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Judgment
Chitra Venkataraman, J.—The following are the substantial questions of law on which T.C. No. 224 of 2011, relating to the assessment
year 1999-2000, was admitted:
(i) Whether in view of Section 4(2) of the Entry Tax Act, the entry tax paid by the petitioners did not form part of their taxable turnover?
(ii) Whether in view of the clarification issued by the Principal Commissioner and Commissioner of Commercial Taxes in E. Dis. Acts. Cell/IV.
29951/1993 dated 13.5.1993, the Hon''ble Tribunal has erred in confirming the liability to pay tax of the petitioners?
The following is the substantial question of law on which T.C. No. 244 of 2011, relating to the assessment years 2000-2001 and T.C. No. 251 of
2011, relating to the assessment year 1998-1999, were admitted:
Whether in view of Section 4(2) of the Entry Tax Act, the entry tax paid by the petitioners did not form part of their taxable turnover? "" As the
issues are in respect of the self-same assessee relatable to different assessment years, the facts being one and the same and the matter having been
disposed of by a common order by the Tribunal, all these Tax Cases are disposed of by a common order. For the purpose of convenience, the
facts, as stated in Tax Case Revision No. 224 of 2011 are referred to in this order.
The assessee is a dealer in motor vehicles. It is seen from the facts that in respect of inter-State purchase of motor vehicles from Maruthi Udyog
Limited, the assessee paid entry tax under the Tamil Nadu Tax on Entry of Motor Vehicles in to Local Areas Act, 1990. The vehicles were sold
locally, which attracted sales tax under the provisions of the Tamil Nadu General Sales Tax Act. While effecting the sale, evidently, the assessee
included the entry tax paid in respect of the vehicles in the sale consideration. However, the assessee worked out the sales tax by excluding entry
tax from the sale price and remitted the same. The Assessing Officer pointed out that an inspection was conducted by the Enforcement Wing
Officers in the business premises of the assessee on 31.07.2002 and on scrutiny of the records maintained by the assessee, the same disclosed
collection of certain amount in the sale invoices in excess of the amount actually collectable from the customers on the sale of motor vehicles. On
the examination of the accounts, it was noticed that the tax on the motor vehicles had been charged on the price excluding entry tax. The Assessing
Officer referred to a model invoice in Invoice No. 10348 dated 30.04.2012, which reads as follows:
From a reading of the said invoice and other invoices which were similar in nature, the Officer held that the price of the vehicle included the entry
tax paid on the vehicles coming from outside the State. However, excluding the entry tax which was part of the consideration, the assessee had
charged sales tax. In the circumstances, the Assessing Officer revised the assessment to assess the taxable turnover of Rs. 8,47,898/- taxable at
11% u/s 16(1)(a) of the Act and levied penalty at 150% of the tax due on the assessable turnover. After hearing the assessee, the revision of
assessment was confirmed.
It is seen from the assessment order that the assessee contended that it had charged sales tax on the amount excluding the entry tax, since sales
tax on the sale of motor vehicles was adjustable as against the entry tax paid u/s 4 of the Entry Tax Act. The Assessing Officer held that when
entry tax paid was included in the basic cost of the vehicles, the sales tax liability was to be worked on the consideration charged, which was
inclusive of the entry tax.
As against this order, the assessee went on appeal before the Appellate Assistant Commissioner. Having lost the appeal, the assessee went on
further appeal before the Tamil Nadu Sales Tax Appellate Tribunal. Referring to the reasoning of the Assessing Officer, the Tribunal held that the
basic price of one motor vehicle evidently was calculated as inclusive of entry tax. If the assessee had charged the basic price exclusive of entry
tax, the same would be Rs. 2,62,148.65 on which, tax at 12% would be calculated, which would come to a sum of Rs. 31,457.84. However,
when the assessee, in fact, had collected a sum of Rs. 2,94,718.37 as sale consideration, borne out from the assessee''s own invoice, in calculating
sales tax, the assessee had worked out the liability, excluding the entry tax. Going by the factual position on the consideration received, the Tribunal
held that there was no infirmity in the orders of the authorities below. Thus the assessment was confirmed. Aggrieved by this, the present revision
has been filed.
The Tribunal cancelled the levy of penalty u/s 16(2) of the Act, holding that there was no lacking of bona fide in not including the entry tax as
part of the consideration. The assessee is on revision before us. Even though learned counsel appearing for the petitioner submitted that sales tax
was collected on a sum excluding entry tax, yet, going by the model invoice produced before the Assessing Officer as well as before the other
Authorities, the total consideration charged by the assessee being inclusive of entry tax, the mere fact that entry tax payment would be adjusted
against the sales tax liability as per Section 4 of the Entry Tax Act, would not come to the aid of the assessee to contend that sales tax at 12% was
to be levied on the price excluding entry tax.
We agree with the reasoning of the Assessing Officer as well as the other Authorities in confirming the assessment. In the circumstances, the Tax
Cases stand dismissed. No costs.