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2017 (7) TMI 456 - MADRAS HIGH COURT

2017 (7) TMI 456 - MADRAS HIGH COURT - TMI - Jurisdiction of Assessment Order passed - inclusion of discount in the taxable turnover of the appellant - The appellant says that since, he had not availed of any Input Tax Credit (ITC), no reversal of the same could have been brought about, as is required under the provisions of Section 19(20) of the 2006 Act, in case, the said provisions is triggered, as was erroneously sought to be done by the respondent - Held that: - A bare reading of the Explan .....

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2015. - The very basis of the calculation is flawed. The Assessing Officer was required to compare the unit sale price of the goods in issue with the unit purchase price. The inclusion of the opening stock, to our minds, has led to an erroneous conclusion that the appellant has sold the goods at a price lesser than the price at which they had been purchased by him. - Before concluding a best judgment assessment, the Assessing Officer is required to reach a satisfaction in this behalf. Cl .....

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ct goods i.e., cement. Therefore, there was no occasion for the Assessing Officer, in any event, to invoke the provisions of Section 19(20) of the 2006 Act. - The Assessing Officer is, therefore, directed to redo the assessment - appeal allowed - decided in favor of appellant. - W.A.No. 585 of 2017 and C.M.P.No.8214 of 2017 - Dated:- 1-6-2017 - Rajiv Shakdher And R. Suresh Kumar, JJ. For the Appellant : Ms.R.Hemalatha For the Respondent : Mr.S.Kanmani Annamalai, AGP JUDGMENT ( Judgment of th .....

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edy available to him. The appellant, being aggrieved, has preferred the captioned appeal. 4. It is the case of the appellant that, what was articulated in the Writ Petition was that the Assessment Order passed in the appellant's case was without jurisdiction, inasmuch as it, inter alia relied, upon the provisions of Section 19(20) of Tamil Nadu Value Added Tax, Act 2006 (in short, 'the 2006 Act'). It was further contended that the Assessing Officer had also relied upon a circular dat .....

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e provisions of Section 19(20) of the 2006 Act, in case, the said provisions is triggered, as was erroneously sought to be done by the respondent. 4.2. For all reasons, according to the appellant, the illegality went to the root of jurisdiction of the respondent. The impugned assessment order, according to the appellant, was thus, liable to be set aside. 5. A perusal of the Assessment Order dated 30.12.2016 would show that the Assessing Officer has included in the taxable turnover, declared by t .....

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ellant has not, admittedly, availed of ITC. ITC reversal u/s27(2) Determined Tax determined Total Due Rs 16,80,697 25,397 17,06,094 6. Mr.Annamalai, the learned counsel, who appears for the Revenue admits as much that it is not a case of 'ITC reversal'. 7. Before we proceed further, the following brief facts are required to be noticed: 7.1. The appellant, who is a dealer in cement, had filed his monthly returns for the relevant year, i.e. 2014-15. The Assessment of the appellant was comp .....

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30.11.2009. Apart from the above, the notice also adverted to the issue pertaining to the suppression of sales. The allegation was that there was a mismatch in the sale figure shown by the seller and that which was disclosed by the appellant in the returns filed with the Revenue. It is not in dispute that the appellant filed a detailed reply to the notice dated 30.12.2016. The respondent however, was not impressed with the stand taken by the appellant and thus, via order dated 30.12 2016 to whi .....

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se suppression found ₹ 1,75,153/- at 14.5%- ₹ 25,397- ₹ 1,17,66,164/- at 14.5% TOTAL TAX determined ₹ 17,06,094/- ITC reversal u/s 27(2) Determined Tax Determined Penalty under Section 27(3)(c) Determined Penalty under Section 27(4)(ii) Determined Total Due Rs 1680697- 25397- 38096- 1680697- 34,24,887- Paid Rs 0 0 0 0 0 Balance Rs 1680697- 25397- 38096- 1680697- 34,24,887- 7.2. The appellant being aggrieved by the directions contained in the Assessment Order dated 30.12.2 .....

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The learned counsel submits, in brief, that the learned single Judge was called upon to decide as to whether the Assessment Order passed by the respondents could be sustained under the provisions of Section 19(20) of the 2006 Act. Furthermore, the learned counsel submitted that the other error, which was, in particular, adverted to, but was not discussed in the impugned Judgment, was that, which pertained to determination of the market price of like goods. 9.1. It was submitted by the learned co .....

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the learned counsel for the appellant that since the necessary ingredients for invoking the provisions of Section 19(20) or Section 24 of the 2006 Act were missing, the entire order was illegal, and therefore, beyond jurisdiction. 9.3. It was also the contention of the learned counsel for the appellant that while an alternative remedy was available to the appellant, that by itself, could not come in the way of this Court exercising jurisdiction, if, otherwise illegality obtaining in the Assessme .....

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the learned single Judge in the impugned Judgment. The learned counsel, however, fairly submitted that the Assessing Officer had not fulfilled the mandate of Section 24 of 2006 Act which obliged him to carry out an enquiry and determine the market prices of like goods. Mr.Annamalai also indicated to us that the provisions of Section 19(20) of the 2006 Act could not have been invoked as ITC, in the instant case, was not claimed by the appellant. 11. We have heard the learned counsel for the parti .....

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m of ₹ 38,096/- will be paid by the appellant. Therefore, as indicated above, we only require to deal with one aspect of the matter, which is, as to whether discount could have been included in the taxable turnover of the appellant, the facts not being in dispute. For this purpose, we may set out in the first instance, the definition of turnover as given in Section 2(41) of 2006 Act, which is as follows: (41) turnover means the aggregate amount for which goods are bought or sold, or delive .....

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as an interest whether as owner, usufructuary mortgagee, tenant or otherwise, shall be excluded from his turnover. Explanation I....................... Explanation II.- Subject to such conditions and restrictions, if any, as may be prescribed in this behalf (i) the amount for which goods are sold shall include any sums charged for anything done by the dealer in respect of the goods sold at the time of, or before the delivery thereof; (ii) any cash or other discount on the price allowed in respec .....

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sion that the appellant had sold goods at a price lesser than the price at which the goods were purchased by him, has adverted to the following workings which have been gleaned Form W.W, filed by the appellant for the year 2014-2015. 13.1. For the sake of convenience, the relevant extract taken from the Assessment Order, which forms, the pivot for imposition of tax on the discount, which has been included in the taxable turnover, is set forth herein below: On scrutiny of the Form WW filed for th .....

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oss Profit ₹ 404520 % of profit or loss ₹ 0 14. A perusal of the table extracted above, would show that the sales turnover for the period 2014-2015, for the year ending 31st March 2015 is ₹ 8,60,68,851/-. The total purchases made during the year is a sum of ₹ 8,55,23,004/-. Though not articulated clearly, it appears that the Assessing Officer has come to a conclusion that the sale price is lesser than the price at which the appellant has purchased the goods by including i .....

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the goods at a price lesser than the price at which they had been purchased by him. This apart, as conceded by Mr.Annamalai, the exercise, which is contemplated under Section 24 of the 2006 Act, has not been carried out by the Assessing Officer. 16.For the sake of convenience, the provisions of Section 24 are set out hereafter: 24. Assessment of sales shown in accounts at low prices.- 1. If the assessing authority is satisfied that a dealer has, with a view to evade the payment of tax, shown in .....

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ovisions of sub-sections (3) to (8) of section 27, shall, as far as may be, apply to assessment or re-assessment under sub-section (1) as they apply to the re-assessment of escaped turnover under sub-section (1) of section 27. 17. A perusal of the aforementioned Section would show that were the Assessing Officer to carryout a best judgment, he would have had to carry out an exercise via which, he would have demonstrate that the appellant, in order to evade tax, had shown in his accounts, sales o .....

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he price at which they were brought, can he, obtain jurisdiction to adjust the ITC, to the extent the amount of ITC exceeds the output tax on the goods. As indicated herein above, the appellant has not availed of ITC in respect of the subject goods i.e., cement. Therefore, there was no occasion for the Assessing Officer, in any event, to invoke the provisions of Section 19(20) of the 2006 Act. In order to appreciate what is observed above, the provisions of Section 19(20) of 2006 Act are extract .....

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