State VAT on imported stone chips was partly upheld, but import-based assessment lacked jurisdiction under Article 286.

Stone chips imported into Tripura were held taxable under the Tripura Value Added Tax Act, 2004 because the commodity was not shown to be exempt and could be covered by the residuary taxable entry. However, the assessment and notices were unsustainable insofar as they were founded only on import into India, since the charging provision and Article 286 bar State taxation of transactions in the course of import. The proceedings based solely on import were therefore set aside, while the authority was left free to act, if otherwise permissible, in relation to any subsequent intra-State sale.

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Issues: (i) Whether stone chips imported into Tripura were exigible to tax under the Tripura Value Added Tax Act, 2004. (ii) Whether assessment and notices based on import into India were without jurisdiction in view of the constitutional restriction on taxing import transactions.

Issue (i): Whether stone chips imported into Tripura were exigible to tax under the Tripura Value Added Tax Act, 2004.

Analysis: The disputed goods were not specifically named in the tariff entry relied upon by the petitioner, but the Act contained a residuary entry covering miscellaneous items not otherwise mentioned. The exclusion of a commodity from an earlier taxing enactment did not by itself establish exemption under the later enactment, particularly where exempted goods were separately placed in Schedule III and no such exemption was shown for stone chips.

Conclusion: Stone chips were liable to tax under the Act and could fall within the residuary taxable entry if not specifically covered elsewhere.

Issue (ii): Whether assessment and notices based on import into India were without jurisdiction in view of the constitutional restriction on taxing import transactions.

Analysis: The levy provisions of the Act, read with the non-liability clause, showed that sales or purchases in the course of import into or export out of the territory of India were outside the charging provision. Article 286 of the Constitution of India similarly barred State taxation of transactions in the course of import. As the notices and assessment proceeded only on the footing of import into India and did not disclose a taxable sale within the State, the proceedings lacked jurisdiction.

Conclusion: The assessment and notices could not be sustained insofar as they were founded only on import transactions into India.

Final Conclusion: The proceedings based solely on import into India were set aside, while the authority was left free to proceed, if otherwise permissible, against any subsequent intra-State sale under the Act.

Ratio Decidendi: A State sales tax law cannot validly impose tax on transactions occurring in the course of import into India, and where the impugned demand is founded only on such import, the assessment is without jurisdiction notwithstanding the presence of a residuary taxing entry.

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