2014 (9) TMI 743 - HC - VAT and Sales Tax

Benefit of compounding system of assessment - Tamil Nadu Value Added Tax Act, 2006 - Held that - Perusal of the order of the respondent shows that nowhere it is stated therein that the petitioner s turnover during the previous years relevant to the year under consideration crossed ₹ 50 lakhs, or for that matter this year. In the above circumstances, in the absence of any provision like the one referred to by the assessing officer on the previous year turnover having inter-State sales turnover too to disentitle the petitioner from claiming compounded rate of tax, I do not find any legal support to the contention of the respondent that the petitioner is not entitled to have the benefit of the compounded rate of tax as under Section 3(4) of the Act. So long as the petitioner has the taxable turnover for the year under consideration at less than ₹ 50 lakhs and so too during the immediate previous year, the taxable turnover of that year remained at less than ₹ 50 lakhs, the mere fact of his earlier years having inter-State purchase, per se, would not go against the claim of the petitioner to have the assessment done under Section 3(4) of the Act. - Matter remanded back - Following decision of Bharani Readymades Vs. State of Tamil Nadu and another 2014 (8) TMI 897 - MADRAS HIGH COURT - Decided in favour of assessee.

Summary

Issues:
Challenge to order of revision of assessment under Section 27 of the Act based on dealer's inter-state purchases and denial of compounded tax benefit.

Analysis:
The petitioner sought to quash the order of revision of assessment dated 27.11.2013, contending it contradicted a previous judgment. The petitioner had availed the compounding system under Section 6 of the Tamil Nadu Value Added Tax Act, 2006 for the assessment year 2009-10. However, a notice for revision of assessment was issued on 28.10.2013, citing the prohibition for dealers opting for compounded rates to make inter-state purchases if they had done so in previous years. The petitioner's response was rejected, leading to the impugned order. The petitioner challenged this through a Writ Petition.

The petitioner's counsel relied on a prior judgment to argue that a dealer's inter-state purchases in earlier years should not disqualify them from paying tax at compounded rates. The Additional Government Pleader for the respondent agreed that the cited judgment applied to the present case. It was suggested that the matter be remitted back to the respondent for reconsideration under Section 3(4) of the Act, provided the petitioner met all other Act requirements.

After hearing both sides, the Court proceeded to final disposal of the Writ Petition. Referring to the relevant portion of the prior judgment, the Court emphasized that as long as the taxable turnover remained below a certain threshold and met other conditions, past inter-state purchases should not affect the dealer's entitlement to compounded tax rates under Section 3(4) of the Act. Consequently, the impugned order was set aside, and the matter was sent back to the respondent to reassess in line with the principles from the cited judgment. The Writ Petition was allowed, and connected Miscellaneous Petitions were closed without costs.