The Madras High Court upheld a 14.5% VAT on inter-state sales, ruling that capital goods cannot benefit without being used within the state.
Madras HC Upholds VAT on Inter-State Sales
The Madras High Court has upheld the 14.5% Value Added Tax (VAT) on inter-state sales, rejecting the argument for exemption based on capital goods. The court clarified that the molds and dies sold by the petitioner did not meet the essential criteria as they were not utilized within Tamil Nadu.
The ruling emphasized that the benefit of tax exemptions for capital goods is contingent on their use within the state, reinforcing stricter interpretations of existing tax laws and their implementation.
Practitioners should note this decision as it reiterates the importance of complying with pertinent conditions to qualify for tax benefits, particularly in inter-state trade contexts.
