1990 (11) TMI 395 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Whether assessing the turnover of Rs. 33,940 under section 7-A separately amounts to double taxation.
2. Interpretation of "total turnover" and its implications on tax liability under sections 3, 7, and 7-A of the Tamil Nadu General Sales Tax Act, 1959.

Issue-wise Detailed Analysis:

1. Whether assessing the turnover of Rs. 33,940 under section 7-A separately amounts to double taxation:

The Tribunal had held that taxing the amount of Rs. 33,940 separately under section 7-A, when it had already been included in the total turnover assessed under section 7, amounted to double taxation. The assessee, a dealer in gold and silver jewellery, reported a total turnover of Rs. 33,710 for the year 1977-78. The taxing officer, after finding defects in the accounts, estimated the total turnover at Rs. 37,081 and included Rs. 33,940 under section 7-A. This resulted in a total turnover of Rs. 71,021 being taxed under section 7, with Rs. 33,940 being taxed separately under section 7-A. The Appellate Assistant Commissioner agreed with the assessing officer, but the Tribunal found this to be double taxation and allowed the appeal.

2. Interpretation of "total turnover" and its implications on tax liability under sections 3, 7, and 7-A of the Tamil Nadu General Sales Tax Act, 1959:

The court examined sections 2(p), (q), (r), 3, 5, 6, 7, and 7-A of the Tamil Nadu General Sales Tax Act, 1959, to understand the definitions and implications of "taxable turnover," "total turnover," and "turnover." Section 3(1) is the main charging section, while section 7 provides for compounded rates of tax. Section 7-A deals with the levy of purchase tax. The court referred to the Full Bench judgment in State of Tamil Nadu v. Manakchand, which clarified that "total turnover" includes all turnovers of a dealer, whether under sections 3(1), 4, 5, or 7-A.

The court noted that section 7-A(2) allows for the compounding of tax under section 7 for dealers whose total turnover is between Rs. 50,000 and Rs. 2,00,000. The Full Bench had concluded that "total turnover" includes both sales and purchase turnovers, and the tax compounded under section 7 covers the tax under sections 3(1) and 7-A. The court emphasized that once tax is compounded under section 7(1), it covers both sections 3(1) and 7-A, and any further tax under section 7-A would amount to double taxation.

Conclusion:

The court concluded that the Appellate Tribunal did not commit any error in holding that taxing Rs. 33,940 separately under section 7-A, when it had already been included in the total turnover taxed under section 7, amounted to double taxation. The revision petition was dismissed, and no costs were awarded.