Case Law Details
M/s. Sri Murugan Agency Vs. Commercial Tax Officer (FAC) (Madras High Court)
The petitioner herein opted to pay compounding tax as per section 3(4) of the Tamil Nadu Value Added Tax Act, 2006, as the assessee expected the turnover for the year 2007-08 as between Rs. 10 lakhs and Rs. 50 lakhs. The petitioner filed the monthly returns in form K disclosing the turnover and corresponding tax at 0.5 per cent. It is stated that the petitioner’s turnover, however, exceeded Rs. 50 lakhs and hence, not eligible for compounded rate of tax at 0.05 per cent. The petitioner filed the form I monthly returns from April, 2007 to March, 2008 by taking credit of the tax paid on the purchases during the relevant assessment year 2007-08 and after adjusting the input- tax credit, it paid the tax under section 3(2) of the Tamil Nadu Value Added Tax Act, 2006. On December 18, 2009, the respondent determined the total and taxable turnover at Rs. 57,92,100 by accepting the turnover reported by the petitioner, but took the input- tax credit for the month of March, 2008 alone. The petitioner’s grievance is that the said order is contrary to the circular issued by the Commissioner dated August 29, 2007, wherein, it is clarified that if the turnover of the assessee exceeded Rs. 50,00,000 in the middle of the year, then the assessee would not be assessed at the compounded rate of tax under section 3(4) of the Tamil Nadu Value Added Tax Act, 2006 and he has to pay higher rate of tax and eligible for input- tax credit for the purchases made from the beginning of the year. The said clarification given in the case of individual assessee is applicable to the case of the petitioner also. Consequently, the order suffered an illegality. The petitioner made a representation by way of rectification petition on February 9, 2010, pointing out to the clarification dated August 29, 2007 and requested the respondent to cancel the demand. By proceedings dated February 23, 2010, the respondent rejected the prayer by stating that it is open to the petitioner to get necessary relief from the appropriate forum against the order passed by the assessing authority. The petitioner submits that having regard to the clarification given by the Commissioner, which is binding on the assessing officer, once the petitioner crosses the turnover of Rs. 50,00,000, he is eligible for the benefit of input-tax credit. It is not denied by the respondent that the petitioner had paid tax at four per cent and 12.5 per cent for every month as per section 3(2) of the Tamil Nadu Value Added Tax Act, 2006.
Full Text of the High Court Judgment / Order is as follows:-
Heard Mr. P. Rajkumar, learned counsel appearing for the petitioner and Mr. S. Kanmani Annamalai, learned Additional Government Pleader appearing for the respondent.
2. The petitioner, who is a registered dealer on the file of the respondent under the provisions of the Tamil Nadu Value Added Tax Act, 2006 (in short “TNVAT Act”), is aggrieved by a notice dated 20.10.2008. In the said notice, the respondent stated that the petitioner had filed Form K return for the year 2007-08, up to December 2007, when the turnover was Rs. 49,86,142/-. Subsequently, for the months of January 2008, February 2008 and March 2008, the petitioner filed Form I returns for Rs. 10,04,720/-. The respondent has verified the Form I returns applying Section 3(4)(b) of the TNVAT Act, and granted the benefit of input tax credit for a period of 90 days and directed the petitioner to remit the balance value added tax of Rs. 3,32,294/-, along with penalty at 11.4%. The impugned notice is bad in law for several reasons.
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SIR,
WILL YOU POST THE EXACT CIRCULAR WHICH HC REFERRED IN THIS ORDER?