Turnover exemption under Tamil Nadu additional sales tax law limited liability to the balance after statutory exclusion and deductions.

The proviso to section 2(1)(a)(i) of the Tamil Nadu Additional Sales Tax Act, 1970 required the first Rs. 10 lakhs to be excluded where the admitted taxable turnover did not exceed Rs. 1 crore. After that exclusion, only the remaining turnover was chargeable at the rate applicable under section 8(2)(b) of the Central Sales Tax Act, 1956. The deduction attributable to iron scrap was also allowed, which further reduced the taxable balance. On that basis, the assessee's liability was confined to tax at 10 per cent on the reduced balance turnover.

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Issues: Whether, on the admitted taxable turnover and the proviso to section 2(1)(a)(i) of the Tamil Nadu Additional Sales Tax Act, 1970, the assessee was entitled to exemption for the first Rs. 10 lakhs and liable to tax only on the balance turnover at the rate applicable under section 8(2)(b) of the Central Sales Tax Act, 1956.

Analysis: The admitted taxable turnover was Rs. 10,58,688 and it did not exceed Rs. 1 crore. On that basis, the first Rs. 10 lakhs was required to be excluded under the proviso to clause (i) of section 2(1)(a) of the Tamil Nadu Additional Sales Tax Act, 1970. After giving that exemption, the balance turnover alone remained taxable at 10 per cent under section 8(2)(b) of the Central Sales Tax Act, 1956. The claim for further deduction of the amount relatable to iron scrap was accepted, reducing the taxable balance further.

Conclusion: The assessee was liable to pay tax at 10 per cent only on Rs. 52,088.

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