S. Vaidyanathan, J@mdashBeing aggrieved over the orders, dated 25.6.2014 passed by the first respondent, in and by which, while revising the
assessments for the years 2012-13 and 2013-14, levy of purchase tax on the Inter State stock transfer effected from warehouse located in SEZ
under Section 12 of the Tamil Nadu Value Added Tax Act, 2006 (in short, TNVAT Act, 2006) has been imposed, the petitioner has filed the
present writ petitions. The petitioner has also challenged the consequential notices of assessment and demand, dated 25.6.2014 issued by the first
respondent.
2. It is pertinent to note that 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
objections for the above said proposal. Pursuant to the same, it appears that the petitioner had filed their objections, which were duly considered
by the first respondent and passed the impugned orders, dated 25.6.2014. Hence the Writ Petitions.
4. The issue for consideration in these writ petitions is, whether the first respondent is right in imposing of purchase tax on the Inter State stock
transfer effected from warehouse located in SEZ under Section 12 of the TNVAT Act, 2006 read with Section 15 of the Tamil Nadu SEZ Act?
5. Separate counter affidavits in both the writ petitions were filed on behalf of the respondents, wherein, it is stated that the writ petitions are not
maintainable since the petitioner has challenged the orders of assessment dated 25.6.2014 as well as orders of rectification dated 30.7.2014 in the
same writ petitions, which is wholly impermissible and as two different cause of actions arose, the petitioner has necessarily to file two separate
writ petitions. It is stated that the levy of purchase tax on SEZ unit is in accordance with law and in terms of the provisions of the TN SEZ Act and
TN VAT Act, 2006 and there is a statutory appeal remedy available as against the impugned orders, however without exhausting the same, the
petitioner has filed the present writ petitions. It is further stated that the petitioner approached the State Government for setting up of a unit in the
Special Economic Zone at Sriperambudur and pursuant to negotiation, a Memorandum of Understanding was entered into by the petitioner with
the State Government in terms of which, various benefits have been extended to the petitioner by the State and concessions by way of levies and
duties as well as the benefits of deferment of taxation has been provided by the State to the petitioner company. The letter of approval dated
7.3.2011 issued by the Development Commissioner, MEPZ granted to the petitioner to carry on authorized operations subject to various terms
and conditions both in regard to the export of the goods/services as well as clearances and supply of goods/services in the domestic tariff area.
6. It is further stated that by virtue of Section 12 of the Tamil Nadu Special Economic Zones Act, 2005 (in short, TNSEZ Act, 2005), goods
sold/cleared by the SEZ unit of the petitioner are exempted from levy of purchase tax only in respect of exports and in respect 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 interstate sales, but claims exemption in relation to the bulk of its turnover, of an amount of Rs. 776.87 crores relating to
SEZ clearances to branches in other states. Thus, while utilizing the hospitality and resources of the State of Tamil Nadu, a significant part of the
turnover of the petitioner stands diverted to other states for taxation. This cannot, by any stretch of imagination, be in tandem with the object of the
TNSEZ Act and it is contrary to the provision of Section 15 of TNSEZ Act, which charges tax on any goods removed from SEZ to domestic tariff
area. Therefore, the impugned orders dated 25.6.2014 were rightly passed by the first respondent in terms of Section 22 (3) of the TNVAT Act.
7. As regards the challenge to the orders, dated 30.7.2014 passed by the first respondent in rectification applications, it is stated that the petitions
filed under Section 84 of the TNVAT Act, seeking a rectification of an alleged error apparent of mistakes is wholly misplaced and the first
respondent has rightly rejected the same. With these averments, the respondents sought for dismissal of the writ petitions.
8. The issue involved in these writ petitions, is whether the petitioner company, being a SEZ unit, is entitled to exemption from levy of purchase tax
on the interstate stock transfer effected from warehouse located in SEZ?
9. Mr. Arvind P.Datar, learned senior counsel appearing for the petitioners would contend by virtue of Section 12 of the TNSEZ Act, the goods
purchased by the warehouse of the petitioner in the SEZ are exempted from levy of purchase tax. According to him, the petitioner company is
entitled to exemption from levy of purchase tax, in the following analysis, viz.,
10. Section 12(1) of the TNSEZ Act refers to exemption from levy of taxes on the sale or purchase of goods under the Tamil Nadu General Sales
Tax Act, 1959, which Act has been later repealed by the TNVAT Act, by virtue of said TNVAT Act, tax on sale and purchase of goods is being
levied and collected. However, there is a saving clause provided in Section 87 of the TNVAT Act, which provides that reference to the Tamil
Nadu General Sales Tax Act would be construed as a reference to the TNVAT Act and therefore, by virtue of Section 87 of the TNVAT Act,
Section 12(1) of the TNSEZ Act has to be read as granting exemption from levy of tax on sale or purchase of goods under 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 ''entrepreneur'' 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 of Approval for setting up of a unit in a SEZ and to authorize the operations to be undertaken by such unit. The
petitioner was granted a Letter of Approval, dated 7.3.2011 by the MEPZ Special Economic Zone Authority for setting up of a unit for the
purpose of ''trading & warehousing services for mobile phone handsets and mobile phone parts and accessories''. In the present case, the goods in
question were purchased by the warehouse of petitioner company located in Nokia SEZ from another company located in Nokia SEZ and the
said goods were used for carrying out the authorized operations of the petitioner company, viz., for the purpose of trading and warehousing of
Mobile phone handsets and mobile phone parts and accessories.
12. In any case, Section 15 of TNSEZ Act cannot be interpreted to operate as a charging section to create levy of tax on a transaction which is
otherwise not exigible to VAT/CST, viz., branch transfer to other branches of the same entity. VAT/CST are taxes on sale of goods, and are not
attracted on transactions which do not qualify as sale. Sale by its very basic nature requires three essential conditions, viz., transfer of property in
goods, existence of two persons and valuable consideration and these conditions are encapsulated in the definition of ''sale'' in Section 2(33) of the
TNVAT Act, which defines sale to mean transfer of property in goods by one person to another for cash, deferred payment or other valuable
consideration. When goods are removed for stock transfer to the branches of the petitioner in other states, none of these conditions are satisfied.
Therefore, since stock transfers to other branches of the same person do not satisfy the essential requirements of a sale, such transfers do not
attract levy of VAT/CST. Hence, when sale itself was not involved in such transfer, purchase tax cannot be levied.
13. Therefore, based on the above analysis, the learned senior counsel would contend that the terms of Section 12(1) are clear and unambiguous
and hence by virtue of Section 12 of the TNSEZ Act, the goods purchased by the warehouse of the petitioner company in the SEZ are exempted
from levy of purchase tax. He would also contend that the Government of Tamil Nadu had announced its SEZ Policy, wherein, it has been
expressly stated that the industrial units and other establishments within the SEZs would be exempted from all 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 in Kailash Nath and Another Vs. State of U.P. and Others, AIR 1957 SC 790 : (1957) 8 STC 358 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 Limited Vs.
State of Gujarat, (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 mean that the exemption from purchase tax granted by Section 21 would continue to have effect
notwithstanding anything to the contrary contained in Sub Section 9(5) of the Gujarat VAT Act. Relying on this decision, he would contend that in
Section 12 of TNVAT Act, there is no such provision similar to sub section 9(5) of the Gujarat VAT Act, therefore, unlike the Gujarat VAT Act,
the TNVAT Act does not provide for levy of purchase tax where goods were purchased in a zero rated sale (e.g. purchase by a SEZ unit from a
unit outside the SEZ) and hence, when compared to pari materia exemption under the Gujarat SEZ Act, the learned senior counsel would contend
that the petitioner company is entitled to exemption from levy of purchase tax under Section 12.
15. As regards the alternative remedy, the learned senior counsel would contend that although the remedy of statutory appeal to the Appellate
Deputy Commissioner is provided under Section 51 of the Act, however, it is subject to making deposit of 25% of the difference of the tax
assessed by the assessing authority and the tax admitted by the petitioner as a condition precedent to entertain the appeal and when the impugned
orders are per se illegal and being contrary to law, certainly, a petition would lie to the High Court under Article 226 of the Constitution.
16. With the above contentions, the learned senior counsel sought for setting aside the impugned orders.
17. On the other hand, the learned counsel appearing for the respondents would contend that by virtue of Section 12 of the TNSEZ Acct, goods
sold/cleared by the SEZ unit of the petitioner are exempted from levy of purchase tax in regard to the turnover pertaining to exports alone,
however, the petitioner had cleared the goods from SEZ unit to the domestic tariff area, which are liable to tax in terms of Section 15 of the
TNSEZ Act. It is contended that the provision of Section 12(1) cannot be read or interpreted in isolation as it grants exemption from the levy of
sales/purchase tax relating to authorized operations carried on by the developer/entrepreneur and in the present case, the authorized operations
were clearly elaborated in terms of Letter of Approval dated 7.3.2011, wherein, Section 3(v) specified subjects clearances from SEZ to the
domestic area to tax in terms of the provisions of the TN VAT Act. Therefore, according to the learned counsel, 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 received
Presidential assent on the 23rd of June, 2005. After extensive consultations, the SEZ Act, 2005, supported by SEZ Rules, came into effect on
10th February, 2006, providing for drastic simplification of procedures and for single window clearance on matters relating to Central as well as
State Governments.
20. Section 2(za) defines ''Special Economic Zone'', Section 2(zc) defines ''units'', Section 2(j) defines entrepreneur. Section 3 deals with the
procedure for making proposals to establish a special economic zone. Section 15 deals with setting up of units and Section 26 deals with
exemptions, draw backs and concessions to every developer and entrepreneur. It is submitted that the Tamil Nadu Government enacted the Tamil
Nadu Special Economic Zone (Special Provisions) Act, 2005, and in terms of Section 12(1)(a) of the State Act, every developer or entrepreneur
shall be entitled to various exemptions and one such exemption is from levy of tax on the sale or purchase of goods under the TNGST Act, if the
goods are meant to carry on the authorised operations by the developer or entrepreneur. Therefore, by virtue of both the Central Act and in
particular the State Act exemption is granted on the sale or purchase of goods, if the goods are meant to carry on authorized operations.
21. The petitioner company sent a proposal for setting up a unit in the Nokia Special Economic Zone by making an application dated 17.2.2011 to
MEPZ Special Economic Zone, which accorded approval for the same by proceedings, dated 7.3.2011 subject to the provisions of the Special
Economic Zones Act, 2005 and the rules and orders made thereunder for undertaking authorized operations, namely, trading and warehousing
services for mobile phone handsets and mobile phone parts and accessories. Thus, the petitioner company became a part of larger scheme of
operation by the NOKIA group in the State. The above said approval dated 7.3.2011 is subject to various terms and conditions both in regard to
the export of the goods/services as well as clearances and supply of goods/services in the domestic tariff area. The relevant terms and conditions
specified in the approval letter, dated 7.3.2011 are extracted hereunder:
You (the petitioner) shall export the goods manufactured/goods imported/procured for trading and services, including items of trading, as per
provisions 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
Economic Zones Act, 2005, which deals with ''Domestic clearance by units, which reads as under:
30. Domestic clearance by Units.-
Subject to the conditions specified in the rules made by the Central Government in this behalf:- (a) any goods removed from a Special Economic
Zone to the Domestic Tariff Area shall be chargeable to duties of customs including anti-dumping, countervailing and safeguard duties under the
Customs Tariff Act, 1975, where applicable, as leviable on such goods when imported; and (b) the rate of duty and tariff valuation, if any,
applicable to goods removed from a Special Economic Zone shall be at the rate and tariff valuation in force as on the date of such removal, and
where such date is not ascertainable, on the date of payment of duty.
24. A perusal of the above, it is explicit that if any goods removed from a Special Economic Zone to the Domestic Tariff Area shall be chargeable
to duties of customs including anti-dumping, countervailing and safeguard duties. Further, it is also relevant to extract Section 15 of the TNSEZ
Act, which deals with domestic clearances by Units, reads as under:
15. Domestic Clearance by Units.-
Subject to the conditions specified in the rules made by the Government in this behalf.-
a) Any goods removed from a Special Economic Zone to the Domestic Tariff Area shall be chargeable to sales tax and additional sales tax under
the Tamil Nadu General Sales Tax, 1959 and the Tamil Nadu Additional Sales Tax, 1970 and the entry tax under the Tamil Nadu Entry of Motor
Vehicles into Local Areas Act, 1990 and the Tamil Nadu Entry Goods into Local Areas Act, 2001 where applicable, as leviable on such goods
when imported; and
b) The rate of sales tax, additional sales tax and entry tax, if any, applicable to goods removed from a Special Economic Zone shall be at the rate
in force as on the date of such removal, and where such date is not ascertainable, on the date of payment of tax.
25. A perusal of the above provision, it is clear that if the goods are removed from SEZ to the domestic tariff area, such transaction is liable to
sales tax.
26. In both the writ petitions, it is not in dispute that the petitioner company effected Inter State stock transfer from warehouse located in SEZ for
Rs. 776,87,15,603/- and for Rs. 533,18,47,466/- respectively. The first respondent, by 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 turnover relating to the purchase aforesaid at
the rate specified in the Schedules to this Act.
27. According to the learned senior counsel, the petitioner company is entitled to the benefit of exemption from levy of purchase tax by virtue of
Section 12(1) of the TNSEZ Act, which provides exemption from the levy of taxes on the sale or purchase of goods under the Tamil Nadu
General Sales Tax Act if such goods are meant to carry on the authorized operations by the Developer or entrepreneur. He pointed out that by
virtue of Approval Letter granted by the MPEZ to the petitioner to authorize the operations, viz., trading and warehousing services for mobile
phone handsets and mobile phone parts and accessories'' and the goods which were subjected to purchase tax are actually meant to carry on the
authorized operation, viz., trading & warehousing of mobile phone handsets and parts and accessories thereof.
28. 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. It is to be noted that the definitions ''authorized operations'',
''developer'' and ''entrepreneur'' have not been defined in TNSEZ Act, 2005. However, we can find definitions of these words in Section 2 of
Special Economic Zones Act, 2005 as under:
2(c) ""authorized operations"" means operations which may be authorized under sub-section (2) of section 4 and sub-section (9) of section 15;
2(g) ""Developer"" means a person who, or a State Government which, has been granted by the Central Government a letter of approval under sub-
section (10) of section 3 and includes an Authority and a Co- Developer;
2(j) ""entrepreneur"" means a person who has been granted a letter of approval by the Development Commissioner under sub-section (9) of section
15;
2(i) ""Domestic Tariff Area"" means the whole of India (including the territorial waters and continental shelf) but does not include the areas of the
Special Economic Zones;
29. Section 2(f) of TNSEZ Act envisages that the expressions used and not defined in TNSEZ Act but defined in the Special Economic Zones
Act, 2005 have the meanings respectively assigned to them in the said Act. Therefore, the expressions, ""developer"", ""entrepreneur"" and ""domestic
tariff area"" defined in the Special Economic 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 land customs stations, as the case may
be under section 7 of the Customs Act, 1962 (52 of 1962). Provided that for the purposes of this section, the Central Government may notify
different dates for different Special Economic Zones."" ""Domestic Tariff Area has been defined in sec 2(j) of the SEZ Act 2005 which means the
whole of India but does not include the areas of the SEZ."" The term export has been defined in sec 2(m) of the SEZ Act 2005, Export means (i)
Taking goods, or providing services, out of India from a Special Economic Zone, by land, sea or air or by any other mode, whether physical or
otherwise; or (ii) Supplying goods, or providing services, from the Domestic tariff Area to a Unit or Developer; or (iii) Supplying goods, or
providing services, from one Unit to another Unit or Developer, in the same or different Special Economic Zone, The term import has been defined
in Sec 2(o) of the SEZ Act which reads as under ""Import"" means (i) bringing goods or receiving services, in a Special Economic Zone, by a Unit
or Developer from a place outside India by land, sea or air or by any other mode, whether physical or otherwise; or (ii) receiving goods, or
services by a Unit or Developer from another Unit or Developer of the same Special Economic Zone or a different Special Economic Zone. The
supply of goods by the dealer of Domestic tariff area to SEZ unit is treated as export of the dealer and import of the SEZ unit vice versa the sale of
goods by SEZ unit to a dealer of Domestic tariff area will be import of the dealer and export of the SEZ unit. Thus all sales effected by SEZ unit to
a dealer situated anywhere in India is export sales of SEZ unit because SEZ territory is deemed to be a foreign territory. The petitioner cleared the
goods from SEZ unit to domestic tariff area and such removal of goods claimed as branch transfers under Section 6(A) of the CST Act, exempt
from tax, however, such domestic tariff area clearances consequently attract provisions of Section 15 of TNSEZ Act. Therefore, Section 2(1(b) of
the TNVAT Act stands attracted justifying levy of purchase tax. In fact, the proposal for levy of purchase tax on the entire purchase effected from
SEZ to SEZ, viz., Tvl.Nokia India Private Limited to the petitioner (Tvl.Nokia India Sales Private Limited) has been dropped, however,
considering the fact that the petitioner effected stock transfer 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 make SEZs an engine for economic
growth supported by quality infrastructure and by an attractive fiscal package, both at the Centre and the State level, with the minimum possible
regulations in order to promote export and to achieve the target of economic growth at desired level. In the present case, it is contended by the
learned senior counsel that the sales made by Nokia India Private Limited to the Nokia India Sales Private Limited are zero rated by virtue of
18(1) of the TNVAT Act and for levying the purchase tax, it is essential that the goods purchased should be disposed/dealt with in any one of the
clauses specifically mentioned under (a) to (d) of Section 12(1) of the TNSEZ Act and the clauses (a), (b) and (d) are not attracted since the
petitioner had neither consumed or used the purchased goods in or for the manufacture of other goods for sale or otherwise nor disposed such
goods in any manner other than by way of sale in the State nor installed and used such goods in the factory for the manufacture of any goods. He
further contended that as regards the consignment sales, i.e. interstate stock transfer from warehouse located in SEZ, goods would be sent to
depots in other States and VAT would be paid when the goods are sold in other States. The contentions raised by the learned senior counsel, in
my opinion, do not merit acceptance and if the version of the petitioner is accepted, the resultant position is, a) no tax is levied in regard to
purchase for manufacture of goods by Nokia India Private Limited SEZ Unit; b) No tax is levied on intra SEZ sales effected between Nokia India
Private Limited and the petitioner; c) Out of total turnover of Rs. 4676.35 and 1635 crores (both writ petitions), the petitioner has exported
goods/services of an amount of Rs. 1759.32 and 674.24 crores respectively and claimed exemption thereon; d) the petitioner has remitted tax of
an amount of Rs. 159.49 and Rs. 45.96 crores only in respect of intra and inter-state sales and e) the petitioner claims exemption in relation to the
bulk of its turnover, of amount of Rs. 776.87 crores and Rs. 533.18 crores relating to SEZ clearances to branches in other States, of course, sales
of such goods are thereafter liable to tax in respective States. However, it is very deplorable to note that being a SEZ unit, having availed the
hospitality and resources of the State of Tamil 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 transfer effected from warehouse located in SEZ by the
petitioner, in my opinion, is perfect in order.
32. As regards the reliance placed by the learned senior counsel appearing for the petitioner in ""Torrent Energy Ltd., reported supra, does not
come to the rescue of the petitioner in the given facts and circumstances of the case. In this regard, it is relevant to refer a decision of this Court in
Tulsyan Nee Limited versus The Assistant Commissioner (CT)"" rendered in a batch of writ petitions in W.P. Nos. 21453 of 2008, etc., wherein,
in similar circumstances, this Court has held as under in para 22:
22. In the case of Torrent Energy Ltd. (supra), the petitioner is a power generation unit established in an SEZ. The question which fell for
consideration was whether they were liable to purchase tax on capital goods and fuel used in power generation under the Gujarat VAT Act. The
other petitioner was a unit in a SEZ engaged in the manufacture of printing ink and purchase tax was demanded on the zero rated goods purchased
by them and consumed in its SEZ unit. The petitioners contended that Section 21 of the Gujarat SEZ Act provides for total exemption from
payment of various State taxes of units situated in SEZ area; Section 22 of the Gujarat SEZ Act contains a non-obstante clause; the SEZ Act
would have overriding effect over the State fiscal statutes. The Revenue took a stand that Section 22 of the Gujarat SEZ Act gives overriding
effect only to existing state laws and not to Section 5A and Section 9(5) of the Gujarat VAT Act, which was introduced subsequently that is w.e.f.,
01.04.2008; non-obstante clause be given effect only to the extent the legislation intended. It is to be pointed out that it was not in dispute that the
petitioners therein were not required to pay any taxes under Gujarat VAT Act [but for the newly introduced provisions, Section 5A and 9(5)].
Therefore, the question which was considered was whether immunity enjoyed was curtailed by subsequent law inserted w.e.f., 01.04.2008.
Considering these facts the Court held that the provisions of Section 21 of the Gujarat SEZ Act had primacy and purchase tax cannot be
demanded. At the outset, it has to be pointed out that Section 21 of Gujarat SEZ Act and Section 12 of TNSEZ Act are not pari materia and the
Revenue herein does not admit the position that the petitioners herein are not liable to pay tax, but would seriously dispute the same. Further, the
petitioners herein claim ITC on the sales effected to SEZ''s or its developers. That apart, there is marked and material difference with regard to
zero rated sale as per under Section 5A in the Gujarat VAT Act with that of Section 18 of the TNVAT Act. The provisions are not pari materia.
Furthermore, the factual background of the case was entirely different and therefore, the decision does not render support to the case of the
petitioners. The interpretation of the petitioners, if accepted, it would render the statue futile. The intention of the legislation is clear from the
language of Section 18 of TNVAT Act specifies the benefit for zero rated transactions.
33. Therefore, having held that Section 21 of Gujarat SEZ Act and Section 12 of TNSEZ Act as well as the provisions thereof are not pari materia
and the interpretation of the petitioners therein, if accepted, it would render the statute futile, this Court has observed that the decision in ""Torrent
Energy Pvt.Ltd.,"" does not render support to the case of the petitioners. The above said observation of this Court, in my opinion, will hold good in
the facts and circumstances of the present case.
34. As regards the impugned orders, dated 30.7.2014 passed by the first respondent while rejecting the rectification petitions filed by the petitioner
under Section 84 of the TNVAT Act, 2006, are concerned, I do not find any irregularity or illegality therein in order to interfere with the same.
Admittedly, as against the original orders, dated 25.6.2014, the petitioner is having efficacious remedy by way of appeal and without resorting to
the same, the petitioner has filed the rectification petitions and again canvassed the issue which was already dealt with in a well considered manner
by the first respondent and in those circumstances, the first respondent has held that the orders dated 25.6.2014 hold good. Therefore, I do not
find any infirmity in the impugned orders, dated 30.7.2014.
For the foregoing discussion, the Writ Petitions fail and they are dismissed. No costs. Consequently, connected MPs are closed.
