2016 (11) TMI 495 - HC - VAT and Sales Tax

Concessional rate of VAT @4% subject to turnover limit of ₹ 300 crores - imported peas - whether the threshold limit of ₹ 300 crores is to be restricted to the turnover of Peas and Peas dhall or should be taken on the basis of the overall turnover of the petitioner? - Held that - in terms of Entry 68, the sale of Peas and grams which have been listed out under the said Entry which are twelve in number, the threshold limit is ₹ 500 crores in a year. Therefore, looking at the case from both the angles, the impugned assessment order made by the respondent, stating that the petitioner has exceeded the threshold limit of ₹ 300 crores limit is not sustainable in law. - petition allowed - decided in favor of petitioner.,

Summary

Issues:
1. Interpretation of threshold limit for tax exemption on sale of imported Peas.
2. Whether the threshold limit of ?300 crores should be restricted to the turnover of Peas and Peas dhall or considered based on the overall turnover of the petitioner.

Analysis:
The petitioner, a National Agricultural Co-operative Marketing Federation of India Ltd., engaged in procurement and distribution of agricultural commodities, was registered under the Multi State Co-operative Societies Act, 2002. The primary contention revolved around the tax liability on the sale of imported Peas, where the petitioner argued for exemption based on a threshold limit of ?300 crores specified for Peas and Peas dhall. The respondent, however, insisted on considering the entire turnover for taxation purposes. The core issue was whether the threshold limit should apply solely to Peas and Peas dhall or be extended to the overall turnover of the petitioner.

The petitioner referred to Entry No.67 in Part B of the Fourth Schedule, emphasizing that the entire ?300 crores limit was allocated for Peas and thus, they were eligible for exemption. On the contrary, the respondent maintained that the threshold limit was applicable to the overall turnover, not limited to specific commodities. The judgment highlighted the specific entry and the absence of a clear response in the counter affidavit regarding the interpretation of this provision.

The court noted that the issue arose only for a single assessment year, 2007-08, while subsequent returns were accepted without contest. Additionally, it was pointed out that under Entry 68, the threshold limit for certain commodities, including Peas and grams, was ?500 crores annually. Considering these aspects, the court deemed the assessment order by the respondent as unsustainable in law and ruled in favor of the petitioner. Consequently, the writ petition was allowed, the impugned order was quashed, and no costs were imposed, leading to the closure of the connected Miscellaneous Petition.