Imported items in sales tax law are construed strictly; aircraft sale in Tamil Nadu attracted the lower rate, not the higher levy.

A taxing entry for "imported items" under the Tamil Nadu General Sales Tax Act applies only when the goods are imported from outside India at the point of taxable sale in the State, and ambiguous fiscal language must be strictly construed. On the facts, earlier sales of the aircraft outside Tamil Nadu could not be counted as the first sale within the State, so the Tamil Nadu sale on 08.03.2004 was treated as the first sale. However, because the aircraft had entered Tamil Nadu only after inter-State sale from another Indian State, it was not an imported item for Entry 9 of the XI Schedule. The higher 20% levy was therefore unsustainable, and the sale attracted the lower 12% rate.

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Issues: (i) Whether the sale of the aircraft in Tamil Nadu on 08.03.2004 was the first sale for purposes of the Tamil Nadu General Sales Tax Act, 1959. (ii) Whether the aircraft, having been imported into India in 1992 and thereafter sold inter se before entry into Tamil Nadu, could still be treated as an imported item so as to attract 20% tax under Entry 9 of the XI Schedule.

Issue (i): Whether the sale of the aircraft in Tamil Nadu on 08.03.2004 was the first sale for purposes of the Tamil Nadu General Sales Tax Act, 1959.

Analysis: The statutory scheme under the Tamil Nadu General Sales Tax Act, 1959 and the Central Sales Tax Act, 1956 requires the situs and sequence of sales within the State to be determined by reference to the sale within the State, while sales outside the State are not to be treated as sales for this purpose. On the facts, the aircraft had changed hands in transactions outside Tamil Nadu before its sale in Tamil Nadu, and those earlier out-of-State transactions could not be counted for deciding the first sale within the State.

Conclusion: The sale in Tamil Nadu on 08.03.2004 was the first sale for purposes of the Act.

Issue (ii): Whether the aircraft, having been imported into India in 1992 and thereafter sold inter se before entry into Tamil Nadu, could still be treated as an imported item so as to attract 20% tax under Entry 9 of the XI Schedule.

Analysis: Entry 9 of the XI Schedule uses the expression imported items, which must be construed according to its ordinary meaning and not expanded to include goods of foreign origin irrespective of the manner in which they entered Tamil Nadu. Although imported goods may continue to attract the higher rate when sold in Tamil Nadu after import into India, the present aircraft entered Tamil Nadu only after inter-State sale from another Indian State, and not as goods imported from outside India at the point of sale in Tamil Nadu. In taxing statutes, any ambiguity must be resolved by strict construction and the charging provision cannot be enlarged by implication.

Conclusion: The aircraft was not an imported item at the point of sale in Tamil Nadu, so Section 3(2-C) read with Entry 9 of the XI Schedule did not apply and the sale was taxable at 12% under the relevant lower-rate entry.

Final Conclusion: The reassessment was unsustainable to the extent it levied tax at 20% on the aircraft sale, while the earlier tax collected at 12% remained valid and was not refundable.

Ratio Decidendi: A taxing entry referring to imported items applies only when the goods are imported from outside India at the point of taxable sale in the State, and ambiguous fiscal language cannot be enlarged by reading in goods of foreign origin or by substituting a wider meaning for the words actually used.

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