Gujarat High Court
State Of Gujarat vs Ambuja Cement Ltd - Ambuja Unit on 24 June, 2016
Author: Akil Kureshi
Bench: Akil Kureshi, A.J. Shastri
C/SCA/19032/2015 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 19032 of 2015
With
SPECIAL CIVIL APPLICATION NO. 19086 of 2015
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STATE OF GUJARAT....Petitioner(s)
Versus
AMBUJA CEMENT LTD - AMBUJA UNIT....Respondent(s)
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Appearance:
MR HARDIK VORA, AGP for the Petitioner(s) No. 1
MR RASESH H PARIKH, ADVOCATE for the Respondent(s) No. 1
MR.HEMANG H PARIKH, ADVOCATE for the Respondent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE A.J. SHASTRI
Date : 24/06/2016
ORDER
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. Since facts are common in both these petitions, we may notice the facts as emerging from Special Civil Application No.19032 of 2015.
2. The State Government has filed this petition challenging the judgement of the Value Added Tax Tribunal dated 08.06.2015 by which, the Tribunal allowed the revision petition of the respondent-assessee.
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3. Briefly stated the facts are that, the respondent is a registered dealer and is engaged in manufacture and sale of cement. For the assessment year 2007-08, the assessee had sold such goods to various customers. At the end of the year in the last quarter, the discount to be given to such customers on the sales was finalized. As a result of which, the assessee gave credit notes to such customers discounting the VAT already collected from them on the basis of the original price. Since this event took place during the financial year 2008-09, the assessee claimed credit of such discounted sale price and the consequential reduced tax collected from the consumers in such year. The Assessing Officer accepted the formula and framed the assessment accordingly, upon which, the Commissioner took the order of Assessing Officer into suo motu revision. In such order, the Commissioner was of the opinion that the benefit of discounted price could be granted to the dealer only during the same year in which the event took place. Principally, his objection was, therefore, that for the sale transactions which took place in the year 2007-08 for which the credit notes were issued, the benefit of reduced tax can be granted only during such period and not during the subsequent year. He, therefore, disallowed the adjustments and raised the revised tax demand of Rs. 49.43 lacs. Against this order, the respondent-assessee approached the Tribunal by filing revision petition. In such revision petition, the Tribunal referred to and relied upon the provisions of Sections 60 and 61 of the VAT Act and Rule 43 Page 2 of 7 HC-NIC Page 2 of 7 Created On Tue Jun 28 02:44:33 IST 2016 C/SCA/19032/2015 ORDER of the VAT Rules to hold that the procedure adopted by the assessee was legal and proper. The Tribunal rejected the department's stand that in view of the provisions contained in Section 8 of the Act, such adjustment was not permissible. It is this judgement of the Tribunal which has been challenged in the present petition.
4. Having heard learned counsel for the parties and having perused the documents on record, we notice that in the impugned judgement, the Tribunal has observed that in the present case, the assessee had issued credit notes as a result of discount granted to the customers. The price of goods sold was finalized or revised or settled subsequently and, therefore, the credit notes were issued by the assessee during the financial year 2008-09. It was held that since the discount of each customer was crystallized only on 31.03.2008, the final price payable for the goods sold to the customers could be ascertained only after 01.04.2008. The credit notes were, therefore, prepared and accounted for in the books of the assessee in the first quarter of financial year 2008-09. It was observed that these are regular features followed by the assessee consistently for last many years.
5. In background of such virtually undisputed facts, we may refer to the statutory provisions. Section 60 of the VAT Act pertains to invoices. As per sub section (1) of Section 60, a registered dealer who sales taxable goods to another registered dealer has Page 3 of 7 HC-NIC Page 3 of 7 Created On Tue Jun 28 02:44:33 IST 2016 C/SCA/19032/2015 ORDER to provide him at the time of sale, with a tax invoice containing such particulars as may be prescribed. Section 61 pertains to credit and debit notes and reads as under:
"61. Credit and debit notes:
Subject to the provisions of section 8 and 60, where a tax invoice has been provided as contemplated in sub section (1) of section 60 and-
(a) the amount shown as tax charged in the tax invoice exceeds the actual tax charged in respect of the sale concerned, the seller shall provide [within such period as may be prescribed, the purchaser with a credit note] of the sales of goods involved in the transaction, containing such particulars as may be prescribed.
(b) the actual tax charged in respect of the sale concerned exceeds the tax shown in the tax invoice as charged, the seller shall provide the purchaser with a debit note, containing such particulars as may be prescribed:
[Provided that not more than one credit note, or as a case may be, debit note shall be issued for the amount in excess]."
6. In terms of Section 61 thus, subject to the provisions of Sections 8 and 60, where a tax invoice has been provided in terms of sub section (1) of Section 60 and the amount shown as tax charged in the tax invoice exceeds the actual tax charged in respect of the sale concerned, the seller has to provide within such period as may be prescribed, the purchaser with a credit note of the sales of goods involved in the transaction containing such Page 4 of 7 HC-NIC Page 4 of 7 Created On Tue Jun 28 02:44:33 IST 2016 C/SCA/19032/2015 ORDER particulars as may be prescribed. The act of the assessee providing such credit notes to the purchasers after discounting the sale price was, thus, in consonance with Section 61 of the VAT Act. Rule 43(1) of the VAT Rules provides the details for such credit and debit notes as mentioned in Section 61.
7. In terms of Sections 60 and 61 of the VAT Act thus, the assessee was entitled to issue credit notes once the amount of tax shown as charged in the tax invoice exceeded the actual tax charged in respect of the sale concerned. This is precisely what the assessee had done and claimed benefit of reduced tax collected from the purchasers. This devise, in our opinion, was not prohibited by Section 8 of the VAT Act, reliance upon which has been made by the department. In fact, Section 8 pertains to adjustments in tax. Sub section (1) provides that sub section (2) shall apply in relation of sales of taxable goods by any registered dealer inter alia where the consideration previously charged for that sale has been altered by agreement with the recipient whether due to the offer of a discount or for any other reason. This is subject to fulfillment of the condition viz. that a tax invoice in relation to that sale and the amount shown as tax charged on that sale is incorrect in relation to the amount properly chargeable on that sale or; the registered dealer has furnished a return in relation to the period in respect of which tax on that sale is attributable and has accounted for an incorrect amount of tax on that sale in relation to the amount properly chargeable. If these conditions are satisfied, sub Page 5 of 7 HC-NIC Page 5 of 7 Created On Tue Jun 28 02:44:33 IST 2016 C/SCA/19032/2015 ORDER section (2) of Section 8 would apply, in which, it is provided that where a dealer has accounted for either in the tax invoice or in return an incorrect amount of tax as contemplated in sub- section (1) such dealer would make an adjustment in calculating the tax payable by him in the return for the tax of such period during which it has become apparent that the tax is incorrect. Such adjustment is subject to the provisions contained in Clauses (a) and (b) contained in sub section (2). Thus, even Section 8 permits adjustment of tax which is found to be in excess of what is payable during the period when it has become an apparent that the tax paid was incorrect.
8. Learned AGP, however, submitted that Section 8 would permit adjustments of tax and not re-adjustment of the total turnover which the assessee did in the present case. However, in our opinion, in absence of anything, to point out that this methodology would lead to wrong assessment of tax, the same would be wholly inconsequential. In essence what the assessee did, was to reduce the total turnover of the assessment year 2008-09 to the extent its value after discount during the previous year had come down which would have a direct relation to the tax payable by the assessee.
9. In the result, petition is dismissed. Notice is discharged.
(AKIL KURESHI, J.) Page 6 of 7 HC-NIC Page 6 of 7 Created On Tue Jun 28 02:44:33 IST 2016 C/SCA/19032/2015 ORDER (A.J. SHASTRI, J.) Jyoti Page 7 of 7 HC-NIC Page 7 of 7 Created On Tue Jun 28 02:44:33 IST 2016