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2019 (2) TMI 132 - HC - VAT and Sales TaxValuation - inclusion of discount in assessable value - application of Explanation VII to Section 2(lii) - addition of discount for purpose of computing of turnover - estimation of sales turnover at 3.12% gross profit. Whether the Tribunal was correct in having applied Explanation VII to Section 2(lii) and added on the discount for the purpose of computing the turnover? - Held that:- As far as the Explanation VII to Section 2(lii) of the Act, the issue stands covered by a judgment of a Division Bench of this Court in State of Kerala v. Syed Muhammed [2016 (10) TMI 1023 - KERALA HIGH COURT]. Therein also the assessee having suffered loss received some amounts from the suppliers for the purpose of recouping the loss suffered by it. Based on Explanation VII to Section 2(1ii) the amount transferred to recoup the loss was included in the turnover - the first question in favor of the Revenue and against the assessee. Whether the lower authorities were correct in having estimated the sales turnover at 3.12% gross profit and added on the discount for the purpose of computing the taxable turnover? - Held that:- There has been double taxation effected by application of Explanation VII to Section 2(lii). The actual purchase price by adding on the duty wages and loading and unloading charges was found to be ₹ 1,14,88,348/-. An estimate was made of the total taxable turnover @ 3.12% G.P. and the figure arrived at was ₹ 1,18,46,786/-. Hence the sale price was in excess of the purchase price. In that context, there was no requirement for an addition of the discount applying Explanation VII to Section 2(lii). Either the Assessing Officer could have added on the discount to the returned turnover or taxed the estimated turnover adding G.P. When the sales turnover is estimated after computing the G.P then necessarily the entire turnover is taxed - There cannot be an exercise made of applying gross profit and then addition of the discount amounts; in which event there would be double taxation on the estimated component. The estimation made with G.P. @3.12% is sustained and the Assessing Officer is directed to adopt the taxable turnover at ₹ 1,18,36,786/- after including the estimation with respect to the other suppression - the question in favor of the assessee and against the Revenue. Appeal allowed in part.
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