Territorial tax jurisdiction over DEPB pass book sales depends on where the transfer is completed, not mere physical form.

Tax jurisdiction over DEPB pass book sales turned on the situs of the transaction and the territorial limits of the Tamil Nadu VAT law. The DEPB entitlement was granted, delivered, and the transfer completed in Maharashtra, and VAT had already been paid there; on that basis, the local nexus lay outside Tamil Nadu. Although a DEPB pass book in physical form was treated as ascertained goods, that alone did not create taxing jurisdiction in Tamil Nadu when the sale was finalised elsewhere. The assessment reopening and levy on the DEPB turnover were set aside.

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Issues: Whether the respondent had jurisdiction to levy tax under the Tamil Nadu value added tax law on the sale of DEPB credit, where the pass book was issued, delivered, and the sale was completed in Maharashtra.

Analysis: The relevant levy was examined in the light of the situs of the transaction and the territorial restriction on taxation of sales outside the State. The DEPB entitlement, though connected with exports, had been granted in Maharashtra and the pass book was delivered there; the transfer was completed outside Tamil Nadu and Maharashtra VAT had already been paid. The Court also noted that a DEPB pass book, once reduced to a physical form, constitutes ascertained goods, but that circumstance does not by itself confer taxing jurisdiction on Tamil Nadu when the sale is completed elsewhere. Relying on the statutory limitation under section 2(33) of the Tamil Nadu Value Added Tax Act and the earlier view that such turnover is taxable only where the sale is finalised, the Court held that the local nexus pointed to Maharashtra, not Tamil Nadu.

Conclusion: The respondent had no jurisdiction to levy tax in Tamil Nadu on the sale of the DEPB pass book completed in Maharashtra.

Final Conclusion: The assessment reopening and tax levy on the DEPB turnover were set aside, and the writ petition was allowed in favour of the assessee.

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