Export sales excluded from composition turnover base under Rajasthan VAT composition scheme

A composition scheme under the Rajasthan Value Added Tax Act, 2003 that permits lump-sum tax payment for sales within the State cannot be read to include export sales in the gross turnover base for computing the composition amount. Read with Articles 265 and 286 of the Constitution, the scheme does not authorise levy on export sales, and export turnover must be excluded from the calculation. An earlier Revenue decision was treated as distinguishable because it arose under a different tax regime and did not consider section 5 of the 2003 Act or the wording of the 2006 scheme.

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Issues: Whether export sales were required to be included in gross turnover for determining the composition amount under the Composition Scheme for Gems and Stones, 2006.

Analysis: The scheme was framed under section 5 of the Rajasthan Value Added Tax Act, 2003 and permitted payment of tax in lump sum in lieu of tax liability on sales within the State, with the composition amount linked to gross turnover of the relevant year. Read with the constitutional bar under Articles 265 and 286 of the Constitution of India, the scheme could not be construed to authorise levy on export sales. The earlier decision relied upon by the Revenue was held distinguishable because it arose under a different tax regime and did not consider the effect of section 5 of the Rajasthan Value Added Tax Act, 2003 and the phraseology of the 2006 scheme.

Conclusion: Export sales were not includible in gross turnover for the purpose of computing the composition amount, and the question of law was answered in favour of the assessee and against the Revenue.

Ratio Decidendi: Where a composition scheme under the Rajasthan Value Added Tax Act, 2003 is confined to sales within the State and operates as a lump sum discharge of tax liability, export sales cannot be brought into the turnover base for computing the composition amount.

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