9911796707
TMI Blog2024 (10) TMI 1458X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 read with Section 14 of the Act, it provides for option for payment of lump sum tax in lieu of tax on turnover of sales. On perusal of the interpretation made by the respondent authority, whether the service tax component collected by the petitioner could be said to be sale price or not is answered by this Court in the case of Ambuja Cement Ltd. [ 2016 (4) TMI 1399 - GUJARAT HIGH COURT] while deciding the issue as to whether the total taxable turnover of purchases liable for purchase tax would include Value Added Tax component or not. It is pertinent to note that definition of taxable turnover of purchase is mirror image of definition of taxable turnover of sales under Section 2(33). When the word includes is used in the definition of Section 2(24) of the Act, it is clear that legislature does not intend to restrict the definition, it makes the definition enumerative and not exhaustive as held by this Court and therefore, in ordinary meaning, it has to be extended to bring within the term certain matters which in its ordinary meaning it may or may not comprise. Inclusion of the words duties levied or leviable under the Central Excise Tariff At, 1985 or Customs Act, 1962 and any s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alternative remedy of filing statutory appeal under Section 73 of the Gujarat Value Added Tax Act, 2003. 3.1 The coordinate Bench of this Court vide order dated 12th January, 2021, considering the decision rendered in Tax Appeal No.349 of 2016 in case of Ambuja Cement Ltd. dealing with the similar issue applicable to the facts of the present case, has entertained this petition by issuing notice. 4. Brief facts of the case of Special Civil Application No.705 of 2021 are as under. (i) The petitioner is a company incorporated under the provisions of the Companies Act, 1956 having franchisee of Pizza Hut at Vadodara. (ii) The petitioner was initially carrying on business activities in the name of Dodsal Hospitality Pvt. Ltd. which was incorporated on 05th October, 2012 and thereafter had acquired the Pizza Hut franchisee business pursuant to the scheme of demerger approved by this Court. (iii) M/s.Dodsal Hospitality Pvt. Ltd. was registered under the provisions of the Gujarat Value Added Tax Act, 2003 (for short the Act ) and continued to file its Returns accordingly under the provisions of the said Act. (iv) Thereafter, name of M/s.Dodsal Hospitality Pvt. Ltd. was changed to Sapphire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision of Section 2(24) of the Act, sale price would not include service tax component. However, the respondent No.2, by order dated 03rd June, 2020, set aside the permission granted to the petitioner company under Section 14D of the Act to pay consolidated lump sum amount of composition tax on the ground that VAT has not been paid on the service tax component collected by the petitioner. (xiv) It appears that the petitioner thereafter received notice dated 29th November, 2019 for issue based assessment under Section 34(8A) of the Act for the years 2014-15 and 2015- 16 for the period from 01st April, 2017 to 30th June, 2017 along with notice for imposing penalty on the ground that the petitioner did not file Returns and incorrect self-assessment has been made for the said period. (xv) In the aforesaid proceedings, respondent No.2 Commercial Tax Officer, Ghatak-1 passed the assessment order on 03rd June, 2020. The petitioner, therefore, preferred Special Civil Application No.9183 of 2020 before this Court, which was allowed by order dated 17th August, 2020 by quashing and setting aside order dated 03rd June, 2020 and the respondent No.2 was directed to pass a reasoned order in acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act defines sale price, therefore question which arise for consideration is what is includible in sales turnover. 5.2 Reliance was placed on the decision of this Court in case of Ambuja Cement Ltd. (supra) , wherein the issue regarding computing taxable turnover of purchases under Section 11(3)(b) of the Act was considered vis-a-vis taxable turnover of sales. It was submitted that the definition of taxable turnover of purchases is a mirror image of the definition of taxable turnover of sales and therefore, the ratio of judgment of this Court in the said case of Ambuja Cement Ltd. (supra) would squarely apply to the facts of the case. 5.3 It was submitted that while considering the issue of taxable turnover of purchases, what is excluded is value added tax amount and value of purchases on which no tax credit was claimed by the dealer nor proposed to be granted in the assessment. It was held by the Court relying upon the decision of the Apex Court in the case of Joint Commercial Tax Officer, Division III, Madras v. M/s.Spencer Co. reported in 36 STC 188 (SC) , wherein it is held that amount collected by the assessee under a statutory obligation cannot be part of taxable turno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not in dispute that the services rendered by the petitioner would be covered in sale price and therefore, once it is to be included in the sale price, the VAT is to be paid accordingly on the considerations received for services rendered and once lump sum tax benefit is claimed by the petitioner, it was the liability of the petitioner to ensure that the tax component paid on sale price covers the service tax component recovered by the petitioner. 6.3 Learned Assistant Government Pleader Mr.Dave thereafter referred to Section 2(30) of the Act which deals with taxable turnover and Section 2(33) of the Act which deals with turnover of sales to submit that the petitioner was liable to pay lump sum tax at the prescribed rate under Section 14 read with Section 14D of the Act inclusive of the service tax component and as per Section 15 of the Act, the legislature has provided that it is for the dealer to show that he is not liable to pay any tax on the sale price and hence the petitioner has committed breach of its liability of self-assessment of the tax and accordingly the respondent authority has rightly set aside the permission granted to the petitioner under Section 14D of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct has been paid on the service tax component, the respondent authorities have rightly cancelled the permission right from the day one when it was granted. It was, therefore, submitted that no interference may be made in the impugned order dated 11th November, 2020 as well as notice dated 01st December, 2020 issued by respondent No.3. 7. Learned advocate Mr.Anand Nainawati appearing for other petitioners adopted the submissions made by learned senior advocate Mr.S.N. Soparkar in the facts of the case which were pleaded. 7.1 In case of other petitions, the petitioner was holding master franchisee rights for international brands Domino s Pizza s Overseas Franchising and are also facing the same issue with regard to the VAT liability upon the service tax component not included in the total turnover of the petitioners. 7.2 Learned advocate Mr.Nainawati invited the attention of the Court to the following facts relating to the other petitions as under. 6. By the present following Special Civil Applications, the petitioner is challenging the action of the respondent authorities for issuance of rectification orders and Revision orders by which the demand of VAT has been confirmed on the gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax component collected by the petitioner from customers or not. 9. In order to answer this question, it would be germane to refer to the relevant provisions of the VAT Act, which are as under:- 2(23) sale means a sale of goods made within the State for cash or deferred payment or other valuable consideration and includes,- (h) supply of goods being food or any other article for human consumption or any drink (whether or not intoxicating) where such supply or service is for cash, deferred payment or other valuable consideration, but does not include a mortgage, hypothecation, charge or pledge; and the words sell , buy and purchase with all their grammatical variations and cognate expressions shall be construed accordingly. 2(24) sale price means the amount of valuable consideration paid or payable to a dealer or received or receivable by a dealer for any sale of goods made including the amount of duties levied or leviable under the Central Excise Tariff Act, 1985 or the Customs Act, 1962 and any sum charged for anything done by the dealer in respect of the goods at the time of or before delivery thereof, and includes, - (a) in relation to (i) the transfer, otherwise than in pursua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal turnover and taxable turnover are hereinafter referred to as thresholds of turnover ), or (ii) who was registered under the earlier law or under the Central Act as on the appointed day, or (iii) whose total turnover and taxable turnover in any year first exceed the thresholds of turnover, or (iv) who is registered or liable to be registered as a dealer under this Act or under the Central Act at any time after the appointed day shall be liable to pay tax in accordance with the provisions of this Act. xxx xxx xxx 14 Option for Payment of lumpsum Tax in lieu of tax on Sales. (1)(a) Notwithstanding anything contained in this Act, the Commissioner may, in such circumstances and subject to such conditions as may be prescribed, permit any dealer, whose total turnover has not exceeded fifty lakhs in the previous year, to pay lump sum tax in lieu of the amount of tax payable under section 7 of this Act. (b) The permission granted under clause (a) shall remain valid so long as the total turnover of the registered dealer does not exceed rupees fifty lakhs or the registered dealer does not undertake any of the activities mentioned in clauses (i) to (vi) of the proviso to clause (a). In cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escribed. Rule 18 Calculation of tax. - (1) The net amount of tax payable under section 13 by a registered dealer, other than the dealer who has been granted permission to pay lump sum tax under section 14, shall be determined in Form 201. (2) If the amount calculated as per subrule (1) has a negative value - (a) the same shall be adjusted against tax liability, if any, under the Central Sales Tax Act, 1956 (hereinafter called 'central sales tax liability') for the said tax period and the remaining amount of central sales tax shall be payable; or (b) if there is no central sales tax liability or if the central sales tax liability for the said tax period is less than the said negative amount, then no tax under the Act as well as under the Central Act will be payable and the net amount, after adjusting the central sales tax liability, shall be carried forward to the next tax period of the same year or, as the case may be, the subsequent year. (3) Net tax payable by a dealer liable to pay tax but not registered under the Act for a tax period shall be equal to tax payable for the said tax period and leviable under sections 7 and 9. 10. On perusal of the above provisions, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ystem of payment by installments, the amount of valuable consideration payable to a person for such delivery . 10.2 However, on perusal of the interpretation made by the respondent authority, whether the service tax component collected by the petitioner could be said to be sale price or not is answered by this Court in the case of Ambuja Cement Ltd. (supra) while deciding the issue as to whether the total taxable turnover of purchases liable for purchase tax would include Value Added Tax component or not. It is pertinent to note that definition of taxable turnover of purchase is mirror image of definition of taxable turnover of sales under Section 2(33). Therefore, the decision rendered by this Court on the similar issue while deciding the aspect of what is includible in the taxable turnover of purchase would squarely be applicable in the facts of the present case to the effect that whether the service tax component would includible as a part of the taxable turnover of sales or not. While considering the said issue of inclusion or exclusion of Value Added Tax in the taxable turnover of purchases , it is observed by this Court in the aforesaid decision of Ambuja Cement Ltd. (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f all sales or purchases of a dealer during the prescribed period in any year after deducting therefrom, the matters enumerated thereunder. Sub-section (32) of section 2 defines taxable turnover of purchases to mean the aggregate of the amounts of purchase price paid or payable by a dealer in respect of any purchase of goods made by him during a given period after deducting the amount of purchase price, if any, refunded to the dealer by the seller in respect of any goods purchased from the seller and returned to him within the prescribed period. Thus, turnover of purchases is the aggregate of the amount of purchase price paid or payable by a dealer in respect of purchases made by him. It would, therefore, be pertinent to refer to sub-section (18) of section 2 of the GVAT Act which defines purchase price and reads thus:- (18) purchase price means the amount of valuable consideration paid or payable by a person for any purchase made including the amount of duties levied or leviable under the Central Excise Tariff Act, 1986 or the Customs Act, 1962 and any sum charged for anything done by the seller in respect of the goods at the time of or before delivery thereof, other than the cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Co. (supra) and held that there was no substantial difference between section 21-A of the Madras Prohibition Act, 1937 and section 17(iii)(b)(1) of the U.P. Krishi Utpadan Mandi Adhiniyam, 1964. Whereas the levy under section 21-A of the Madras Prohibition Act, 1937 was sales tax payable to the State Government, under section 17(iii)(b)(1) of the Adhiniyam, the levy in question was market fees payable to the market committee which was to be paid over to the Government. The court held that the levies in both the cases are statutory, although under the Madras Prohibition Act, 1937, it is a tax payable to the Government and under the Adhiniyam, it is a fee payable to the market committee which is a statutory body. The court, accordingly, upheld the contention of the appellant therein that market fees payable under the Adhiniyam cannot be included in the turnover of purchases. 7. Thus, what is held in the above decisions is that the amounts collected by the dealers under a statutory obligation, cannot be a part of their taxable turnover. Therefore, ordinarily, the purchase price would not include the value added tax component which the seller is under a statutory obligation to collec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other duties as leviable under different Acts. In the opinion of this court, the view adopted by the Tribunal is in consonance with the construction of section 2(18) as discussed hereinabove. Since the interpretation of purchase price as defined under section 2(18) of the Act is the foundation for interpretation of the expressions turnover of purchases and taxable turnover , once it is held that the purchase price does not include the value added tax component, it follows that calculation of input tax credit under section 11(3)(b) of the GVAT Act is also required to be made by excluding the value added tax component from the total turnover of the dealer. 11. Considering the above reasoning, when the word includes is used in the definition of Section 2(24) of the Act, it is clear that legislature does not intend to restrict the definition, it makes the definition enumerative and not exhaustive as held by this Court and therefore, in ordinary meaning, it has to be extended to bring within the term certain matters which in its ordinary meaning it may or may not comprise. Inclusion of the words duties levied or leviable under the Central Excise Tariff At, 1985 or Customs Act, 1962 and ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
