2015 (7) TMI 548 - HC - VAT and Sales Tax

Levy of sales tax / VAT on sale of REP licenses - .Whether the Hon ble Tribunal is correct in holding that the income received by way of premium on sale of REP licences alone is taxable as turnover as against the aggregate amount for which the said goods were sold as per the definition of the term turnover as laid down in Section 2(r) of the TNGST Act, 1959? - Held that - According to the Department, the assessee had surrendered REP licence to the Reserve Bank of India and that the turnover was 1,51,76,000/-, whereas the Appellate Authority and the Tribunal have held that the aggregate value insofar as the surrender of REP licence was ₹ 22,58,840/-. The rate of tax leviable on surrender of REP licence at 8% is not in dispute. On a conspectus of two orders, viz, the first Appellate Authority as well as the Tribunal, it is clear that factually both the Authorities have found that the turnover on surrender of REP licence was only ₹ 22,58,840/-. In the absence of any record or material to the contrary, we are unable to countenance the argument of the learned Additional Government Pleader appearing for the State that there was an error in levy of tax in respect of REP licence surrendered to the Reserve Bank of India. - Decided against the revenue.

Summary

Issues:
1. Interpretation of the term 'turnover' under Section 2(r) of the TNGST Act, 1959 in relation to income received from the sale of REP licenses.
2. Levy of penalty under Section 12(3)(b) of the TNGST Act 1959 for assessment years beyond 1992-93.

Analysis:
1. The case involved a dispute regarding the taxation of income received from the sale of REP licenses. The Revenue challenged the Tribunal's decision, arguing that the income should be taxed based on the aggregate amount for which the goods were sold, as per the definition of 'turnover' in Section 2(r) of the TNGST Act, 1959. The Appellate Assistant Commissioner and the Tribunal both found that the correct turnover for assessment related to the REP license was only Rs. 22,58,840, not the higher amount claimed by the Revenue. The Tribunal upheld this finding, stating that the turnover on the surrender of REP license was correctly assessed at Rs. 22,58,840. The High Court agreed with the Tribunal's factual findings, dismissing the Revenue's argument and ruling that no substantial question of law arose in this regard.

2. The second issue pertained to the levy of penalty under Section 12(3)(b) of the TNGST Act 1959 for assessment years beyond 1992-93. The Assessing Officer proposed to revise the assessment and impose penalties based on the surrender of REP licenses. However, the Appellate Assistant Commissioner, upon verification of the records, found that the correct turnover for assessment was significantly lower than initially assessed. The Tribunal also confirmed this lower turnover amount. Consequently, the High Court held that since both the Appellate Authorities had verified the records and arrived at a conclusion regarding the turnover, there was no question of law, let alone a substantial question of law, to be considered. As a result, the Tax Case (Revision) was dismissed, with no costs imposed.

In conclusion, the High Court upheld the findings of the Appellate Authorities regarding the turnover and penalty issues, dismissing the Revenue's appeal and ruling that no substantial question of law was present for consideration.