1995 (7) TMI 380 - HC - VAT and Sales Tax

Court rules Deputy Commissioner's reassessment time-barred, upholds Tribunal's decision.

State of Tamil Nadu Versus MM Mohideen Thamby & Co.

The High Court upheld the Tribunal's decision to set aside reassessment and penalty proceedings, ruling that the Deputy Commissioner's direction to reopen ... - Issues involved: Assessment based on original assessment, exercise of suo motu power u/s 32 of Tamil Nadu General Sales Tax Act, jurisdiction of Deputy Commissioner to enhance turnover, penalty proceedings initiation, revision barred by limitation.Assessment based on original assessment: The assessing officer initially considered a sum of Rs. 2,31,237.83 for the assessment year 1976-77, which was the only amount included in the assessment order.Exercise of suo motu power u/s 32 of Tamil Nadu General Sales Tax Act: The Deputy Commissioner, under section 32, found that the exemption allowed on Rs. 2,31,237.83 by the assessing officer was incorrect and brought a turnover of Rs. 4,00,012 for assessment related to local purchases of raw hides and skins within Tamil Nadu.Jurisdiction of Deputy Commissioner to enhance turnover: The assessee contended that the revision was time-barred and that the Deputy Commissioner had no jurisdiction to enhance the turnover of Rs. 4,00,012, which was not considered during the original assessment.Penalty proceedings initiation: Penalty proceedings of Rs. 12,000 were initiated, which the Tribunal later held that the assessing officer had no authority to initiate.Revision barred by limitation: The Tribunal determined that the revision was within the prescribed period of limitation under the amended section 32 of the Act, rejecting the plea of the assessee that it was time-barred.The High Court, after hearing arguments from both sides, upheld the Tribunal's decision to set aside the reassessment proceedings and penalty proceedings. The Court emphasized that the Deputy Commissioner's direction to reopen the assessment was barred by limitation as per section 16(1)(a) of the Act, which allows for a period of five years from the expiry of the relevant year for assessing escaped turnover. Since the notice issued for reopening fell outside this period, the reassessment including the turnover of Rs. 4,00,012 was deemed improper. Citing precedent, the Court affirmed that the period of limitation under section 16(1) applies to all cases where statutory functionaries assess escaped turnover. Consequently, the Court dismissed the revision, with no costs imposed.