The court upheld the constitutionality of Section 6 of the Tamil Nadu VAT Act, affirming it allows for voluntary tax payment options and does not impose undue taxation on interstate purchases.

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C O M M O N O R D E R

(Order of the Court delivered by MOHAMMED SHAFFIQ.J., The present writ petitions have been filed challenging show cause notices dated 21.04.2014 in respect of assessment years 2006-2007, 2007-

2008 and 2008-2009.

2. It is submitted by Mrs.Hema Muralikrishnan, learned counsel for the petitioner in all writ petitions that the validity of Section 6 of the Tamil Nadu Value Added Tax Act, 2006 was the subject matter of challenge in a batch of writ petitions namely, W.P.Nos.26788, 29096 and 29120 of 2007 batch etc., and the same came to be disposed of vide order dated

31.03.2022. It is agreed by Mr.V.Prashanth Kiran, learned Government Advocate appearing on behalf of respondents that the above order squarely covers the facts of the present cases. Relevant portion of the above order is extracted hereunder:

"218. In view of the foregoing discussions and findings, we hold thus:

a. Section 6 of the TNVAT Act, 2006 is not a charging Section. It only provides for an alternate mode of discharging taxes to the dealers, who voluntarily opt for the compounding scheme to pay taxes at a compounded rate. It is always open to the dealers to fall back under Section 5 from the next year, if their tax planning permits them. No tax under the TNVAT Act, can be levied at the point of interstate purchase. However, when such goods are brought in and used in the execution of the works contract, they are liable to pay tax on the deemed sale in accordance with Sections 5 and 10 of the TNVAT Act.

b. While granting the concession at the point of payment of output tax, it is open to the State to impose any restriction or conditions for availing such concession. The concession at the point of interstate purchase from a registered dealer is already available under Section 8 of the CST Act and there is no tax on imported goods and such goods are taxed only at the first point of sale within the State.

c. The composition scheme under Section 6 cannot be treated as provision for levy of tax on purchases or imposing any restriction on purchases from other State or import. The conditions do not alter the rate of tax of goods imported from outside the State. The concession is granted at the point of output tax payable on the transfer of property in goods.

d. Works contract in general denotes the genus with different species. The dealers purchasing goods from local dealers form a distinct category/species from dealers who purchase goods from local as well as other state dealers or dealers who import goods to be used in the works contract. There is a rationale behind such classification for the purpose of Section 6 . In fiscal or taxing enactments, it is not necessary that every enactment should be backed by objects and reasons. What is relevant is the competence of the State and whether such enactment offends any constitutional rights, which in the instant cases, are held to be negative. The object and the reason adduced in the counter, which in the opinion of this court, can be discerned even without such counter as because, whenever, a purchase takes place in the course of intertrade or commerce falling under Section 8(1) of the CST Act, the rate of tax payable is at a concessional rate upon satisfaction of the requirement under Section 8(4), which is much lower than the rate of tax prescribed for the purchase of goods from a local dealer. The State obviously is at loss of revenue at the point of purchase, added together the option to pay tax at compounded rate on the value of the Contract, the State is at a loss. Such classification or distinction is not unknown in taxing law. Even Sections 5 and 6 of TNVAT Act classify works contractors into different categories. Similarly, Section 8 of the CST Act treats the dealers of the same goods differently, depending upon whether they fall und