TULSYAN NEC LIMITED Vs. ASSISTANT COMMISSIONER

JUDGEMENT

(1.) The issue involved in all these cases being identical, they were heard together and are disposed of by this common order.

(2.) The matter arises under the provisions of the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act), and the interpretation of Section 18 of the TNVAT Act, qua the transactions effected by the petitioners to units in Special Economic Zones. In majority of the cases the challenge is to the circular issued by the Commissioner of Commercial Taxes in Circular No.9 of 2013, dated 24.07.2013 and the assessment orders passed by the respective Assessing Officers which were based on the impugned circular.

(3.) The facts in the lead case in W.P.No.29450 of 2014, are taken into consideration. The petitioner is a public limited company incorporated under the Companies Act, engaged in the manufacture of High Tensile Fasteners, Gear Shifters etc., and its factory located in Special Economic Zones (SEZ). The petitioner was awarded contracts for construction of their factory building and related infrastructure in the SEZ. According to the petitioner in terms of Section 18 (1)(ii) of the TNVAT Act, any sale effected to a unit which will include a deemed sale in line with the definition of sale contained under Section 2(33) of the TNVAT Act, in terms of Article 366(29A)(b) of the Constitution of India. However, the Commissioner issued the impugned circular stating that works contracts executed for SEZ units cannot have the benefit of zero rating, since goods transferred by a contractor are neither exported as such or used in the manufacture of other goods which are exported. In the impugned circular, it has been stated that sale of goods, involved in the execution of works contract, to any other registered dealer located in SEZ in the State is not zero rate sale, as the goods are not exported as such or consumed or used in the manufacture of other goods that are exported, as required under Section 18(2) of the TNVAT Act. Consequent upon the circular, the Assessing Officer has taken a stand that no zero rating is permissible and issued notices/orders to reverse the input tax credit availed. In the said background, the petitioner has challenged the circular dated 24.07.2013, and the consequential action of the Assessing Officer stating that the transaction is not a zero rated sale.