LAWS(MAD)-2018-12-207

TVL.SHANMUGAMARI TIMBERS Vs. COMMERCIAL TAX OFFICER

Decided On December 20, 2018
Tvl.Shanmugamari Timbers Appellant
V/S
COMMERCIAL TAX OFFICER Respondents

JUDGEMENT

(1.) The petitioner is a dealer in Timber. He had registered himself under the TNVAT Act, 2006. He is an assessee registered with the respondent. Sec. 3 of the Act is the charging Sec. . As per Sec. 3(1)(a) of the Act, taxes on sales of goods are levied on dealers whose total turn over in a year is not less than Rs.5,00,000.00. As per Sec. 3(2) of the Act, the tax shall be payable by a dealer on every sale made by him within the State as per rates specified in the First Schedule. But then, Sec. 3(4) of the Act provides for a composition scheme. As per the said provision, the dealer whose annual taxable turn over is less than Rs.50.00 lakhs instead of paying tax as per Sec. 3(2) can opt for paying a flat tax at such rate not exceeding one percent as may be notified by the Government. The Government has issued G.O.Ms.No.2, CT and R Department dtd. 1/1/2007 notifying that a dealer who has opted to pay under this provision shall have to pay tax @ 1/2 %. But then, such a dealer is subjected to certain conditions. (a) He cannot collect any tax from his purchasers. (b) He cannot avail any ITC on the goods purchased by him and also the dealer who puchased goods from such dealer shall not be entitled to ITC (c) he cannot make any inter-state purchase.

(2.) If these conditions are breached by the dealer, the consequence will be that the composition given to him to pay at 1/2 % on the turn over would stand withdrawn and he will have to pay under Sec. 3(2) of the Act. This provision found place in the Act even from the beginning in order to benefit the small dealers whose annual turn over did not exceed Rs.50.00 lakhs. But then, the law makers did not foresee the possibility of the annual turn over of the dealers crossing Rs.50.00 lakhs even before the close of the assessment year. The question that arose was how to deal with such cases. Therefore, Sec. 3(4) of the Act was recast and Sec. 3(4)(b) was introduced vide Tamilnadu Act No. 49 of 2008 with effect from 18/6/2008. Sec. 3(4)b) read as under :

(3.) But, the said provision was interpreted by the officials as if on crossing of the ceiling of Rs.50.00 lakhs, the dealer will have to pay tax under Sec. 3(2) of the Act on his entire sales turn over. This had a ruinous impact on the small dealers. Therefore, the provision was substituted vide Tamilnadu Act 27 of 2011 with effect from 1/4/2012. The relevant provision in the amending Act read as under : "In Sec. 3 of the Tamil Nadu Value Added Tax Act, 2006, in sub-sec. (4), in clause (b) for the expression "Such dealer is liable to pay tax under sub-sec. (2) on all his sales of rupees fifty lakhs and above " the expression "Such dealer may pay a tax for each year on his turnover relating to taxable goods upto rupees fifty lakhs at such rate not exceeding one percent, as may be notified by the Government and is liable to pay tax under sub- sec. (2) on all his sales of taxable goods above rupees fifty lakhs " shall be substituted. "