TMI Blog2016 (4) TMI 1399X X X X Extracts X X X X X X X X Extracts X X X X ..... er cent on taxable turnover of purchases within the State. The controversy involved in the present case is as regards the taxable turnover of the purchases made by the petitioner. It would, therefore, be germane to refer to the definition of taxable turnover as defined under section 2(30) of the GVAT Act which provides that taxable turnover means the turnover of 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. When the word includes is used in a definition as in the case of section 2(18) of the GVAT Act, it is clear that the legislature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1(3)(b) of the Act? [2] Whether the Hon ble Tribunal has erred in law and in facts in holding that purchases on which value added tax is neither claimed nor granted are required to be excluded for computing taxable turnover of purchases under section 11(3)(b) of the Act? 2. The respondent dealer calculated the taxable turnover of its purchases within the State under the provisions of section 11(3)(b) of the GVAT Act by excluding the amount representing (i) tax (Value Added Tax) and (ii) value of purchase on which no tax credit was claimed. Accordingly, tax credit was calculated and proportionately reduced by 4% on the quantity of goods involved in the manufacture of goods dispatched by way of branch transfer. At the time of audit assessment, the respondent explained to the Deputy Commissioner that while determining the taxable turnover of purchases within the State, the following amount is required to be excluded (a) tax amount i.e. value added tax amount and (b) value of purchases on which no tax credit was claimed by the dealer nor proposed to be granted in the assessment. The Deputy Commissioner (hereinafter referred to as the assessing authority ) did not accept the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act on account of branch transfer. Such transfer was made on proportionate basis considering the taxable turnover of purchases exclusive of tax. However, in the assessment order the assessing officer has considered the turnover inclusive of tax for the purpose of calculating such reversal u/s 11(3)(b) of th Act and the learned Joint Commissioner has upheld the same. We find much substance in the submission of the appellant that the tax collected by the vendor would not form part of purchase price and the calculation of reversal on the taxable turnover of purchases without including the tax is not in accordance with the provisions of the Act. From the conjoint reading of the definitions given of purchase price in sub-section (2) of section 18, turnover of purchases in sub-section 2 of section 32 of the Act and section 11 of the Act, it is very clear that the tax collected under the VAT Act is not includible in the turnover of purchases, though covers other duties as leviable under different Acts. The decision relied upon by the appellant in the case of Joint Commissioner of Commercial Tax, Div. III, Madras vs Spencer and Co. (supra), Anand Swarup Mahesh Kumar vs The Commissioner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the State . Accordingly, once any one of the sub-clauses of clause (b) that is, (i), (ii) or (iii), of sub-section (3) of section 11, is attracted, the only relevant aspect for consideration is whether the purchases are taxable or not. It was, accordingly, urged that the appeal requires consideration on the questions as proposed or as may be deemed fit by this court. 4. Opposing the appeal, Mr. Rasesh Parikh, learned advocate for the respondent purchasing dealer supported the impugned order passed by the Tribunal by submitting that section 2(18) of the GVAT Act which defines purchase price does not include the value added tax component and as such, the same cannot be included in the taxable turnover of the dealer. Reliance was placed upon the decision of the Supreme Court in the case of Joint Commercial Tax Officer, Division III, Madras v. M/s. Spencer Co. and Others (supra), as well as the decision of the Supreme Court in the case of Anand Swarup Mahesh Kumar v. The Commissioner of Sales Tax (supra), for the proposition that taxable turnover would not include the amount collected by the assessee under a statutory obligation. It was submitted that the value added tax pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made by the petitioner. It would, therefore, be germane to refer to the definition of taxable turnover as defined under section 2(30) of the GVAT Act which provides that taxable turnover means the turnover of 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 le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rightly been held by the Tribunal to be not part of the turnover of the respondent dealer. In Anand Swarup Mahesh Kumar v. The Commissioner of Sales Tax (supra), the Supreme Court placed reliance upon its earlier decision in the case of M/s Spencer 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 am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price in sub-section (18) of section 2, turnover of purchases in sub-section (32) of section 2 of the Act and section 11 of the Act, was of the view that the tax collected under the Value Added Tax Act is not includible in the turnover of purchases, though it covers 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. 9. In the light of the above discussion, it is not possible to state that the impugned order passed by the Tribunal suffers from any legal infirmity so as to give rise to any question of law, much less, a substantial question of law. The appeal, therefore, fail ..... X X X X Extracts X X X X X X X X Extracts X X X X
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