SUNDARAM INDUSTRIES LIMITED Vs. STATE OF TAMILNADU

JUDGEMENT

(1.) The assessee is on revision as against the order of the Tribunal, raising the following substantial question of law:

(2.) The assessment years relate to the years 1989-1990 and 1990-1991. The assessee a company engaged in retreading of tyres on a works contract basis. In respect of the works undertaken, the assessee quoted a consolidated amount, which they claimed as inclusive of tax. In the return made, since the assessee had not separately maintained accounts as regards the amount referable towards transfer of property in goods and labour charges, the assessee apportioned 70% of the amount as per the statute, as taxable turnover. The Officer viewed that since the assessee had charged a lumpsum amount and no separate amount was noted in the bills towards collection of sales tax and that the tax was only notionally stated so in the accounts, the entire turnover at 70% was to be assessed to tax. The Assessing Officer rejected the contention of the assessee that there was a clear mention in the invoice to the effect that the sale price is inclusive of sales tax and that the claim was allowable as per the direction of the Kerala High Court (Deputy Commissioner of Sales Tax (Law) Board of Revenue (Taxes), Ernakulam vs. N. Lekshmana Reddiar,1994 94 STC 396). The Assessing Officer, however, pointed out that since the transactions involved in the execution of the works contract are deemed sales, provisions relating to sales are equally applicable to deemed sales and when the tax on the sales are not separately shown as not included in the sale price, the petitioners were liable to pay tax.

(3.) As per Explanation (1-A) to Section 2(r) of the Tamil Nadu General Sales Tax Act, 1959, any amount charged by a dealer by way of tax separately without including the same in the price of goods bought or sold shall be excluded from the turnover. Since the assessee had not collected the tax separately from the purchasers, the mere fact that they had been shown separately in the accounts could not be a justifiable ground for granting exclusion.