W.A.No.474 of 2021 and C.M.P.No.1877 of 2021, High Court of Judicature at Madras, decided 15.04.2025 (K.R.Shriram, CJ, author; Mohammed Shaffiq, J). Letters Patent appeal under Clause 15 by Tai Industries Ltd. against the order dated 19.05.2020 of a learned Single Judge in W.P.No.35865 of 2004; at the hearing the prayer was restricted to the second part — the challenge to the insertion of Bhutan-imported goods as item (8) of Part G to the First Schedule and, via the Seventh Amendment (Act 22 of 2002), Section 3(2-C) and Eleventh Schedule (Item 9) to the Tamil Nadu General Sales Tax Act, 1959, as not applicable in view of the Agreement on Trade and Commerce between the Government of Kingdom of Bhutan and the Union of India dated 28.02.1995. Appellant, a Calcutta-based dealer registered with the Commercial Tax Officer, Saligramam Assessment Circle, importing Sherbet (falling under Part B, Item 4(vi) of the First Schedule) and other goods from Bhutan duty-free, complained that imported goods attract 20% tax at first sale under Eleventh Schedule Serial No.9 while comparable non-imported goods in Parts D and E attract 12% or 16%, and urged Articles I and V of the Trade Agreement and Article 304 of the Constitution against the differential levy. Held: (i) Article-V of the Agreement applies only to goods coming from outside India or leaving Indian territories, not to goods consumed within India, so the Article-V plea falls flat; (ii) per State of Kerala v. Fr. William Fernandez, (2021) 11 SCC 705 (para 125 relied on), goods released from customs barriers are not immune from State taxation and the States are free to levy taxes on goods imported into the State; (iii) Article 304 applies only to goods imported from other States or Union Territories, not to goods imported from outside India; the Protocol-based contention that the Agreement covers lottery sales has no applicability. Appeal dismissed; interim application closed; no order as to costs.
