2016 (9) TMI 1115 - HC - VAT and Sales Tax

Validity of order of assessment - Tamil Nadu Value Added Tax Act, 2006 - taxability of sale of recharge vouchers for mobile Sim Cards - similar issue has been decided in the case of BSNL v. Union of India and Others 2006 (3) TMI 1 - Supreme court where it was held that there was no element of sale involved in the sale of Sim Cards or recharge vouchers. If the petitioner had filed appropriate returns, then there would not have been any problem in that regard and by applying the decisions of the Hon ble Supreme Court, the Assessing Authority would have treated the sale as exempted sale. - while submitting the returns, though in the annexure, the petitioner had mentioned it as exempted goods, while giving the commodity code, the petitioner gave the wrong commodity code, by mentioning it as 363 , which is the commodity code for Television Sets. This resulted in an impugned assessment being made and tax being demanded. If some mistake has been committed by the dealer, can he be given an opportunity to rectify the mistake? - Held that - Section 84 of the TNVAT Act, provides for such a remedy and the Assessing Officer is empowered to rectify the mistake - if on account of the mathematical error committed by the dealer resulted in a wrong assessment imposing higher rate of tax, such mathematical error can be corrected. This is what was requested by the petitioner stating that he has wrongly given the commodity code. The petitioner also states that he has got all the purchase bills and documents to prove that the nature of business conducted by him was only the sale of recharge coupons. The assessment can be re-done, after giving due opportunity to the petitioner - matter remanded - petition allowed - decided in favor of petitioner.

Summary

Issues:
Challenge to assessment order under TNVAT Act for selling recharge vouchers for mobile Sim Cards; Mistake in commodity code leading to tax demand; Rectification of mistake by dealer.

Analysis:

1. Challenge to Assessment Order:
The petitioner, a registered dealer under TNVAT Act, challenged the assessment order for the sale of recharge vouchers for mobile Sim Cards. The petitioner claimed that the transactions were not taxable, citing the legal position established in previous judgments like BSNL v. Union of India and Others and Idea Mobile Communication Ltd. v. Commissioner of Central Excise and Customs, Cochin. These judgments clarified that the sale of SIM cards or recharge vouchers does not involve an element of sale and is considered part of the services provided. The petitioner's failure to file appropriate returns accurately led to the assessment issue.

2. Mistake in Commodity Code:
The assessment problem arose due to a mistake in mentioning the commodity code in the returns filed by the petitioner. While the petitioner correctly identified the goods as exempted, an error in the commodity code, referring to Television Sets instead of recharge vouchers, resulted in the incorrect assessment and tax demand. The petitioner promptly notified the mistake upon receiving the order, but the respondent rejected the request for revision, citing no reasonable cause.

3. Rectification of Mistake:
The High Court considered the legal aspect, which aligned with previous judgments, and the possibility of rectifying the dealer's mistake. Section 84 of the TNVAT Act allows for rectification of errors by the Assessing Officer. The court opined that while rectification power is not equivalent to a review, correcting a mathematical error that led to a wrong assessment, such as the incorrect commodity code, is permissible. The petitioner provided purchase bills and documents to support the business nature of selling recharge coupons, strengthening the case for rectification.

In conclusion, the High Court allowed the writ petition, setting aside the impugned order and remanding the matter back to the respondent for fresh consideration. The respondent was directed to provide a personal hearing to the petitioner, verify all relevant documents, and re-do the assessment in compliance with the law. The judgment emphasized the importance of rectifying genuine mistakes to ensure fair assessment practices under the TNVAT Act.