Before Sh. D.P. Reddy, I.A.S., Excise and Taxation Commissioner, Punjab.

Name of the applicant

M/s TATA Teleservice Ltd.
C-125, Phase-8, Industrial,
Focal Point, Mohali, Punjab.

Subject: Application u/s 85 of Punjab VAT Act.

M/s TATA Teleservice Ltd. C-125, Phase-8, Industrial, Focal Point, Mohali, Punjab, have submitted application under section 85 of PVAT Act, 2005, requesting for determination of question. The facts of the case are that the applicant has submitted that section 2 (m) of the Punjab Value Added Tax Act defines Gross Turnover as:

"(m) "gross turnover" includes the aggregate of the amounts of sales and/or purchases made by any person during the given period, including any sum, charged on account of freight, storage, demurrage, insurance and for anything done by the person in respect of the goods at the time of or before the delivery thereof;"
Further he has quoted Section 43 of the PVAT Act, 2005, which states that

"Every person whose gross turnover in a year exceeds the prescribed limit, shall have his accounts audited by an accountant and shall submit to the designated officer a VAT audit report in the prescribed form duly signed by such accountant and setting forth such particulars and certificates, as may be prescribed.

Explanation:- In this section "accountant" means a Chartered Accountant within the meaning of the Chartered Accountants Act,1949 (Central Act No. 38 of 1949), and includes any person, who by virtue of provisions of sub-section (2) of Section 226 of the Companies Act, 1956 (Central Act No. 1 of 1956), is entitled to be appointed to act as an auditor of companies."

The applicant has also quoted rule 41 regarding VAT audit report by a Chartered Accountant. It reads:
"Every taxable person whose gross turnover in a year exceeds fifty lacs, shall furnish the annual Statement with Part B thereof duly certified by a Chartered Accountant."

In view of the above stated provisions of law, the applicant has sought determination of the following question:
"Under what circumstances will purchase made during the period form part of gross turnover to be used to determine requirement of audit ?"

The representatives appearing on behalf of the applicant and the Department have been heard. Sub-section (1) of section 19 of the PVAT Act, 2005, states:

"Notwithstanding anything contained in this Act, there shall be levied VAT on the taxable turnover of purchase of the goods specified in Schedule 'H' at the rate applicable to such goods as per the Schedule."
Section 20 of the said Act, reads as follows:

"(1) Where a taxable person purchases taxable goods from a person other than a taxable person or a registered person, and-

(a) Uses such goods in the manufacture of goods, declared tax-free under section 16 ; or

(b) Uses such goods in the manufacture of any goods other than those specified in Schedule-A, and sends the goods so manufactured outside the State otherwise than by way of sale in the course of inter state trade or commerce or exports out of India ; or

(c) Disposes of such goods in any manner other than by way of sale in the state ; or

(d) Dispatches them to a place outside the state otherwise than as a result of sale in the course of inter-state sale, trade or commerce or export out of India, there shall be levied a tax on the taxable turnover of purchases of such goods at the rate applicable to such goods as per the Schedules:

Provided that no tax shall be levied under this Section, if a tax has already been paid on such goods under Section 19.

(2) Where a registered person purchases taxable goods from a person, other than a taxable person or a registered person, and disposes of such goods in any manner, there shall be levied a tax on the turnover of such purchases at the rate(s) specified in the Schedule (s)."

As per the scheme of the PVAT Act, 2005, for the purpose of computation of GTO, only the turnover of purchases pertaining to goods, which are exigible to purchase tax under sections 19 or 20 of the Act ibid, would be included in the gross turnover, as defined under the Act. And the GTO thus computed would also determine the requirement of Audit under section 43 of the Act ibid.

D.P. REDDY
Patiala Excise and Taxation Commissioner, Pb.