Export sales and EOU purchase-tax relief cannot be restricted beyond the statute and exemption notification.

Export sales of manufactured goods cannot be artificially brought within the purchase-tax net under section 3(4) of the Tamil Nadu General Sales Tax Act, because the statutory scheme does not permit export transactions to be treated as purchases liable to that levy. A 100% Export Oriented Unit is also entitled to the exemption benefit under the Government notification for purchases made for manufacture, and the explanatory note cannot be used to add an unsupported seller-to-unit condition. On that basis, the adverse assessment view on last purchase tax was unsustainable.

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Issues: (i) Whether export sales of manufactured goods could be included for the purpose of purchase tax under section 3(4) of the Tamil Nadu General Sales Tax Act, 1959. (ii) Whether a 100% Export Oriented Unit could claim exemption or concessional treatment on last purchase of raw materials by relying upon the Government notification and its explanatory note.

Issue (i): Whether export sales of manufactured goods could be included for the purpose of purchase tax under section 3(4) of the Tamil Nadu General Sales Tax Act, 1959.

Analysis: The Tribunal had treated export sales as falling within the expression used in section 3(4) and had reasoned that goods despatched outside the State otherwise than by inter-State sale, including by export, attracted purchase tax. The Court held that the later binding decision had already concluded that export sale is a sale for the purposes of the statutory scheme and that the expression used in section 3(4) cannot be stretched to fasten purchase tax on export transactions. The reasoning rested on the statutory definition of sale and the limitation on indirect taxation of export sales.

Conclusion: The inclusion of export sales for purchase tax under section 3(4) was unsustainable and is decided in favour of the assessee.

Issue (ii): Whether a 100% Export Oriented Unit could claim exemption or concessional treatment on last purchase of raw materials by relying upon the Government notification and its explanatory note.

Analysis: The notification issued under section 17 of the Tamil Nadu General Sales Tax Act, 1959 was read by the Tribunal as granting exemption only to sellers of raw materials to 100% Export Oriented Units, and the explanatory note was treated as incapable of enlarging the notification. The Court held that the later decision of this Court had already recognized that the Government Order intended to grant exemption to the 100% Export Oriented Unit for purchases made for manufacture, and that the unit was not required to be a seller of raw materials to another unit. On that basis, the adverse view on last purchase tax could not stand.

Conclusion: The denial of exemption on the last purchase of cotton was incorrect and is decided in favour of the assessee.

Final Conclusion: The impugned assessment and appellate order could not be sustained in view of the binding later decisions on both questions, and the writ petition succeeded.

Ratio Decidendi: An export sale cannot be artificially brought within the purchase-tax net under section 3(4), and a 100% Export Oriented Unit is entitled to the benefit of the exemption notification for purchases made for manufacture without having to satisfy an unsupported seller-to-unit condition.

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