The statutory scheme under section 3(2) of the Tamil Nadu General Sales Tax Act, 1959 fixes tax at the rate and point specified in the First Schedule, and item 33(ii) of Part C applies a rate of eight per cent on last purchase of raw rubber. At the same time, section 17 of the Act and the Government Order granted exemption to registered 100 per cent export oriented units for purchase of raw materials within the State. The decisive consideration was that the petitioner purchased the raw material for manufacture as an export oriented unit. The exemption was not confined to situations where the seller itself dealt with another export oriented unit, and the benefit could not be denied on that basis.

Conclusion: The petitioner was entitled to the exemption, and the levy on last purchase turnover was unsustainable.

Final Conclusion: The assessment order was set aside and the writ petition was allowed with a direction to grant appropriate exemption under the Government Order.

Ratio Decidendi: Where a statutory or governmental exemption is granted to registered export oriented units for purchase of raw materials used in manufacture, the benefit cannot be denied on an additional condition not found in the exemption itself.

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