SEZ authorized operations and overriding exemption prevented purchase tax on inter-State stock transfers.

A Special Economic Zone unit's inter-State stock transfer was treated as an authorized operation where the Letter of Approval permitted trading, warehousing, and supply or sale of goods in the Domestic Tariff Area, so the transfer fell within the approved business activity. The exemption under Section 12(1) of the Tamil Nadu Special Economic Zones Act, 2005 was held not to be confined by Section 15(a), because the two provisions operated in different fields and the Act's overriding clause extended to the Tamil Nadu Value Added Tax Act, 2006. Purchase tax on the stock transfers was therefore not attracted, and the assessee obtained relief.

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Issues: (i) Whether the inter-State stock transfer made by a unit in a Special Economic Zone fell within the expression "authorized operations" under the Letter of Approval; (ii) Whether the exemption under Section 12(1) of the Tamil Nadu Special Economic Zones Act, 2005 was restricted by Section 15(a) of that Act and could not extend to purchase tax under the Tamil Nadu Value Added Tax Act, 2006.

Issue (i): Whether the inter-State stock transfer made by a unit in a Special Economic Zone fell within the expression "authorized operations" under the Letter of Approval.

Analysis: The expression "authorized operations" had to be understood with reference to the Special Economic Zones Act, 2005 and the Letter of Approval issued by the Development Commissioner. The approval specifically permitted trading and warehousing services and also allowed supply or sale of goods or services in the Domestic Tariff Area. Reading the conditions of approval harmoniously, the unit was not required to be a 100% export-oriented unit and the stock transfer to branches in other States was within the approved business activity.

Conclusion: The inter-State stock transfer was an authorized operation and the finding against the assessee was incorrect.

Issue (ii): Whether the exemption under Section 12(1) of the Tamil Nadu Special Economic Zones Act, 2005 was restricted by Section 15(a) of that Act and could not extend to purchase tax under the Tamil Nadu Value Added Tax Act, 2006.

Analysis: Section 12(1) conferred exemption on a developer or entrepreneur for sale or purchase of goods meant for authorized operations, while Section 15(a) dealt with removal of goods from the Special Economic Zone to the Domestic Tariff Area. The two provisions operated in different fields. The Court held that Section 15(a) could not be read as creating a taxable event for every removal, and that the overriding clause in Section 28 extended to the Tamil Nadu Value Added Tax Act, 2006. The levy of purchase tax under Section 12 of the Tamil Nadu Value Added Tax Act, 2006 was therefore not attracted to the assessee's inter-State stock transfers.

Conclusion: The exemption under Section 12(1) was not circumscribed by Section 15(a), and purchase tax was not payable by the assessee.

Final Conclusion: The common order of the learned Judge and the assessment orders were set aside, and the writ petitions were allowed, granting relief to the assessee.

Ratio Decidendi: Where a Special Economic Zone unit is expressly authorized to undertake trading and warehousing operations and to supply or sell goods in the Domestic Tariff Area, an inter-State stock transfer within that authorization remains an authorized operation, and the State SEZ exemption clause with overriding effect prevails over the general purchase-tax provision of the value added tax law.

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