BHARANI READYMADES Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) The petitioner seeks quashing of the proceedings dated April 4, 2011 relating to the assessment year 2009-10. The petitioner is a dealer in readymade garments. It is stated that since the petitioner's turnover was below Rs. 50 lakhs and was making purchase from local registered dealer and effecting sales locally, in terms of section 3(4) of the Tamil Nadu Value Added Tax Act, 2006 (hereinafter called as "the Act"), the petitioner opted to pay tax at the rate not exceeding one per cent. As per section 3(4) of the Act, such option shall be exercised by the dealer within 30 days from the date of commencement of the Act; that the dealer, whose turnover is below Rs. 50 lakhs during the previous year on or before the 30th day of April of the year, has exercised such option and for the year 2008-09, the dealer has exercised the said option within thirty days from the date of commencement of the Tamil Nadu Value Added Tax (Second Amendment) Ordinance, 2008; the proviso to section states that such dealer shall not collect any amount by way of tax or purporting to be by way of tax; the dealer shall not be entitled to input-tax credit on the goods purchased by him and the dealer who purchased goods from such dealer shall not be entitled to input-tax credit on the goods purchased by him. Sub-section (b) states that when dealer's turnover reaches Rs. 50 lakhs at any time during the previous year, as per the proviso therein, the dealer shall not be entitled to exercise such option for subsequent years. The dealer has to inform the assessing authority in writing within seven days from the date on which such turnover has crossed the turnover of Rs. 50 lakhs. Such dealer is liable to pay tax under sub-section (2) of section 3 on all his sales of Rs. 50 lakhs and above. In that case, he is entitled to the input-tax credit on the purchases made from the date, and on the stock available with him, the purchases of which has been made within ninety days before that date, on which such turnover has reached rupees fifty lakhs.

(2.) The petitioner states that for 2009-10, he opted for section 3(4) assessment and filed returns in form K and paid the tax at five per cent. The second respondent herein issued notice dated November 18, 2011 for the assessment year 2009-2010 by pointing out that the petitioner had effected purchases of readymade garments from outside the State during the assessment year 2009-10 and hence in view of section 3(4)(a) of the Act, the petitioner was not eligible for assessment under section 3(4) of the Act. On the notice issued, the petitioner submitted his objections on February 24, 2011 stating that it did not make any inter-State purchase during the assessment year 2009-10 and as the turnover was below Rs. 50 lakhs, it was entitled to opt for assessment under section 3(4) of the Act. The petitioner was also issued notices on the same day for the earlier assessment year. The petitioner states it purchased garments from other States for the earlier assessment years 2007-08 and 2008-09 for a small value only for Rs. 45,469 and Rs. 13,311, respectively. Immediately realising that it might not be entitled to the concessional levy under section 3(4) of the Act, it filed form I and claimed input-tax credit of the tax paid on its purchases. Thereafter on March 24, 2011, it submitted another reply to the notice dated March 4, 2011 containing the same allegation that the claim for concessional levy for 2009-10 was not available on account of the petitioner's inter-State purchase for 2007-08, 2008-09. On July 12, 2011, the respondent passed an order that on March 30, 2011, the petitioner was assessed under section 22(2) of the Act. However, taking note of the inter-State purchase effected on the preceding two assessment years, the assessment was revised levying tax under section 3(2) of the Act. The petitioner refuted the contention. Thereafter, on considering the claim of the assessee for the year 2009-2010, the assessment order was passed on August 4, 2011 holding that the petitioner be assessed under section 3(2) of the Act attracting levy tax at the rate of 12.5 per cent. It is stated that in respect of the assessment years 2007-08 and 2008-09, the respondent passed the assessment order levying tax at 12.5 per cent. The petitioner states that the assessment order for the year 2009-10 rejecting the compounding rate of tax at five per cent on the ground the dealer was not eligible for assessment under section 3(4) of the Act in respect of the previous years 2007-08 and 2008-09 is contrary to the provisions under section 3(4) of the Act. The petitioner states that during the year under consideration, viz., 2009-10, the petitioner had not made any inter-State purchase. In the absence of any condition stipulated under section 3(4) of the Act, rejecting the claim based on earlier years' results is contrary to law. Aggrieved by the same, the petitioner has come before this court.

(3.) On notice, the respondents have given instructions to the Government Pleader, wherein, it has been specifically averred that the petitioner had violated conditions under section 3(4) of the Act since they had made inter-State purchase during 2007-08 and 2008-09. Considering the violations thus made, the prohibition under section 3(4) of the Act to avail of concessional levy operated against the petitioner. On instructions, it has been further pointed out that the petitioner had filed form I in respect of assessment years 2007-08 and 2008-09 seeking eligibility for input-tax credit. However, as far as the present year is concerned, since the petitioner had violated conditions under section 3(4) of the Act, the ineligibility under section 3(4) operated.