Tai Industries Ltd Vs State of Tamilnadu (Madras High Court)
Conclusion: Article 304 of the Constitution applies only to goods imported from other states or union territories and not to goods imported from outside India. Where goods imported after having been released from customs barriers were not immune from any kind of State taxation, States were free to levy taxes on goods imported into the State.
Held: Assessee was importing food products like Sherbet from the Kingdom of Bhutan. As per assessee he would fall under Section 3(2-C) of the Tamil Nadu General Sales Tax (Seventh Amendment) Act, 2002. His goods were covered by the Eleventh Schedule. According to assessee his products fell under Part B, Item 4(vi) of the First Schedule and did not fall under Parts D and E of the First Schedule, along with other goods such as mixed fruit juice, orange juice, etc. Assessee submitted that assessee imports goods into Calcutta and from there the goods were moved to be sold in Tamil Nadu. The goods were imported free of duty as per the agreement on Trade and Commerce between the Government of Kingdom of Bhutan and the Government of India. It was further submitted that Article-I read with Article-V of the Trade agreement, for goods imported by assessee, tax could not be levied at a differential rate. It was held that Article-V applied only to those goods which come from outside India or leave Indian territories and would not apply to those goods which were consumed within India. Assessee relied upon Article 304 of the Constitution of India to suggest that this kind of differential rates could not be levied. Article 304 of the Constitution of India was of no help because that applied only to goods imported from other States or Union Territories and not to goods imported from outside India.
