Narrow construction of purchase turnover tax provision: export sales did not extend liability on raw materials purchased under Form XVII.

Section 3(4) of the Tamil Nadu General Sales Tax Act, 1959 was construed narrowly, and the court held that export sales of manufactured goods could not be used to extend purchase turnover tax on raw materials bought against Form XVII declarations unless the statute clearly so provided. The Revenue's reliance on situs and on distinctions drawn from Section 5(3) of the Central Sales Tax Act, 1956 did not displace the earlier view in Tube Investment of India Ltd. The levy was therefore held impermissible on the facts presented, and the substantial questions were answered against the Revenue.

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Issues: Whether export sales of manufactured goods fall within the ambit of Section 3(4) of the Tamil Nadu General Sales Tax Act, 1959 so as to attract tax on the purchase value of raw materials bought against Form XVII declarations and whether such levy is impermissible in view of Article 286 of the Constitution of India.

Analysis: The revision turned on the construction of Section 3(4) of the Tamil Nadu General Sales Tax Act, 1959, particularly the expression referring to goods manufactured and sold, and on whether export sales could be treated as sales within its scope. The Court followed the earlier decision in Tube Investment of India Ltd. and held that the levy under Section 3(4) could not be extended to purchase turnover merely because the manufactured goods were exported. The questions framed by the Revenue, including the reliance on situs and the distinction sought from the decision under Section 5(3) of the Central Sales Tax Act, 1956, did not alter the binding effect of the prior view.

Conclusion: Export sales were not brought within Section 3(4) for the purpose of taxing the purchase turnover of raw materials, and the revision was dismissed. The substantial questions of law were answered against the Revenue.

Ratio Decidendi: A provision imposing tax on purchase turnover for concessional purchases of raw materials cannot be extended, by interpretation, to export sales of the manufactured products unless the statute clearly so provides.

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