Turnover threshold under Tamil Nadu VAT law cannot be replaced by purchase value in assessing liability

Section 3(4)(a)(ii) of the Tamil Nadu Value Added Tax Act, 2006 ties the concessional or optional tax scheme to sales turnover, not purchase value. On the admitted facts, the dealer's sales turnover was below the statutory threshold, so the assessing authority could not assess liability by reference to purchase value. The assessment was therefore inconsistent with the governing provision and was held to be without jurisdiction, resulting in the impugned order being set aside.

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Issues: Whether the assessing authority could determine liability under section 3(4) of the Tamil Nadu Value Added Tax Act, 2006 on the basis of purchase value when the dealer's sales turnover was below the statutory threshold.

Analysis: Section 3(4)(a)(ii) permits the concessional or optional tax scheme by reference to the dealer's turnover relating to taxable goods, and the statutory threshold is anchored to sales turnover. On the admitted facts, the sales were only Rs. 47,00,000, which was below the prescribed limit of Rs. 50,00,000. The assessment based on purchase value, instead of the turnover criterion stated in the statute, was therefore inconsistent with the governing provision.

Conclusion: The assessment based on purchase value was without jurisdiction and could not be sustained. The writ petition was allowed and the impugned order was set aside in favour of the assessee.

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