MADRAS REFINERIES LTD. vs STATE OF TAMIL NADU

The Supreme Court held that under the Tamil Nadu General Sales Tax Act, the amount received by the appellant from the industrial pool account cannot be included in the taxable turnover as it is not deemed to be the first sale in the State, per Explanation 1. The Court clarified that even if the amount is considered part of the sale price, it relates to sales made to another oil company, Indian Oil Corporation Ltd. (IOCL), and thus is exempt from sales tax. The notices issued to include this amount in the turnover were quashed, affirming that no tax can be levied on the appellant for the amounts received from the compensation pool.