Concessional purchase turnover and export sales: Madras HC held such turnover was not taxable under Section 3(4).

Purchase turnover of raw materials obtained against Form XVII declarations and used to manufacture goods exported outside the State could not be assessed under Section 3(4) of the Tamil Nadu General Sales Tax Act, 1959. Following Tube Investment of India Ltd., the Madras HC held that export of the manufactured goods amounted to a sale for the first part of Section 3(4), so the corresponding concessional purchase turnover was not liable to tax merely because the finished goods were sold by export. The substantial questions of law were answered against the Revenue, the revision was dismissed, and the Tribunal's order in favour of the dealer was sustained.

---

---

Issues: Whether purchase turnover of raw materials obtained against Form XVII declarations and used in manufacturing goods exported outside the State could be assessed to tax under Section 3(4) of the Tamil Nadu General Sales Tax Act, 1959.

Analysis: The revision was decided by following the earlier binding decision in Tube Investment of India Ltd. and the court accepted that the export of manufactured goods constituted a sale for the purpose of the first part of Section 3(4). On that basis, the purchase turnover corresponding to such export sales could not be brought to tax under Section 3(4). The substantial questions of law were answered against the Revenue.

Conclusion: The issue was decided in favour of the assessee and against the Revenue.

Final Conclusion: The tax revision was dismissed and the Tribunal's order allowing the dealer's appeal was sustained.

Ratio Decidendi: Where goods manufactured out of concessional purchases are exported, the purchase turnover cannot be assessed under Section 3(4) merely because the final sale is an export sale.

---