2009 (10) TMI 868 - HC - VAT and Sales Tax

Levy of tax under section 7A on the purchase turnover of edible oil(i.e., covered under the conditional exemption at the time of purchase) - Held that - In view of the request made by the learned counsel for the petitioner and as there is no serious objection raised by the learned counsel appearing on behalf of the respondent, the petitioner is permitted to file its objections before the respondent, with regard to the impugned notice, dated July 30, 2007, within a period of four weeks from the date of receipt of a copy of this order and on receipt of the said objections, the respondent is directed to pass appropriate orders thereon, on merits and in accordance with law.

Issues involved:
1. Levy of tax under section 7A of the Tamil Nadu General Sales Tax Act, 1959 on purchase turnover of certain goods.
2. Proposal to revise assessment for the year 2000-01 under the TNGST Act.
3. Proposed penalty under section 16(2) of the TNGST Act.
4. Dispute regarding the tax rate applicable to certain purchased goods.

Analysis:

1. Levy of tax under section 7A:
The petitioner, a registered dealer, operates hotels and restaurants under a specific name. The respondent issued a notice regarding the levy of tax under section 7A of the TNGST Act, based on the purchase turnover of edible oil and various food items like pulses, grams, chillies, coriander, tamarind, etc. The notice proposed the revision of assessment for the year 2000-01, citing the withdrawal of conditional exemptions by the Government. The Tribunal's judgment in a similar case supported the levy of tax on the purchase turnover of edible oil. The notice also mentioned the proposed penalty for non-disclosure of assessable turnover.

2. Revision of assessment:
The notice highlighted the discrepancies in the purchase turnover of certain goods used in food preparation, proposing a revised assessment under the TNGST Act. It specifically mentioned the need for a proper breakdown of purchase figures for different goods to determine the applicable tax rates accurately. The proposal aimed to assess the turnover attracting liability under section 7A of the TNGST Act, emphasizing the importance of accurate disclosure and compliance.

3. Penalty under section 16(2):
Apart from the proposed tax levy, the notice also indicated the intention to impose a penalty under section 16(2) of the TNGST Act for the wilful non-disclosure of assessable turnover. The penalty was to be levied at the appropriate rate on the taxable turnover proposed for assessment due to the lack of disclosure by the dealers. The notice provided an opportunity for the dealers to file objections within a specified timeframe before final orders were passed.

4. Tax rate dispute for purchased goods:
A discrepancy arose regarding the tax rate applicable to certain purchased goods like pulses, grams, and other items used in food preparation. The notice highlighted the need for a clear breakdown of purchase figures for different categories of goods to determine the correct tax rates. The proposal suggested a modification in the assessment to ensure accurate taxation based on the nature of the purchased goods. The dealers were given the chance to raise objections and provide necessary details to facilitate a correct assessment.

In conclusion, the judgment permitted the petitioner to file objections within a specified timeframe, allowing for a review of the impugned notice by the respondent. The decision aimed to ensure a fair and accurate assessment of tax liabilities and penalties under the TNGST Act, emphasizing the importance of compliance and proper disclosure in tax matters.

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