2020 (3) TMI 583 - HC - VAT and Sales Tax

Scope of the term 'Total Turnover' - Entitlement for deduction of exempted turnover of the food and drinks which is served in the Club - exemption on the second sales made by such Club within their premises to the customers - HELD THAT - The concept and definition of total turnover, exempted turnover and taxable turnover are distinct in the Sales Tax Law and these terms are separately defined in the definition caluses of the Act and the Rules made thereunder. The total turnover obviously would include the total turnover of all the goods made by the Assessee, irrespective of the liability to pay tax thereon. If the turnover in question is exempted from payment of tax, it would nonetheless remain part of the total turnover even though it may not form part of the taxable turnover . Section 3-D of the Act as it stood prior to 01.04.1999 clearly mentioned the total turnover for applying the said flat rate of 2% tax. Even after amendment from 01.04.1999, the words total turnover have been employed in said Section 3-D of the Act - there are no merit in the argument raised by the learned counsel for the Assessee that the provisions after its substitution from 01.04.1999 should be held to be clarificatory in nature and to apply to the period even prior to 01.04.1999 i.e. Assessment year 1997-1998 which is the assessment year involved in the present case. A substantive provision of the Act unless specifically made retrospective by the Legislature cannot, by a deeming fiction, be construed to be a retrospective provision. As far as the words total turnover is concerned, there are no doubt that the total turnover would include even the exempted turnover. Since obviously the total turnover of the Assessee in question for the Assessment Year 1997-98, 1998-99 was beyond the prescribed limit of ₹ 50 Lakhs viz., being ₹ 72,34,527/- and ₹ 82,56,668/- as quoted above, we have no doubt that the learned Tribunal and the authorities below were justified in not applying the Section 3-D of the Act to the present case. There are no merits in the present petition - petition dismissed.

Summary

Issues:
Interpretation of provisions related to total turnover and taxable turnover for taxation under Section 3-D of the TNGST Act.

Analysis:
The case involved Writ Petitions filed by a Club challenging the order of the Sales Tax Appellate Tribunal. The Tribunal upheld that the Club was not entitled to deduction of exempted turnover of food and drinks served, making them liable to pay tax on total turnover under Section 3-D. The Club argued that post-01.04.1999 amendments exempted turnover from tax, but the Respondent contended that exempted turnover is part of total turnover. The Tribunal and lower authorities applied a 2% tax on total turnover, denying slab rate benefits.

The Petitioner argued that post-01.04.1999 provisions should apply retrospectively, considering exempted turnover. However, the Respondent stated that exempted turnover is included in total turnover as per TNGST Act definitions and rules. Rule 6 of TNGST Rules specifies deductions for taxable turnover determination. The Court noted distinct definitions of total, exempted, and taxable turnover, emphasizing that total turnover includes all goods turnover, taxable or not.

The Court rejected the Petitioner's argument, affirming that total turnover includes exempted turnover. Section 3-D, pre and post-amendment, referred to total turnover for tax calculation. The Court held that post-01.04.1999 provisions do not apply retrospectively. As the Club's turnover exceeded the limit, the Tribunal's decision to apply a 2% tax on total turnover was justified. The Writ Petitions were dismissed, and no costs were awarded.