2014 (2) TMI 913 - HC - VAT and Sales Tax

Inclusion of cost of empty bags, stevedoring, clearing, forwarding charges and standardisation, bagging, loading and unloading charges, transport costs in turnover - Exemption under Section 2(p) of the TNGST Act read with Rule 6 of the TNGST Rules - Held that - Tribunal has not committed any error as a reading of Section 2(p) of the TNGST Act makes it clear that Taxable turnover means the turnover on which a dealer shall be liable to pay tax as determined after making such deductions from his total turnover and in such manner as may be prescribed - Rule 6 of the TNGST Rules, clearly provides that the tax or taxes under (section 3 or 4) shall be levied on the taxable turnover of the dealer. In determining the taxable turnover, the amounts specified in the clauses shall, subject to the conditions specified therein, be deducted from the total turnover of a dealer. Invoice No.5/8.3.93 shows the cost of the cargo DAP separately and other charges separately and that transaction has been effected based on the agreement dated 18.12.1992. This is also not disputed by the authority. Invoice Nos.1 to 4 are only made for other purposes and not for the purpose of filing the form A1 return - Nevertheless, these invoices have not been suppressed and they have been shown to the authority as cancelled and therefore, the question of relying upon those invoices does not arise. Penalty under Section 22(2) of the TNGST Act - Held that - it is made applicable only if the amount is not remitted to the State by the dealer who collects the excess amount of tax. In this case, there is no dispute that the respondent-assessee has remitted the amount to the State and therefore, placing reliance on the decision of this Court in State of Tamil Nadu v. K.Mohamed Ibrahim Sahib reported in 1991 (7) TMI 301 - MADRAS HIGH COURT , the Tribunal was justified in setting aside the levy of penalty - Decided against Revenue.

Summary

Issues:
1. Discrepancy in invoicing and tax assessment for the supply of Di-Ammonium Phosphate (DAP).
2. Interpretation of taxable turnover under the Tamil Nadu General Sales Tax Act.
3. Applicability of penalty under Section 22(2) of the TNGST Act.

Issue 1: Discrepancy in Invoicing and Tax Assessment
The case involved a dispute over the invoicing and tax assessment related to the supply of DAP. The respondent initially issued an invoice for the supply of 24,148.500 Metric Tonnes of DAP at a certain price per Metric Tonne. Subsequently, revised invoices were issued, showing a lower price per Metric Tonne. The Assessing Officer alleged that the turnover was suppressed, leading to a tax demand and penalty under the TNGST Act.

Issue 2: Interpretation of Taxable Turnover
The Assessing Officer contended that certain charges related to packing, forwarding, transport, and loading/unloading should be included in the turnover for tax assessment. However, the respondent argued that these charges were shown separately and should be exempted under Section 2(p) of the TNGST Act read with Rule 6 of the TNGST Rules. The Appellate Tribunal agreed with the respondent, considering the subsequent agreement and revised invoices that clearly separated the cost of goods from additional charges.

Issue 3: Applicability of Penalty under Section 22(2) of the TNGST Act
Regarding the penalty under Section 22(2) of the TNGST Act, the Tribunal ruled in favor of the respondent, as the excess tax amount collected was remitted to the State. The State raised concerns citing previous court decisions on unjust enrichment. However, the Tribunal justified its decision based on relevant case law and the absence of specific provisions in the Act for unjust enrichment.

In conclusion, the High Court dismissed the Tax Case Revision, upholding the Tribunal's decision. The Court found no error in the Tribunal's interpretation of taxable turnover or in setting aside the penalty under Section 22(2) of the TNGST Act. The judgment clarified the legal aspects of invoicing, taxable turnover determination, and penalty imposition under the tax laws, providing a comprehensive analysis of the issues raised in the case.