Calculating Deemed Sales Value by taking Turnover from Entirety of Works Contract even at the First Stage is Contrary to VAT Act: Madras HC [Read Order]
![Calculating Deemed Sales Value by taking Turnover from Entirety of Works Contract even at the First Stage is Contrary to VAT Act: Madras HC [Read Order]](https://www.taxscan.in/wp-content/uploads/2022/10/Works-Contract-VAT-Act-Madras-HC-TAXSCAN.jpeg "Calculating Deemed Sales Value by taking Turnover from Entirety of Works Contract even at the First Stage is Contrary to VAT Act: Madras HC [Read Order]")
The Madras High Court, in a recent judgment has directed the VAT authorities to re-do the proceedings as the method for assessing the turnover from works contract was in contradictory to Rule 8(5) of the Tamil Nadu Value Added Tax Rules, 2007. The petitioner, M/s.VBHC Chennai Value Homes Private Limited challenged the impugned assessments relate to the periods 2011-12, 2012-13 &...
The Madras High Court, in a recent judgment has directed the VAT authorities to re-do the proceedings as the method for assessing the turnover from works contract was in contradictory to Rule 8(5) of the Tamil Nadu Value Added Tax Rules, 2007.
The petitioner, M/s.VBHC Chennai Value Homes Private Limited challenged the impugned assessments relate to the periods 2011-12, 2012-13 & 2013-14 and have been framed in terms of the provisions of the Tamil Nadu Value Added Tax Act, 2006 all dated 14.03.2019. The assessments are assailed on the basis of the methodology adopted in computing the value of the works contract under Section 5 of the Act.
In completing the impugned assessments, the assessing authority arrives at a deemed sale value of the transactions, bringing to tax the turnover from the entirety of the contract even at the first stage. In doing so, he takes a cue from the petitioner who admittedly has availed the entirety of the Input Tax Credit (ITC) available in respect of all purchases effected by it.
The petitioner is aggrieved by the methodology adopted in the computation of tax on turnover, and draws attention to Rule 8(5) of the Tamil Nadu Value Added Tax Rules, 2007 and approached the High Court for relief.
The Government Pleader agreed before the Court that the proper method for assessing the turnover from works contract is as per Rule 8(5) and that there is no statutory basis to justify the methodology adopted in the impugned assessments.
Quashing the orders, Justice Anita Sumat held that “In light of the same, the impugned assessments are set aside and remanded to the assessing authority to be redone de novo, applying the methodology set out under Rule 8(5) of the Rules. For this purpose, and seeing as the assessments relate to the periods 2011-12 to 2013-14, the petitioner will appear before the assessing authority on 12.10.2022 at 10.30 a.m. without awaiting any further notice and make itssubmissions. The assessments shall be completed within a period of eight (8) weeks from the date of receipt of copy of this order.”
To Read the full text of the Order CLICK HERE
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