State of Tamil Nadu Vs Tvl. Aro Granite Industries Ltd. (Madras High Court)
The Madras High Court has disposed of a tax case filed by the Commercial Taxes Department against Tvl. Aro Granite Industries Ltd., pertaining to the assessment year 2013-14. The core issue revolved around the taxation of asset sales, which the assessee contended should be treated as a slump sale.
The original assessment, completed on March 7, 2017, included the turnover from the sale of plant and machinery, furniture, electrical and office equipment, along with profit from these sales, profit from building sales, and turnover from old and used vehicles. A penalty under Section 27(3) of the Tamil Nadu Value Added Tax Act, 2006, was also imposed.
Tvl. Aro Granite Industries Ltd. challenged this assessment, arguing that the sale of its Unit 1 at Hosur to S.V.G. Exports Private Limited was a “slump sale” on an “as is where is basis,” meaning the entire undertaking was sold for a lump sum consideration without individual asset valuation.
The first appellate authority, upon reviewing the matter, acknowledged that to determine if it was indeed a slump sale, the agreement between the parties needed to be examined to ascertain their true intention. Consequently, the case was remanded back to the Assessing Authority for a fresh consideration. However, the first appellate authority made certain observations in its remand order, which the State found objectionable.
