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September 2014

State Of Tamil Nadu vs Therman Heat Tracers Ltd, [2012] 51 VST 69 (Mad)

By C. B. Thakar Advocate ; G. G. Goyal, Janak Vaghani Chartered Accountants
Reading Time 1 mins
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Sales Tax – Turnover – Liquidated Damages – Deducted From Contracotr’s Bill – Does Not Form Part of Turnover Of Sales -Not Taxable, The Tamil Nadu General Sales Tax Act, 1959.

FACTS
Certain amount was deducted from the bill of the contractor by the employer. The assessing authority determined gross amount before deduction of liquidated damages as turnover of sales and levied tax. The Tribunal in appeal allowed the deduction of liquidated damages from total turnover of sales. The Department filed revision petition against the impugned judgment of Tribunal before the Madras High Court.

HELD
The Tribunal had correctly found that the liquidated damages were to be borne by the contractor and the payment was reduced to that extent. Therefore, such amount received after the contractual deductions can alone be treated as turnover. The High Court accordingly affirmed the judgment of Tribunal and revision petition filed by the Department was dismissed.

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