TaxTMI 
TaxTMI 
2015 (11) TMI 1079
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.... as against the above said orders, dated 25.6.2014, the petitioner has filed rectification petitions under Section 84 of the TNVAT Act, 2006 before the first respondent, which came to be rejected by orders, dated 30.07.2014, holding that the first respondent is not having jurisdiction to re-open the assessment under Section 84 and that the revised orders, dated 25.6.2014 hold good and the petitioner have to seek remedy by way of an appeal. These orders also were challenged in the present writ petitions. 3. M/s.Nokia India Sales Private Limited, dealers in Mobile Phones, is a company incorporated under the Companies Act, 1956 and it has reported a total cum taxable turnover of Rs. 218,89,.36,541 and Rs. 2,17,11,37,117 for the assessment year 2012-13 and Rs. 827,50,85,371 and Rs. 825,44,43,497 for the assessment year 2013-14 respectively. Since certain defects were found by the Assessing Officer, it was proposed to revise the assessments for the years 2012-13 and 2013-14 under Section 27 of the TNVAT Act, 2006. Accordingly, notices, dated 29.5.2013, 28.6.2013, 23.7.2013, 10.09.2013 and 10.01.2014 & 25.04.2014 were issued to the petitioner, calling upon them to file their objection....
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....t of clearances from the SEZ unit to the domestic tariff area, are liable to purchase tax in terms of Section 15 of the TNSEZ Act. The intention behind the enactment of SEZ Act is to encourage manufacture and exports as well as increase the inflow of foreign exchange and therefore, exemption is provided from the levy of tax on transactions between units within SEZ as well as exported, however, turnover from local clearances and removals from SEZ to domestic tariff area are not intended to be offered protection or exemptions. The petitioner cleared goods from SEZ unit to domestic tariff area and such clearance of goods is claimed as branch transfers under Section 6(A) of the CST Act, exempt from tax, however, domestic tariff area clearances consequently attract the provisions of Section 15 of the TNSEZ Act that provide for the levy of TNVAT on goods removed from SEZ to domestic tariff area and thus, Section 2(1)(b) of the TNVAT Act stands attracted justifying the levy of purchase tax. However, input tax credit is available and will be set off against tax remitted on intra state/CST sales. The petitioner has only remitted an amount of Rs. 159.49 crores only with respect to intra and ....
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....der the TNVAT Act. Since the Section 12(1) grants exemption from the levy of taxes on the sale or purchase of goods to SEZ units if they were meant to carry on the authorized operations of the unit, it is to be noted that the terms entrepreneur and authorized operations are not defined in TNSEZ Act and Section 2(f) of the TNSEZ Act provides, All other words and expressions used and not defined in this Act but defined in the Special Economic Zones Act, 2005 shall have the meaning respectively assigned to them in that Act. Therefore, the definitions of enterpreneur and authorized operations contained in the SEZ Act, 2005 apply mutatis mutandis to the TNSEZ Act and the term entrepreneur has been defined in Section 2(j) of SEZ Act as, "a person who has been granted a letter of approval by the Development Commissioner under sub-section (9) of Section 15." 11. The term authorized operations has been defined under Section 2(c) of the SEZ Act to include operations which may be authorized under sub-section (2) of Section 4 of sub-section (9) of Section 15 of the SEZ Act. Under Section 15 of the SEZ Act, the Development Commissioner has the power to grant a Letter ....
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.... local taxes and levies, including sales tax, VAT and purchase tax or any other cess or levy of state government in respect of all transactions between the units/establishments within the SEZs and hence, there is no justification on the part of the first respondent in levying purchase tax on inter-state stock transfer effected from the warehouse located in the SEZ that too while dropping the proposal for levy of purchase tax on the entire purchases effected from SEZ unit. 14. The learned senior counsel also contended that in view of the exemption granted by Section 12 of the TNSEZ Act read with non-obstante provisions of Section 28 of the Act, no tax can be levied on sale and purchases made within SEZ. He relied upon a decision of Five Judge Bench of Hon'ble Supreme Court inKailash Nath versus State of U.P. reported in AIR 1957 SC 790 that if an exemption applies, the tax levied is without jurisdiction. He also relied upon a decision of the Gujarat High Court in Torrent Energy Ltd. Versus State of Gujarat reported in (2014) 71 VST 582, wherein, the Division Bench of Gujarat High Court has held that the over-riding effect given to Gujarat SEZ Act by virtue of Section 22 would mea....
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....unsel, the first respondent levied purchase tax in respect of clearances effected by the petitioner to the domestic tariff area in terms of Section 12(1) read with Section 15 of the TNSEZ Act. 18. Heard the learned senior counsel appearing for the petitioners and the learned counsel appearing for the respondents and perused the entire materials available on record. 19. The Government of India had announced a Special Economic Zone Scheme in April 2000 with a view to provide an internationally competitive environment for exports. The objectives of Special Economic Zones include making available goods and services free of taxes and duties supported by integrated infrastructure for export production, expeditious and single window approval mechanism and a package of incentives to attract foreign and domestic investments for promoting export-led growth. To instill confidence in investors and to impart stability to the SEZ regime thereby generating greater economic activity and employment through the establishment of SEZs, a comprehensive draft SEZ Bill was prepared in consultation with the stakeholders. The Special Economic Zones Act, 2005, was passed by Parliament in May, 2005 and....
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....ons of the Special Economic Zones Act, 2005 and Rules made thereunder for a period of five years from the date of commencement of production/service activities. For this purpose, you shall execute the Bond-cum Legal Undertaking as prescribed under the Special Economic Zone Rule, 2006. You (the petitioner) may supply/sell goods or services in the domestic tariff area in terms of the provisions of the Special Economic Zones Act, 2005 and rules and orders made thereunder. 22. It is the specific case of the department that the petitioner company had effected inter state stock transfer from warehouse located in SEZ which attracts levy of purchase tax in terms of Section 12 of the TNVAT Act,2006 read with Section 15 of the TNSEZ Act. 23. It is to be noted that the petitioner had accepted the terms prescribed in the approved letter dated 7.3.2011 for its setting up in SEZ unit, of which, one of the conditions is that the petitioner can supply/sell the goods or services in the domestic tariff area in terms of the provisions of the Special Economic Zones Act, 2005 and rules and orders made thereunder. In this regard, it is relevant to extract Section 30 of the Special Economi....
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....y proceedings, dated 25.6.2014, purchase tax on the above said amounts at 14.5% has been confirmed by invoking Section 12 of the TNVAT Act, 2006. It is relevant to extract Section 12 of the TNVAT Act, 2006, which reads as under: "12. Levy of Purchase tax. (1) Subject to the provisions of sub-section (1) of section 3, every dealer, who in the course of his business purchases from a registered dealer or from any other person, any goods (the sale or purchase of which is liable to tax under this Act), in circumstances in which no tax is payable by that registered dealer on the sale price of such goods under this Act, and either (a) consumes or uses such goods in or for the manufacture of other goods for sale or otherwise; or (b) disposes of such goods in any manner other than by way of sale in the State; or (c) dispatches or carries them to a place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce or in the course of export out of the territory of India; or (d) installs and uses such goods in the factory for the manufacture of any goods, shall pay tax on the turnove....
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....Zones Act, 2005 would apply to TNSEZ Act. 30. As per Section 2(c), authorized operations means the operations which were authorized by the Development Commissioner by granting a letter of approval to the Developer to undertake in a special economic zone. In the present case, the petitioner was granted a Letter of Approval, dated 7.3.2011 by the MEPZ Special Economic Zone Authority for undertaking authorized operations, namely, "trading and warehousing services for mobile phone handsets and mobile phone parts and accessories." 31. As per SEZ scheme, the SEZ area is deemed to be a foreign territory for the purposes of trade operations and levy of various taxes and duties. As per the provisions of Sec 53 of the Special Economic Zone Act 2005 SEZ area is deemed to be foreign Territory. The relevant provision reads as under (1) A Special Economic Zone shall, on and from the appointed day, be deemed to be territory outside the customs territory of India for the purpose of undertaking the authorized operations. 2) A Special Economic Zone shall, with effect from such date as the Central Government may notify, be deemed to be a port, airport, inland container depot, land station and l....
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....r to other states having imported the goods from outside India to its warehouse located in SEZ area, which is nothing but domestic tariff area sales and such transaction is liable to sales tax, as if the goods are imported goods and in terms of Section 15 of the TNSEZ Act, the first respondent has confirmed the liability of purchase tax under Section 12 of the TNVAT Act at 14.5%. As already stated that Section 12 of TNSEZ Act provides exemption from the levy of taxes on the sale or purchase of goods subject to the condition that such goods are meant to carry on the authorized operations by the Developer or entrepreneur. The purchase tax was imposed on the inter state stock transfer and the petitioner cannot seek exemption thereof since effecting inter state stock transfer has not been authorized by the Development Commissioner nor it would fall within the definition of authorized operations. The authorized operations at best can be construed that they should achieve the object of the SEZ Policy. In fact, only with a view to attract larger foreign investment in India, the Special Economic Zones (SEZs) Policy was announced by the Government of India. This policy was intended to mak....
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....Nadu, the petitioner had diverted significant part of the turnover to other States by effecting interstate stock transfers which would not only defeat the very object of the SEZ Policy but also would have a considerable impact both on the revenue and economic growth of State of Tamil Nadu. In order to avoid these kind of repercussions, Section 15 has been brought into TNSEZ Act, which specifically insists that any goods removed from SEZ to domestic tariff area, shall be chargeable to tax. Further, Section 30 of the SEZ Act also provides specifically that any goods removed from a SEZ area to Domestic Tariff area shall be liable for import duty as is leviable on import of such goods as per the provision of Custom Tariff Act. It is admitted fact that the petitioner had accepted the terms prescribed in the approved letter dated 7.3.2011 for its setting up in SEZ unit, of which, one of the conditions is that the petitioner can supply/sell the goods or services in the domestic tariff area in terms of the provisions of the Special Economic Zones Act, 2005 and rules and orders made thereunder. Therefore, levy of purchase tax confirmed by the first respondent on the interstate stock transfe....