TaxTMI 
TaxTMI 
2024 (10) TMI 1458
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...., these petitions are heard analogously and are being disposed of by this common judgment and order. 1.2 Rule in Special Civil Application Nos.16620 of 2022, 17011 of 2022, 19080 of 2022, 16446 of 2023 and 16515 of 2023, returnable forthwith. Learned Assistant Government Pleader Mr.Chintan Dave waives service of notice of Rule on behalf of the respondents in these petitions. 2. For the sake of convenience, Special Civil Application No.705 of 2021 is treated as a lead matter. 3. The respondent raised a preliminary issue with regard to maintainability of the petitions in view of availability of the alternative remedy of filing statutory appeal under Section 73 of the Gujarat Value Added Tax Act, 2003. 3.1 The coordinate Bench of this Court vide order dated 12th January, 2021, considering the decision rendered in Tax Appeal No.349 of 2016 in case of Ambuja Cement Ltd. dealing with the similar issue applicable to the facts of the present case, has entertained this petition by issuing notice. 4. Brief facts of the case of Special Civil Application No.705 of 2021 are as under. (i) The petitioner is a company incorporated under the provisions of the Companies Act, ....
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....to June, 2017) 2018-19 GST regime (xi) With effect from 09th June, 2017 Section 14D of the Act has been repealed. (xii) The petitioner thereafter received notice dated 14th October, 2019 from the Commercial Tax Officer-4, Vadodara to show cause as to why permission granted on 09th July, 2014 to the petitioner company to pay lump sum composition tax under Section 14D of the Act should not be revoked on the ground that the petitioner, while making payment of VAT did not take into consideration the service tax component and did not add the same in the invoice while determining the VAT to be paid by the petitioner company. (xiii) The petitioner company replied on 10th December, 2019 and 23rd January, 2020 in response to the show-cause notice contending that as per the provision of Section 2(24) of the Act, sale price would not include service tax component. However, the respondent No.2, by order dated 03rd June, 2020, set aside the permission granted to the petitioner company under Section 14D of the Act to pay consolidated lump sum amount of composition tax on the ground that VAT has not been paid on the service tax component collected by the petitione....
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....posite contract or mere sale of food by way of pick-up or home delivery as also the goods sold at M.R.P. It was submitted that post-01st July, 2012 under Section 65B(44) of the Finance Act, 1994, declared services within the ambit of services which are defined under Section 65B(22) of the said Act as activity carried out by a person for another person for consideration and declared as such under Section 66E of the said Act which means that service to be covered under the purview of declared services, it must satisfy two conditions simultaneously - (i) it must be an activity carried out by one person for another person in lieu of consideration, and (ii) it must be specified (declared) under Section 66E of the Finance Act, 1994. It was further submitted that provision of Section 2(33) of the Act defines turnover sales and Section 2(24) of the Act defines sale price, therefore question which arise for consideration is what is includible in sales turnover. 5.2 Reliance was placed on the decision of this Court in case of Ambuja Cement Ltd. (supra), wherein the issue regarding computing taxable turnover of purchases under Section 11(3)(b) of the Act was considered vis-a-vis taxable tu....
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....rned Assistant Government Pleader that search was carried out on 07th August, 2019 under Sections 67, 88 and 100(2)(a) of the Gujarat VAT Act, 2003 and during the course of the said proceedings, it was discovered by the authorities that the petitioner had paid VAT on lump sum rate on the amount charged by the petitioner on the invoice value without including component of "service tax". It was, therefore, submitted that though the petitioner has collected service tax on the services rendered by the petitioner, however petitioner has conveniently chosen to avoid the payment of VAT at the lump sum rate on the service tax component. 6.2 Learned Assistant Government Pleader referred to and relied upon the definition of "sale price" under Section 2(24) to submit that definition is required to be considered in its true perspective and strict sense as it is not in dispute that the services rendered by the petitioner would be covered in sale price and therefore, once it is to be included in the sale price, the VAT is to be paid accordingly on the considerations received for services rendered and once lump sum tax benefit is claimed by the petitioner, it was the liability of the petitione....
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....by the respondent authority in relation to any offence or violation committed by the dealer prior to the enforcement of the Amendment Act shall not be affected and the authorities have power to initiate proceedings and are not precluded from taking any action with regard to such violation if found during the course of investigation, inquiry, verification etc. instituted pursuant to the enforcement of the Amendment Act and it cannot be said that such action of the respondent authority is without legal backing and such contentions raised by the petitioner are, therefore, not tenable. 6.7 Reliance was placed on Section 14 of the Act read with corresponding Rule 26 of the Rules to submit that permission which has been cancelled from the date when it was in contravention of the provisions of the Act and therefore, when indisputedly at no point of time the tax under the VAT Act has been paid on the service tax component, the respondent authorities have rightly cancelled the permission right from the day one when it was granted. It was, therefore, submitted that no interference may be made in the impugned order dated 11th November, 2020 as well as notice dated 01st December, 2020 issue....
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....ent under statutory obligation do not form part of 'Sale price' as defined under Section 2(24) of GVAT, as has been observed by this Hon'ble Court in the case of State of Gujarat vs. Ambuja Cement Ltd., bearing Tax Appeal No. 349 of 2016, wherein this Hon'ble Court, relying upon judgments of Hon'ble Supreme Court in the cases of Joint Commercial Tax Officer, Division-III, Madras vs. Spencer & Co. & Ors., 36 STC 188 (SC) & Anand Swarup Mahesh Kumar vs. Commissioner of Sales Tax, 46 STC 477 (SC), wherein Hon'ble Supreme Court observed that where a dealer is authorized by law to pass on any tax payable by him on a transaction of sale to the purchaser, such tax does not form part of the consideration for the purposes of levy of tax on sales and purchase." 8. Having heard learned advocates for the respective parties, the short question which arises for consideration of this Court is as to whether the liability of payment of Value Added Tax would include 'service tax' component collected by the petitioner from customers or not. 9. In order to answer this question, it would be germane to refer to the relevant provisions of the VAT Act, which are as under:- 2(....
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....charges shall be calculated in such manner as may be prescribed. 2(33) "turnover of sales" means the aggregate of the amount of sale price received or receivable by a dealer in respect of any sale of goods made during a given period after deducting the amount of sale price, if any, refunded by the dealer to a purchaser, in respect of any goods purchased and returned by the purchaser within the prescribed period; 2(34) "total turnover" means aggregate of the following transactions effected by a dealer, (a) turnover of sales of goods within the State whether such sales of goods are taxable or exempt under this Act; (b) turnover of sales of goods in the course of inter-State trade or commerce; (c) turnover of sales of goods in the course of export of goods out of the territory of India; (d) turnover of sales by a dealer on his own account and also on behalf of his principal; 3. Incidence of tax. (1) Subject to the provisions of this Act, every dealer,- (i) whose total turnover during the year immediately preceding the appointed day exceeded rupees five lakhs and whose taxable turnover exceeded rupees ten ....
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....es of eatables by hotels, restaurants, caterers, etc. (1) Notwithstanding anything contained in this Act, the Commissioner may, in such circumstances and subject to such conditions as may be prescribed, permit a dealer who is engaged in the business of sale of eatables in any form (whether processed or unprocessed) served, delivered or given in package from the place of business of the dealer or any other place, to pay at his option in lieu of the amount of tax leviable from him under this Act in respect of sales of eatables, lump sum tax by way of composition at such rate as may be fixed by the State Government by notification in the Official Gazette : Provided that the Commissioner shall not grant permission to pay lump sum tax to a dealer who is engaged in the activity of manufacture of such goods as the State Government may, by notification in the Official Gazette, specify. (2) The provisions of sub-sections (3) and (4) of section 14 shall apply mutatis mutandis to a dealer who is permitted under sub-section (1) to pay lump sum tax by way of compositions. (3) The permission granted under subsection (1) shall remain valid so long as the provis....
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....11 on the basic amount. However, as per sub-section (24) of Section 2 of the Act, sale price means the amount of valuable consideration paid or payable to a dealer or received or receivable by a dealer for any sale of goods made including the amount of duties levied or leviable under the Central Excise Tariff Act, 1985 or the Customs Act, 1962 and any sum charged for anything done by the dealer in respect of the goods at the time of or before delivery thereof and includes- (a) in relation to - (i) the transfer, otherwise than in pursuance of a contract of property in any goods, (ii) the transfer of the right to use any goods for any purpose, whether or not for a specified period, (iii) the supply of goods by any unincorporated association or body of persons to a member thereof, (iv) the supply by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), the amount of cash, deferred payment or other valuable consideration paid or payable therefor; (b) in relation to the transfer of property in goods (whether as goods or in some other form) involved in the execution o....
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....(1), (2), (5) or (6) of section 9, or; tax paid by the purchasing dealer under the Gujarat Tax on Entry of Specified Goods into Local Areas Act, 2001. Clause (b) of subsection (1) provides that the tax credit so claimed under the sub-section shall be subject to the provisions of sub-sections (2) to (12) and the tax credit shall be calculated in such manner as may be prescribed. Section 11(3)(b) of the GVAT Act provides that notwithstanding anything contained in the section, the amount of tax credit in respect of a dealer shall be reduced by the amount of tax calculated at the rate of four per cent on the taxable turnover of purchases within the State - (i) of taxable goods consigned or dispatched for branch transfer or to his agent outside the State, or (ii) of taxable goods which are used as raw materials in the manufacture, or in the packing of goods which are dispatched outside the State in the course of branch transfer or consignment or to his agent outside the State, (iii) of fuels used for the manufacture of goods. Thus, the amount of tax credit in respect of a dealer is required to be reduced by the amount of tax calculated at the rate of four per cent on taxable turnover of....
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....le consideration paid or payable by a person for the execution of such works contract, the amount representing labour charges for such execution, (c) in relation to the delivery of goods in hire purchase or any system of payment by installments, the amount of valuable consideration payable by person for such delivery. 6. Before adverting to the merits of the case, it may be germane to refer to the decision of the Supreme Court in the case of Joint Commercial Tax Officer, Division III, Madras v. M/s. Spencer & Co. (supra) wherein the Supreme Court, in the context of section 21 of the Madras Prohibition Act, 1937, observed that the sales tax which the section requires the seller of foreign liquor to collect from the purchaser is a tax on the purchaser and not on the seller. Under section 21-A, the tax payable is on the price of the liquor and that tax is to be paid by the purchaser, the seller is required to collect the tax from the purchaser which he has to pay over to the Government. Section 21-A makes the seller a collector of tax for the Government and the amount collected by him as tax under this section cannot, therefore, be part of the turnover. It w....
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....tatutory taxes and duties, in that case, there was no necessity for including specific taxes/duties like duties under the Central Excise Tariff Act and the Customs Act. The legislative intent is, therefore, clear, that is, to include only the duties paid under the Central Excise Tariff Act and the Customs Act within the ambit of "purchase price" as defined under section 2(18) of the GVAT Act. 8. When the word "includes" is used in a definition as in the case of section 2(18) of the GVAT Act, it is clear that the legislature does not intend to restrict the definition; it makes the definition enumerative and not exhaustive, that is to say, the term defined will retain its ordinary meaning but its scope would be extended to bring within the term certain matters which in its ordinary meaning it may or may not comprise. Inclusion of the words "duties levied or leviable under the Central Excise Tariff Act, 1985 or the Customs Act, 1962" is an inherent indicator of the legislative intent to include only those duties/taxes within the purview of the expression "purchase price". Therefore, the intention of the legislature to exclude value added tax from the ambit of purchase price i....