The Madras High Court in a recent case has held that taxable turnover cannot be arrived without giving particulars of value of goods and services under Tamil Nadu Value Added Tax Act, (TNVAT Act), 2006.
Tvl. R. Rama Rao, the petitioner challenged the impugned order passed by the respondent for the assessment year 2016-2017. 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 of Rs.28,31,13,474/- reported in the Profit & Loss Account.
The petitioner is a Civil Contractor and executes works contracts for statutory Corporations and State Departments such as Greater Chennai Corporation, Highways and Rural Works Department, etc. The petitioner had earlier filed a writ petition for a mandamus to direct the respondents therein to consider and grant a refund of the TDS (deduction of tax at source) amount of Rs.56,18,991/- to the petitioner covered by certificate in Form T and statement of tax deduction at source in Form R filed by the Greater Chennai Corporation.
The said Writ Petition was disposed of by this Court by its order dated 14.12.2021 without expressing any opinion on merits by directing the respondents therein to consider the representation dated 07.11.2018 and 02.07.2021 of the petitioner. By these representations, the petitioner had requested the 1st respondent therein, the respondent herein to refund an amount of Rs.56,18,991/- to the petitioner which is said to have been deposited by the Greater Chennai Corporation as TDS while paying the amounts to the petitioner under Section 13 of the TNVAT Act, 2006.
It was alleged that the respondent had wrongly determined the taxable turnover under Rule 8(5)(d) of the TNVAT Rules, 2007, r/w Section 5 of the TNVAT Act, 2006. A further notice based on the above reply dated 11.12.2020 of the petitioner was issued on 03.12.2020, whereby, the petitioner was informed that an opportunity for a personal hearing was fixed and that the petitioner was required to appear on 14.12.2020 to represent the case with supporting documents as mentioned in the reply dated 24.07.2020.
In addition, the petitioner also asked to furnish the proof regarding the filing returns and payment of tax by the Sub-Contractors in respect of item No.10 (Deduction of TDS) and to furnish the details of unregistered purchases for the liability arrived under Section 12 (name and address of the seller). The respondent has passed the impugned order dated 01.06.2022.
Although the petitioner has an alternate remedy by way of an appeal before the Appellate Authority under the provisions of the TNVAT Act, 2006, the petitioner has challenged the impugned assessment order dated 01.06.2022.
It was submitted that the Division Bench has considered the difficulties of the dealer that it is not possible to cull out 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.
It was the practice of the dealers to adopt a 10% profit on the purchase value of the items used in the execution of the works contract to arrive at the deemed sales turnover for which tax at the respective rate was paid to the Department.
A single judge bench of Justice C.Saravanan observed that “Since it is the case of the petitioner that few more TDS certificates have been issued to the Petitioner by the Greater Corporation of Chennai, the petitioner is directed to furnish the same to the respondent within thirty (30) days from the date of receipt of a copy of this Order.”
Further directed the 1st respondent to issue a corrigendum to the impugned order by revising the tax liability after adjusting the TDS certificates said to have been issued during the pendency of this Writ Petition, within sixty (60) days.
While disposing of the appeal, the court held that “the petitioner shall thereafter file an appeal before the Appellate Authority under the provisions of the TNVAT Act, 2006, within ninety (90) days from the date of receipt of a copy of this order.”
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