2015 (6) TMI 227 - HC - VAT and Sales Tax

Levy of tax on purchase value - Held that - Sales had been done by the petitioner to the tune of ₹ 47,05,257/-. In view of Section 3(4)(a)(ii) extracted supra, the respondent has no jurisdiction to assess the tax based on the purchase value. According to the petitioner, the respondent had taken the purchase value as yardstick without considering the provisions of the Act. The statute speaks about the Sales Tax turnover alone for the purpose of liability under section 3(4) of the Tamil Nadu Value Added Tax Act, 2006. - In the light of the provisions under Section 3(4) of the Tamil Nadu Value Added Tax Act, 2006, as the sales of the petitioner are less than ₹ 50,00,000/-, the impuged order is liable to be set aside - Decided in favour of assessee.

Summary

Issues:
Jurisdiction of assessing tax based on purchase value under Section 3(4)(a)(ii) of the Tamil Nadu Value Added Tax Act, 2006.

Analysis:
The petitioner filed a writ petition seeking a writ of certiorari to quash the impugned proceedings dated 12.02.2015 as ultra vires of the provisions of the Tamil Nadu Value Added Tax Act, 2006. The petitioner argued that the respondent assessed tax based on the purchase value of goods, amounting to &8377; 47,05,257, which was incorrect as per Section 3(4)(a)(ii) of the Act. The Act specifies that only sales turnover should be considered for assessing liability under this section. The petitioner contended that the respondent did not adhere to the statutory provisions and wrongly used the purchase value as the criteria for taxation.

The court examined Section 3(4) of the Tamil Nadu Value Added Tax Act, 2006, which provides for an option for dealers with turnover below rupees fifty lakhs to pay tax on their sales turnover at a notified rate. The court noted that since the petitioner's sales were below the threshold of &8377; 50,00,000, the respondent had erred in assessing tax based on the purchase value. The court emphasized that the statute explicitly mentions sales turnover as the basis for liability under Section 3(4) and not the purchase value. Therefore, the court found the impugned order to be incorrect and set it aside.

In conclusion, the court allowed the writ petition, set aside the impugned order, and closed the connected miscellaneous petition. The judgment clarified that under Section 3(4) of the Act, dealers with sales turnover below &8377; 50,00,000 should not be taxed based on purchase value, and any such assessment is not in accordance with the statutory provisions.