TaxTMI 
TaxTMI 
2023 (9) TMI 1369
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.... 39,68,084/- 5% 1,98,404/- Sales Difference 2,74,82,445/- 5% 13,74,122/- Sales Difference 6,41,25,705/- 14.5% 92,98,227/- Exempted sales disallowed 6,50,599/- 5% 32,530/- Sale of Assets 6,05,000/- 5% 30,250/- TDS Deduction 83,14,003/- 2% 1,66,280/- Sundry Creditors treated as un-registered purchases 90,05,493/- 5% 4,50,275/- Total 21,67,26,240/- 1,72,11,279/- 3. On the aforesaid amount, the tax due of the petitioner has been arrived as detailed below: Total Due 1,72,11,279/- Less: ITC adjusted 58,28,477/- Balance 1,13,82,802/- Less: Paid NIL Balance 1,13,82,802/- Less: TDS 33,78,375/- Balance 80,04,427/- 4. The above table indicates that the reported turnover as per the returns comes to only Rs. 10,19,52,599/- (Rs.9,63,47,907/- + Rs. 56,04,692/-). However, in the beginning of the impugned order in the second table, the reported turnover has been arrived as Rs. 10,65,71,282/-. 5. The estimated taxable turnover has been arrived at Rs. 19,81,79,432/-, by deducting 30% towards labour charges and like charges from the total contract income ....
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....d notice dated 10.09.2019 was issued to the petitioner based on the income declared by the petitioner in the Profit & Loss Account and the amount reported in Form WW under TNVAT Act, 2006, r/w TNVAT Rules, 2007. 12. A sum of Rs. 9,16,08,150/- was arrived as the suppressed taxable turnover which was proposed to be assessed at 5% and 14.5% in the ratio of 70:30 as detailed below: Details Amount (Rs.) Total Contract Income 28,31,13,474.00 Less: 30% towards labour and like charges 8,49,34,042.00 Total estimated taxable turnover 19,81,79,432.00 Less: Sales reported 10,65,71,282.00 Suppressed sales turnover proposed to assess at 5% and 14.5% in the ratio of 70:30 9,16,08,150.00 13. That apart, several discrepancies were also pointed out under the following heads: (i) Purchase difference of Rs. 1,96,208/-; (ii) Purchases effected from unregistered dealer for Rs. 34,50,508/- for being assessed at 5% under Section 12 of the TNVAT Act, 2006; (iii) Turnover of Rs. 9,63,47,907/- to be assessed at 5%; (iv) Turnover of Rs. 56,04,692/- to be assessed at 14.5%; (v) ITC of Rs. 10,37,164/- carried forward from 01.....
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....y of limitation for filing statutory appeal before the Appellate Authority had expired. 19. Arguing on behalf of the petitioner, the learned Senior Counsel for the petitioner submits that the petitioner had resorted to valuation for the purpose of Section 5 r/w Rule 8(5)(d) of the TNVAT Act, 2006 r/w TNVAT Rules, 2007 as per the ratio of the Hon'ble Division Bench of this Court in Tax Case (Revision) Nos.31 to 34 of 2017 vide its order dated 10.01.2018. 20. It is submitted that the Hon'ble Division Bench has considered the difficulties of dealer that it is not possible to cull out each and every item transferred along with related Gross Profit and thus the dealer can arrive at the taxable turnover notionally by calculating the deemed sales value by adding a percentage to the value of purchase. 21. It is submitted that it is the practice of the dealers to adopt 10% gross profit on the purchase value of the items used in the execution of works contract to arrive at the deemed sales turnover for which tax at the respective rate was paid to the Department. 22. The learned Senior Counsel for the petitioner further submits that the said decision was also rendered in t....
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....It is submitted that the petitioner has declared the sales turnover of only Rs. 10,65,71,282/- and thus there was a escaped turnover of Rs. 9,16,08,150/- which has been correctly arrived. That apart, it is submitted that there are several other issues which have been considered in the impugned order dated 01.06.2022 and therefore the impugned order dated 01.06.2022 does not warrant any interference under Article 226 of the Constitution of India and therefore the petitioner should be asked to approach the Appellate Authority. 30. I have considered the arguments advanced by the learned Senior Counsel for the petitioner and the learned Government Advocate for the respondent. 31. Section 5(1) of the TNVAT Act, 2006 is the charging provisions for works contract. The taxable turnover is to be determined under Rule 8(5) of the TN VAT Rules,2007. Only the amounts specified in Clauses (a) to (i) to Rule 8(5) of the TNVAT Rules, 2007 are to be allowed to be deducted for determining the taxable turnover in the case of works contract. 32. Section 5(1) of the TNVAT Act, 2006 and Rule 8(5) of the TNVAT Rules, 2007 reads as under:- Extract from TNVAT Act,2006 Extract from TNVAT Rul....
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....urnover was included in the return and tax paid; and (ii) the amount including the tax collected from the customer is refunded or adjusted, within a period of six months from the due date for filing of the return in which the said amount was included and tax paid." (*See the next paragraph) 33. Table to Rule 8(5)(d) of TNVAT Rules, 2007 reads as under:- Sl. No. Type of works contract Labour or other charges as a percentage value of the works contract (1) (2) (3) 1. Electrical Contracts 15 2. All structural contracts 15 3. Sanitary contracts 25 4. Watch and / or clock repair contracts 50 5. Dyeing contracts 50 6. All other contracts 30 34. In alternative, a dealer had an option to pay tax at the compounded rate under Section 6 of TNVAT Act, 2006. In this case, the petitioner has opted to pay tax under Section 5(1) of the TNVAT Act, 2006. 35. As per clause (c) to Sub Rule (5) to Rule 8 of TN VAT Rules, 2007, all amounts paid to the sub-contractors as consideration for execution of works contract whether wholly or partly is to be deducted. 36. However, proviso to clause (c) to Sub Rule (5) to Rul....
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....ed VAT liability by adding 10% on the gross profit on the purchase turnover recorded under 4% and 12.5% of the commodities respectively. 42. The Hon'ble Division Bench of this Court took note of the nature of the project executed and the gross profit earned and after considering the audited Profit & Loss Account, balance sheet and the certificate issued by the Chartered Accountant for the relevant year. 43. It also has to be kept in mind that as per Section 13 of the TNVAT Act, 2006, every person responsible for paying any sum to any dealer for execution of works contract, shall at the time of payment of such sum for the amount calculated at the rates specified therein. 44. As far as Civil Works Contract is concerned, deduction is to be made at 2%. As per Rule 9(i)(b) of the TNVAT Rules, 2007, any person who makes a deduction under Section 13 of Act, is required to pay the amount sum so deducted electronically to the Assessing Authority for making assessment along with a statement in electronic form on or before 20th day of every succeeding month along with proof of payment. 45. The deductor has to issue a certificate of deduction of tax in Form-T and shall issue th....
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....TN VAT Rules, 2007. 54. There, is no other method prescribed under Rule 8(5) of the TN VAT Rules, 2007. When law mandates a particular thing to be done in a particular manner, then it has to be done in that manner. This is accepted position of law. This principle was laid down by the Privy Council in Nazir Ahmad Vs. King Emperor, AIR 1936 PC 253 (II). The said principle has followed by the Hon'ble Supreme Court in several cases. 55. Attention is invited to the decision of the Hon'ble Supreme Court in State of U.P. Vs. Singhara Singh, AIR 1964 SC 358 and a recent decision of the Hon'ble Supreme Court in Union of India &Ors. Vs. Mahendra Singh in Civil Appeal No.4807 of 2022, wherein also the above view was followed. 56. This Principle will apply for determination of taxable turnover in the works contract under Rule 8(5) of the TN VAT Rules, 2007. 57. The petitioner cannot arrive at the taxable turnover arbitrarily without giving particulars of the value of the goods and value of the services and other items to claim deduction involved to arrive at an arbitrary taxable turnover contrary to scope of Rule 8(5) of the TNVAT Rules, 2007 by merely adding 15% to the val....