Discount excluded from turnover under Tamil Nadu VAT; writ interference permitted where assessment was patently unsustainable.

Discount expressly excluded from turnover under the Tamil Nadu VAT Act could not be added to taxable turnover, because the statutory definition and Explanation II(ii) to Section 2(41) do not treat cash or other discounts as part of turnover. The assessment was based on an erroneous comparison of overall sale and purchase figures rather than the unit sale price against the unit purchase price, making the discount addition unsustainable. The High Court also held that alternative remedy did not bar writ interference where the assessment order contained apparent errors, relied on provisions not attracted on the admitted facts, and lacked the factual basis required for action under Section 24. The assessment was set aside to the extent of the discount addition and remanded for fresh determination.

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Issues: (i) Whether discount received by the dealer could be included in taxable turnover under the Tamil Nadu Value Added Tax Act, 2006. (ii) Whether the existence of an alternative remedy barred interference under Article 226 despite apparent illegality in the assessment order.

Issue (i): Whether discount received by the dealer could be included in taxable turnover under the Tamil Nadu Value Added Tax Act, 2006.

Analysis: The definition of turnover and Explanation II(ii) to Section 2(41) exclude cash or other discount on the price from turnover. The assessment proceeded on a flawed premise by treating the discount as value addition and by comparing overall sale figures with purchase figures after adding opening stock, instead of comparing the unit sale price with the unit purchase price. The statutory basis for including the discount in taxable turnover was therefore unsustainable.

Conclusion: The inclusion of discount in the taxable turnover was illegal and liable to be set aside.

Issue (ii): Whether the existence of an alternative remedy barred interference under Article 226 despite apparent illegality in the assessment order.

Analysis: The assessment order suffered from errors apparent on its face. The Assessing Authority had invoked provisions that were not available on the facts, and the conditions for action under Section 24 were not satisfied because there was no recorded enquiry or satisfaction regarding sales shown at abnormally low prices compared with prevailing market price. The order also proceeded on Section 19(20) even though no input tax credit had been claimed. In such circumstances, availability of an alternative remedy did not preclude writ interference.

Conclusion: The writ appeal could be entertained notwithstanding the alternative remedy, and the assessment was set aside to the extent of the discount addition.

Final Conclusion: The appeal succeeded in part, the impugned judgment was reversed on the discount issue, and the assessment was directed to be redone in accordance with law.

Ratio Decidendi: Discount expressly excluded from turnover cannot be added to taxable turnover, and writ jurisdiction may be exercised despite an alternative remedy where the assessment is patently without jurisdiction or proceeds on provisions not attracted on the admitted facts.

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