The Madras High Court held that the CST turnover cannot be included into VAT turnover for determining tax liability or determining the due date for filing Returns.
The petitioner, Schneider Electric India Pvt.Limited submitted that the turnover under the (Central Sales Tax Act, 1956) CST cannot be clubbed in the returns filed under Section 21 of the Tamil Nadu Value Added Tax Act, 2006 read with Rule 7 of the Tamil Nadu Value Added Tax Rules, 2007 and therefore, the impugned order passed by the respondent is liable to be quashed.
By virtue of the above amendment to the Rule 7 of the Rules amended with effect from 30th March, 2009, Sub- Clause 8 to Rule 7 was introduced, wherein, in case of dealers making electronic payment of tax, the dealers whose taxable turnover in the previous assessment year was Rs.200 Crores and above was required to file returns on or before the 14th of the succeeding month along with the proof of payment of tax while others were required to file returns on or before 22nd of the succeeding month along with proof of payment of tax.
The petitioner submits that though for the purpose of assessment under CST Act, 1956 the procedure prescribed under TNVAT Act, 2006 is adopted, the two turnover and assessments are independent of each other and there is no scope for overlapping or including the turnover into the other for the purpose of Section 21 of the TNVAT Act, 2006 and Rule 7 of the TNVAT Rules, 2007 and therefore submits that the impugned order is liable to be quashed for the being cryptic, non-speaking and unreasoned.
The single bench of Justice C.Saravanan observed that “taxable turnover” under Section 2(38) under TNVAT Act, 2006 can include only the “turnover” on which a dealer was liable to pay tax under TNVAT Act, 2006as determined after making such deductions from “total turnover” and in such manner as may be prescribed for determining “total turnover”. The amounts to be deducted Rule 8(2) of TNVAT Rules, 2007 can never form part of the “taxable turnover” under Section 2 (38) of the TNVAT Act 2006 for the purpose of Section 21 of the TNVAT Act 2006.
“The overlap between the CST Act, 1956 and the TNVAT Act, 2006 and the Rules made thereunder are only for the purpose of following the procedure prescribed under the latter Act for the former. Barring the above, there is no scope for including one turnover into another either for determining the tax liability or the determining the due date for filing the Returns, Section 9 of the CST and Rule made thereunder do not permit any inclusion of the turnover under one tax enactment into another,” the court observed while quashing the impugned order.
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