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2015 (3) TMI 1168 - HC - VAT and Sales TaxWhether the goods transported by the petitioner were liable to be assessed to sales tax under the Central Sales Tax Act, 1956 - Petitioner had been granted permission to set up a unit at the CSEZ for manufacture and export of PVC Free Foam Sheets - Held that:- the Special Economic Zone is treated to be a foreign territory for the purposes of trade operations, duties and tariffs. Units like that of the petitioner are permitted to import capital goods without paying Customs Duty to the Special Economic Zone for the purpose of manufacture of their products. Such capital goods are also permitted to be transferred to other units located in similar Special Economic Zones with the permission of the fifth respondent. The petitioner has obtained permission from the fifth respondent permitting such transfer. Ext.P5 is the agreement pursuant to which, the goods were being transported. Therefore, the goods that were exported to the Special Economic Zone which is to be treated as a foreign territory for the purposes of trade and tariffs, had not crossed the customs frontiers of India. It was for the said reason that they were retained in warehoused condition by the Department of Customs and Central Excise under bond. The goods would become exigible to tax under either the CST Act or the KGST Act only after they cross the customs frontiers of India. In other words the goods would become taxable under the domestic enactments only after they are released for home consumption by the Customs authorities after payment of Customs Duty. As the said eventuality not having taken place yet, it is held that the goods have not become liable to tax under the Act that is relied upon. It is also worth noticing that the Special Economic Zones Act, 2005 is given an overriding effect over other enactments. In view of the provisions of law as well as the terms of the Export - Import Policy, there cannot be any doubt regarding the fact that the goods are not liable to tax under the Sales Tax Act of our country. Also the said taxable event of the goods clearing the customs barriers has not occurred in the case of the capital goods of the petitioner, in this case. Therefore the goods have not come into the territory of India. For the said reason they are not liable to be taxed under the CST Act. - Decided in favour of petitioner
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