2014 (8) TMI 1212 - HC - VAT and Sales Tax

Court rules sales tax should be excluded from turnover if accounted separately. Revenue's appeal dismissed.

The State of Tamil Nadu Versus Tvl. Trent Ltd.

The State of Tamil Nadu Versus Tvl. Trent Ltd. - TMI Issues Involved:1. Rejection of the claim for deduction of sales tax from the total turnover.2. Interpretation of Explanation (1-A) to Section 2 (r) of the Tamil Nadu General Sales Tax Act, 1959.3. The validity of the Tribunal's reliance on previous judgments in similar cases.Detailed Analysis:1. Rejection of the claim for deduction of sales tax from the total turnover:The primary issue in these cases revolves around the Assessing Officer's decision to reject the deduction of the sales tax portion from the total turnover. The Assessing Officer contended that the sales tax was included in the cost of goods and was not charged separately on the invoices. Consequently, the entire amount was taxed without giving the benefit of the taxable portion of the turnover. This decision was upheld by the first appellate authority, leading the assessee to file appeals before the Tribunal.2. Interpretation of Explanation (1-A) to Section 2 (r) of the Tamil Nadu General Sales Tax Act, 1959:Explanation (1-A) to Section 2 (r) states: 'Any amount charged by a dealer by way of tax separately without including the same in the price of the goods bought or sold shall not be included in the turnover.' The Tribunal, while deciding in favor of the assessee, relied on the interpretation provided in previous judgments, particularly S.M. Garments Vs State of Tamil Nadu and Bata India Ltd. Vs State of Tamil Nadu. These judgments clarified that if the books of accounts reflect the correct position regarding the sales tax component and the tax is collected and paid to the Government, the tax component should not be included in the total turnover, even if the sale price is inclusive of all taxes.3. The validity of the Tribunal's reliance on previous judgments in similar cases:The Tribunal's decision was based on the precedent set by the High Court in S.M. Garments and Bata India Ltd. cases. In these cases, the Court held that the intent of the Act was to exclude the tax component from the total turnover if the books of accounts showed the breakup of sales tax and other charges collected from customers. The Tribunal concluded that the assessee had shown the breakup details of sales tax and surcharge separately in the accounts for the relevant assessment years, thereby justifying the exclusion of the tax component from the total turnover.Conclusion:The High Court upheld the Tribunal's decision, stating that the interpretation of Explanation (1-A) by the Tribunal was consistent with the intent of the statute. The Court emphasized that the tax component should be excluded from the total turnover if the books of accounts provide a clear breakup of the sales tax collected and paid to the Government. The Court dismissed the revisions filed by the Revenue, finding no merit in their arguments and affirming that no substantial question of law arose for consideration.Result:All the revision cases filed by the Revenue were dismissed, and the Tribunal's orders were upheld.