Discount-related turnover tax assessment set aside for ignoring circulars, statutory guidance, and effective opportunity to object.

Tax on turnover linked to supplier discounts was challenged where the assessment order ignored the Commissioner's circulars, which stated that Section 19(20) of the Tamil Nadu VAT Act concerns reversal of excess input tax credit and not levy of tax on discounts. The order also suffered from lack of effective opportunity to file objections. On these facts, the assessment could not be sustained and required reconsideration with reference to the circulars, the statutory provision, and the petitioner's objections.

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Issues: Whether the assessment order levying tax and penalty on turnover relatable to discounts received from the supplier, without considering the Commissioner's circulars and Section 19(20) of the Tamil Nadu Value Added Tax Act, 2006 and without granting due opportunity, was liable to be set aside and remitted for fresh consideration.

Analysis: The dispute concerned the treatment of discount-related amounts as taxable turnover. The assessment order did not refer to the Commissioner's circulars or to Section 19(20) of the Tamil Nadu Value Added Tax Act, 2006, although the circulars clarified that the provision was concerned with reversal of excess input tax credit and not with levy of tax on discounts, which had to be dealt with independently under the Act and on the facts of each case. The petitioner was also not afforded an effective opportunity to file objections before the order was passed. In these circumstances, the order could not stand and the matter required reconsideration after receiving objections and applying the relevant circulars and statutory provision.

Conclusion: The impugned assessment order was set aside and the matter was remitted to the respondent for fresh consideration after receiving the petitioner's objections and granting due opportunity.

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