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January 2014

India Exports vs. State of U.P. and others [2012] 47 vst 126(Allahabad).

By C. B. Thakar Advocate, G. G. Goyal, Janak Vaghani Chartered Accountants
Reading Time 2 mins
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Sale – Sales from SEZ – Not a Sale In The Course of Import – Taxable, Section 5(2) of The Central Sales Tax Act, 1956

Facts:
The Petitioner having a unit in Special Economic Zone, cleared furniture manufactured therein, for sale to Domestic Tariff Area (DTA Units) under section 2(i) of The SEZ Act, 2005. The petitioner claimed exemption from payment of tax on such sale of goods u/s. 5(2) of The Central Sales Tax Act, 1956, being sale in course of import as whole of India excludes areas of SEZ under the SEZ Act. The assessing authorities imposed tax on impugned transactions, against which petitioner filed writ petition before the Allahabad High Court.

Held:
The SEZ Act, 2005 has provided for amendment of various taxing statues or modified them for fulfilling object and purpose of the Act. Section 57 of the said Act amends the enactment specified in the Third Schedule, which are amended by SEZ Act, 2005. The Central Sales Tax Act is not included in any of these Schedules. The sales from SEZ Unit to Unit in DTA cannot be deemed to be imports. No such presumption can be drawn from section 5(2) of The CST Act or any of the provisions of SEZ Act as such it is taxable. Accordingly, the High Court dismissed the Writ Petition filed by the Petitioner.

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