IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 17.11.2011 CORAM THE HON'BLE MR.JUSTICE P.JYOTHIMANI AND THE HON'BLE MR.JUSTICE P.P.S.JANARTHANA RAJA T.C. (Revision) No.1245 of 2006 The State of Tamilnadu rep. By the Deputy Commissioner of Commercial Taxes Tiruchirappalli Division Tiruchirappalli. .. Petitioner Vs. Thermon Heat Tracers Ltd. I.B.P. Compound C.B.M.T. Muttam Nagapattinam. .. Respondent Tax Case Revision is filed under Section 38 of the Tamil Nadu General Sales Tax Act, 1959 against the order of the Sales Tax Appellate Tribunal (Main Bench), Chennai dated 18.9.2000 passed in S.T.A.No.622 of 2000 preferred against the order of the Appellate assistant Commissioner (CT) Tanjavur appeal No.399/97 dated 15.12.97 preferred against the order of the Deputy Commercial Tax Officer, Nagapattinam in TNGST /3901242/1995-96 dated 6.3.1997 for the Assessment year 1995-96. For Petitioner : Mr.R.Sivaraman Special Government Pleader For Respondent : Mr.Chandran O R D E R (Made by P.JYOTHIMANI, J.) The Revenue has preferred this revision against the order of the Sales Tax Appellate Tribunal (Main Bench), Chennai dated 18.9.2000 passed in S.T.A.No.622 of 2000, and the same was admitted on the following question of law: https://hcservices.ecourts.gov.in/hcservices/ "Whether in the facts and circumstances of the case, the Tribunal has erred in having excluded the payment received towards liquidated damages would not form part of the taxable turnover?" 2. The issue is as to whether the liquidated damages stated to have been received by the assessee to the extent of Rs.4,52,960/- should form part of the turnover. The Assessing Officer has found that the said amount is only a temporary deduction and will be paid to the dealers after handing over of the project and, therefore, the deduction claimed by the assessee was held to be inadmissible. That finding of the Assessing Officer came to be reversed by the Appellate Assistant Commissioner holding that though the deduction on the receipts of the assessee was temporary, as the assessee has not received the said amount, there is no justification in including the said amount for determination of the turnover. Accordingly, the Appellate Assistant Commissioner held that the said amount of Rs.4,52,960/- has to be deleted from the taxable turnover. The said order of the Appellate Assistant Commissioner came to be confirmed by the Tribunal under the impugned order, while dismissing the appeal filed by the Revenue. 3. On a perusal of the impugned order of the Tribunal, we find that the Tribunal has correctly found, in our view, that the liquidated damages levied have to be borne by the contractor and the payment is reduced to the extent of liquidated damages and, therefore, such amount received after the contractual deductions can alone be treated as turnover. The operative portion of the order of the Tribunal is as follows: "10. ..... For any reason or any lapse in the completion of the contract as per the terms, liquidated damages levied has to be borne by the contractor and the payment is reduced to the extent of liquidated damages. The amount received by him after the contractual deduction can only be treated as his turnover. In such circumstances, we are inclined to confirm the order of the Appellate Assistant Commissioner (CT), Thanjavur, setting aside the assessment of their turnover towards recovery of liquidated damages amounting to Rs.4,52,960/-." 4. Similar view was also taken by the Punjab and Haryana High Court in Punjab Communications Ltd. v State of Punjab and others, (2002) 128 STC 306. In the said judgment, it was held as follows: "11. A perusal of the above shows that the buyer was entitled to recover liquidated damages for delay in delivery of the goods. In other words, the dealer was liable to pay the liquidated damages at the agreed https://hcservices.ecourts.gov.in/hcservices/ rate if it failed to supply the goods within the agreed time. The liquidated damages were in the nature of an expenditure which the dealer had to incur for its default. This was not a discount as contemplated under Section 2(h) of the Central Sales Tax Act. The damages in the very nature of things are meant to compensate the party for the loss it suffers on account of the default of the supplier. It has no connection with the sale price agreed upon between the parties." In view of the same, we see no reason to interfere with the impugned order of the Tribunal. The question of law is answered against the Revenue and this revision stands dismissed. No costs. Sd/- Asst.Registrar. /true copy/ Sub Asst.Registrar. sasi To 1. The Deputy Commissioner of Commercial Taxes tiruchirappalli division, Tiruchirappalli 2. The Registrar Tamilnadu Sales Tax Appellate Tribunal (Main Bench) Chennai 3. The Appellate assistant Commissioner (CT) Thanjavur 4. The Deputy Commercial Tax Officer, Nagapattinam 1 cc to Special Government Pleader, (Taxes), Sr. 70485 1 cc to Mr.B. Raveendran, Advocate, Sr. 70201 T.C. (Revision) No.1245 of 2006 MSM (CO) kk 14/12 https://hcservices.ecourts.gov.in/hcservices/