2022 (10) TMI 379 - HC - VAT and Sales Tax

Levy of tax - transfer of goods involved in works contract - Input Tax Credit (ITC) - Rule 8(5) of the Tamil Nadu Value Added Tax Rules, 2007 - HELD THAT - Learned Government Pleader agrees that the proper method for assessing the turnover from works contract is as per Rule 8(5) and that there is no statutory basis to justify the methodology adopted in the impugned assessments - In light of the same, the impugned assessments are set aside and remanded to the assessing authority to be redone de novo, applying the methodology set out under Rule 8(5) of the Rules. Seeing as the assessments relate to the periods 2011-12 to 2013-14, the petitioner will appear before the assessing authority on 12.10.2022 at 10.30 a.m. without awaiting any further notice and make its submissions. The assessments shall be completed within a period of eight (8) weeks from the date of receipt of copy of this order - Petition allowed by way of remand.

Summary

Issues: Impugned assessments based on methodology under Tamil Nadu Value Added Tax Act, 2006 for periods 2011-12, 2012-13 & 2013-14.

Analysis:
1. The assessments are challenged based on the computation methodology of works contract value under Section 5 of the Tamil Nadu Value Added Tax Act, 2006. The petitioner contests the deemed sale value of transactions taxed at the first stage and the Input Tax Credit availed. The legal position on works contract is cited from Supreme Court judgments.

2. The assessing authority's methodology in arriving at the turnover from works contract is disputed by the petitioner. Rule 8(5) of the Tamil Nadu Value Added Tax Rules, 2007 is highlighted, which outlines the procedure for assessment of works contract turnover. The Rule mandates deductions from the total turnover for various amounts involved in the execution of works contract.

3. The court notes that the assessments must adhere to Rule 8(5) for computing the turnover from works contract. The learned Government Pleader acknowledges that the methodology in the impugned assessments lacks statutory justification. Consequently, the assessments are set aside and remanded for redone assessment following Rule 8(5) methodology.

4. In light of the above, the assessments for the periods 2011-12 to 2013-14 are directed to be completed afresh by the assessing authority. The petitioner is required to appear before the authority without further notice and present submissions. The assessments must be concluded within eight weeks from the date of receipt of the court order.

5. The writ petitions are disposed of without costs, and connected miscellaneous petitions are closed. The judgment emphasizes the importance of adhering to statutory provisions in assessing turnover from works contracts under the Tamil Nadu Value Added Tax Act, 2006, ensuring a fair and lawful assessment process.