Court dismisses writ petition on tax exemption, upholds purchase tax imposition under TNGST Act

The court dismissed the writ petition, ruling that the petitioner was not entitled to the exemption under Sections 5(3) and 5(4) of the Central Sales Tax Act, 1956, due to the change in the character of the goods. The imposition of purchase tax under Section 7A of the TNGST Act was upheld, and the court found no merit in the petitioner's arguments. Consequently, the connected miscellaneous petitions were also closed.

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Issues Involved:
1. Validity of the assessment order dated 29.10.2004.
2. Validity of the consequential order dated 08.03.2006.
3. Imposition of tax on the last purchase of raw hides and skins pursuant to the export order.
4. Applicability of Section 5(3) of the Central Sales Tax Act, 1956.

Detailed Analysis:

1. Validity of the Assessment Order Dated 29.10.2004:
The petitioner challenged the assessment order dated 29.10.2004, wherein the total and taxable turnover were determined by the Commercial Tax Officer for the Assessment Year 2002-2003. The petitioner reported a total turnover of Rs.4,68,46,396/- and taxable turnover of Rs.60,93,882/-, while the first respondent determined the total turnover as Rs.5,59,31,898/- and taxable turnover as Rs.5,54,07,663/-. The petitioner was asked to pay purchase tax under Section 7A of the TNGST Act for purchasing raw hides and skins without sales tax and converting them into dressed hides for export.

2. Validity of the Consequential Order Dated 08.03.2006:
The second respondent's order dated 08.03.2006 partly set aside and partly confirmed the assessment order dated 29.10.2004, remanding the case back to the first respondent regarding the imposition of penalty under Section 12(5) of the TNGST Act. The petitioner did not file a statutory appeal but instead filed this writ petition.

3. Imposition of Tax on the Last Purchase of Raw Hides and Skins Pursuant to the Export Order:
The petitioner contended that the tax on the last purchase of raw hides and skins should not be imposed until the disposal of Civil Appeal No.3773/2000 pending before the Supreme Court. The court noted that the petitioner had not disputed the amount confirmed under Section 3(4) of the TNGST Act. The court examined the applicability of Section 5(3) of the Central Sales Tax Act, 1956, which provides an exemption for the last sale or purchase preceding the export if it is for complying with an export order.

4. Applicability of Section 5(3) of the Central Sales Tax Act, 1956:
The court analyzed Section 5(3) of the Central Sales Tax Act, 1956, and its applicability to the petitioner's case. The court referred to the Supreme Court's decision in Azad Coach Builders Private Limited, which held that the exemption under Section 5(3) applies if there is an inextricable link between the local sale/purchase and the export. The court found that the petitioner failed to establish such a link and noted that the goods purchased (raw hides) were different from the goods exported (dressed hides). Therefore, the petitioner was not entitled to the exemption under Section 5(3).

Conclusion:
The court dismissed the writ petition, stating that the petitioner was not entitled to the exemption under Sections 5(3) and 5(4) of the Central Sales Tax Act, 1956, due to the change in the character of the goods. The court upheld the imposition of purchase tax under Section 7A of the TNGST Act and found no merit in the petitioner's arguments. Consequently, the connected miscellaneous petitions were also closed.

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