2020 (2) TMI 364

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.... quash the same. 2. In these writ petitions, the Petitioner has challenged the two impugned orders passed by the Respondent on 05.11.2015 in TIN No. 33581324259 for the Assessment Years 2009-2010 & 2010-2011. The Petitioner was issued two Show Cause Notices dated 02.04.2014 for the respective Assessment Years. The Petitioner was called upon to pay tax on the following three heads: In respect of Assessment Year 2009-10: (W.P. No. 37776 of 2015) (a) 2009-10/Trade discount Rs. 9,13,35,246.00 During the year the Petitioner received Trade discount to a tune of Rs. 9,13,35,246.00 which is treated as value addition and proposed to be assessed to tax @ 12.5%. Tax effect Rs. 1,14,16,906/- (b) Sales of Used c....

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....h of January 2011 and lying in the stock as on 30.06.2011. 3. The Petitioner replied to the above notices which has culminated in the impugned orders. In the impugned orders, the issue relating to stock transfer and wrong adjustment of Entry Tax has been dropped for the Assessment Year 2010-2011. However, the demand for sales tax on sale of used cars and Trade Discount have been confirmed in the respective orders. 4. The Petitioner is a dealer of Second Hand motor cars. it availed the benefit of Notification No.79, CT & R (B2), dated 23.03.2007. As per Sl. No. 23 to the said notification, a dealer of used cars/motor vehicle was liable to pay tax at the rate of 4% on the value addition without any Input Tax Credit. This notification wa....

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.... of used cars by the assessee falls under the ambit of the notification cited supra. The notification issued in G.O.Ms. No.79, Commercial Taxes and Registration (B2) dated 23.03.2007 is extracted as below for better understanding. "Reduction in the rate of tax payable by any dealer on the sale of following goods to four percent". Item No.23 used cars/Motor Vehicles on value addition without Input Tax Credit. Subsequently a notification was issued in G.O.Ms.No.36 CT & R (B2), dated 01.04.2008 with effect from 01.04.2008 and the same is extracted below:- "Reduction of tax from 12.5% to 4% in respect of tax payable under that by any dealer other than dealer in automobiles including commercial vehicles, two w....

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.... & R (B2) dated 01.04.2008 with effect from 01.04.2008." 8. The learned counsel for the Petitioner drew my attention to subsequent clarification issued by the Authority for Clarification and Advance Ruling dated 25.10.2016 in the context of Notification No.79, CT & R (B2), dated 23.03.2007. In Paragraph 5, it has been clarified as follows:- " 5. The applicant dealers are dealers in automobiles and hence the first set of notifications is applicable to them. Hence, in view of the above discussion, this committee clarifies that the "Sale of used and re-conditioned Cars" by the applicant-dealers being a registered automobile dealers are liable to tax on value addition without input tax credit and not on entire sale value at....

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....t the impugned orders. 12. I have heard the learned counsel for the Petitioner and the learned Special Government Pleader for the Respondent. TRADE DISCOUNT 13. As far as trade discount is concerned, a separate order has been passed for Assessment Year 2008-2009 in W.P.No.37775 of 2015 today. The operative portion of the said order reads as under:- "12. I have considered the impugned order and the notices pursuant to which the impugned order came to be passed. There is no dispute that the Petitioner is a dealer in motor cars and had received trade discount from the manufacturer from whom it had purchased the cars for retail sales at its show rooms. The trade discount which has been offered by the dealer is an incentive giv....