2021 (12) TMI 131 - HC - VAT and Sales Tax

Violation of principles of natural justice - order was passed without affording an opportunity of hearing to the petitioner - inclusion of CST turnover into the VAT turnover - TNVAT Act, 2006 - HELD THAT - Though the petitioner has an alternative remedy, no useful purpose will be served by either relegating the petitioner to the respondent or to work out the remedy before the Appellate Commissioner as the issue is one of interpreting of the provision of the two Act - the manner prescribed for the purpose of Section 21 of the TN VAT Act, 2006 is under Rule 7 of the TNVAT Rules 2007. Rule 7 as it stood on 01.01.2007 was amended with effect from 24.08.2009. A registered dealer specified in clause (a) or (b) Rule 7(1) of the TNVAT Rules, 2007, whose taxable turnover in the preceding year exceeded two hundred crores of rupees and above was required file the above returns on or before 12th of the succeeding month to the assessing authority in whose jurisdiction his principal place of business or head office was situated. Such return shall be accompanied by proof of payment of tax - This period for filing return was extended from 12th of succeeding month to the 14th of the succeeding month in the case of a registered dealer who made electronic payment of the tax vide the above amendment. In the case of other dealers making the time was extended till 22nd of the succeeding month along with proof of payment of tax. Barring the above, amendment in the year 2009 is of no significance. The taxable turnover under Section 2(38) under TNVAT Act, 2006 can include only the turnover on which a dealer was liable to pay tax under TNVAT Act, 2006as determined after making such deductions from total turnover and in such manner as may be prescribed for determining total turnover . The amounts to be deducted Rule 8(2) of TNVAT Rules, 2007 can never form part of the taxable turnover under Section 2 (38) of the TNVAT Act 2006 for the purpose of Section 21 of the TNVAT Act 2006 - the overlap between the CST Act, 1956 and the TNVAT Act, 2006 and the Rules made thereunder are only for the purpose of following the procedure prescribed under the latter Act for the former. Barring the above, there is no scope for including one turnover into another either for determining the tax liability or the determining the due date for filing the Returns, Section 9 of the CST and Rule made thereunder do not permit any inclusion of the turnover under one tax enactment into another. There is no merits in the impugned order - petition allowed.

Summary

Issues Involved:
1. Whether the CST turnover should be included in the VAT turnover under the TNVAT Act, 2006 for filing returns.
2. Whether the impugned assessment order was cryptic, non-speaking, and unreasoned.
3. Whether the petitioner should have been relegated to exhaust alternative remedies before approaching the High Court.

Issue-wise Detailed Analysis:

1. CST Turnover Inclusion in VAT Turnover:
The primary issue was whether the CST turnover should be included in the VAT turnover under the TNVAT Act, 2006 for the purpose of filing returns. The petitioner argued that the turnover under the CST Act, 1956 and the TNVAT Act, 2006 cannot be clubbed together for filing returns under Section 21 of the TNVAT Act, 2006 read with Rule 7 of the TNVAT Rules, 2007. The petitioner highlighted that the definitions of "taxable turnover," "total turnover," and "turnover" under the TNVAT Act, 2006 and CST Act, 1956 are distinct and independent. The respondent, however, contended that the turnover from CST sales should be included for determining the filing date under the TNVAT Act, 2006.

The court examined the relevant provisions, including Section 21 of the TNVAT Act, 2006 and Rule 7 of the TNVAT Rules, 2007, and concluded that the "taxable turnover" under Section 2(38) of the TNVAT Act, 2006 includes only the turnover on which a dealer is liable to pay tax under the TNVAT Act, 2006. The court clarified that Rule 8 of the TNVAT Rules, 2007, which prescribes the method for determining "taxable turnover," does not imply that CST turnover should be included for filing returns under Rule 7. The court held that the overlap between the CST Act, 1956 and the TNVAT Act, 2006 is limited to procedural aspects and does not extend to the inclusion of CST turnover in the VAT turnover for filing returns.

2. Cryptic, Non-Speaking, and Unreasoned Order:
The petitioner argued that the impugned assessment order was cryptic, non-speaking, and unreasoned, thus contrary to the law established by the Division Bench of the High Court in State of Tamil Nadu Vs. M/s Taher Ali Industries & Projects (P) Ltd. The court agreed with the petitioner, noting that the assessment order lacked detailed reasoning and failed to address the specific contentions raised by the petitioner. The court emphasized the importance of reasoned orders in ensuring transparency and accountability in administrative decisions.

3. Exhaustion of Alternative Remedies:
The respondent contended that the petitioner should have exhausted the alternative remedy of filing an appeal before the Appellate Commissioner under Section 51 of the TNVAT Act, 2006 before approaching the High Court. The court, however, held that since the issue involved a pure question of law regarding the interpretation of statutory provisions, relegating the petitioner to the alternative remedy would not serve any useful purpose. The court cited precedents to support its decision to entertain the writ petition despite the availability of an alternative remedy.

Conclusion:
The court quashed the impugned assessment order, holding that the CST turnover should not be included in the VAT turnover under the TNVAT Act, 2006 for the purpose of filing returns. The court found the assessment order to be cryptic, non-speaking, and unreasoned, and concluded that the petitioner need not exhaust alternative remedies given the nature of the legal issue involved. The writ petition was allowed, and the connected miscellaneous petitions were closed.