TMI Blog2018 (7) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... dealer, which was quickly corrected to “taxable turnover” by a later notification dated 29th April 2006. The Government, by virtue of the said notification dated 31st March 2006, do not intended to compute the lump sum tax of a manufacturer of bakery items on the basis of his total turnover. The very purpose of the composition scheme would be in jeopardy if the payable tax by a dealer is substituted by percentage of his taxable and non-taxable turnover. - R/TAX APPEAL No. 885 of 2014 - - - Dated:- 15-6-2018 - MR. AKIL KURESHI AND MR. B.N. KARIA, JJ. For the Petitioner : Mr Uchit N Sheth, Advocate For The Respondent : Mr Chintan Dave, AGP ORAL JUDGMENT ( PER : HONOURABLE Mr. JUSTICE AKIL KURESHI) This Appeal filed by the assessee raises following question of law : Whether the Gujarat Value Added Tax Tribunal was justified in holding that lump sum tax is payable under the Value Added Tax Act, 2003 on the turnover of sales of bread ? This question arises in the following factual background : The appellant is a proprietary concern and is engaged in the business of manufacturing and sale of bakery items, such as bread, biscui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must be seen and understood as taxable turnover and not total turnover . Any view to the contrary would amount to levying tax on exempt goods. [iii] Even otherwise, purposive construction would be necessary. The entire purpose of introduction of composition scheme is to simplify computation and collection of tax. Accepting the interpretation of the Government would amount to destroying this very purpose. Additionally, it would also create artificial discrimination between the same class of manufactures, namely of bakery items. For a manufacturer/dealer who deals in bakery items with greater component of exempt products, the composition scheme would be wholly unattractive. On the other hand, one who deals with greater percentage of taxable goods would heavily benefit. In support of his contentions, counsel relied on following judgments : [a] State of Kerala Ors. vs. A.P Mammikutty, AIR 2015 SC 3009; [b] Reserve Bank of India vs. Peerless General Finance Investment Co. Limited Ors., AIR, 1987 SC 1023; [c] Mandal Revenue Officervs. Goundla Venkaiah Anr., AIR 2010 SC 744; [d] State Bank of Travancore vs. Mohammed Mohammed Khan, AIR 1981 SC 1744; and [e] Hameedia Hardware ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucting the amount of sale price; if any, refunded by the dealer to a purchaser in respect of any goods purchased and returned by the purchaser within the prescribed period. Term total turnover is defined in Section 2 [34] as under: 2 [34] total turnover means aggregate of the following transactions effected by a dealer : ( a) turnover of sales or purchases of goods within the State whether such sales or purchases of goods are taxable or exempt under this Act; ( b) turnover of sales of goods in the course of inter- State trade or commerce; ( c) turnover of sales of goods in the course of export of goods out of the territory of India; ( d) turnover of sales by a dealer on his own account and also on behalf of his principal. Section 5 of the Act pertains to exemptions . Sub-section [1] thereof provides that the sales and purchases of the goods specified in Schedule-I shall be exempt from tax subject to the conditions and exceptions set-out therein against each of them in column 3 of that Schedule. Under sub-section [2] of Section 5 of the Act, the State Government can by issuing notification exempt any specified class of sales or pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lump sum tax in lieu of the amount of tax payable under Section 7 of the Act. Proviso to Clause (a) is couched in a negative language and provides exclusion when it provides that the Commissioner shall not grant permission to pay lump sum tax to a dealer in categories specified in Clauses (i) to (vi) thereof. Clause (iv) contained therein pertains to a dealer who is engaged in the activity of the manufacture other than such activity as the State Government may, by an order in writing specify. In plain terms, therefore, ordinarily a dealer engaged in the manufacturing activity would not be entitled to composition of tax provided under sub-section [1] of Section 14, unless the manufacturing activity in question has been specified for exclusion from such treatment by the Government by an order in writing. As per sub-section [3] of Section 14, a dealer who is permitted to pay lump sum tax is not entitled to certain benefits, such as to claim tax credit in respect of tax payable by him on his purchases or charge any tax on his sales invoice in respect of the sales on which lump sum tax is payable. It is in context of this proviso that the Government had issued a Notification dated 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of the dealers, who want to pay lump sum tax in lieu of normal tax, the rate of tax prescribed was one-half per cent. This one-half per cent was to be computed as per notification dated 31st March 2006 on the total turnover of the dealer, which was quickly corrected to taxable turnover by a later notification dated 29th April 2006. We have noticed that the Statute carries three distinct and different definitions of terms turnover of sales , taxable turnover and total turnover . If we, however, peruse these definitions more minutely, it would emerge that definition of term turnover of sales contained in Section 2 [33] of the Act refers to aggregate of the amount of sale price received or receivable by a dealer in respect of any sale of goods made during a given period minus the deduction of the amount of sale price, if refunded by the dealer in respect of any goods purchased but returned by the purchaser within the prescribed period. The definition of the terms taxable turnover and total turnover use this term turnover of sales as the base. Term taxable turnover broadly excludes those sales which are not subject to tax. Whereas, term total turnover would b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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