2009 (2) TMI 787 - HC - VAT and Sales Tax

Court rules against assessing authority's demand for entry tax after 7 years due to absence of legal provision.

Sri Balakrishna Transport Versus Commercial Tax Officer, Tambaram I Assessment Circle, Chennai

Sri Balakrishna Transport Versus Commercial Tax Officer, Tambaram I Assessment Circle, Chennai - [2010] 28 VST 356 (Mad) Issues:Challenge to order directing payment of entry tax under Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990 after a lapse of seven years; Interpretation of provisions of the Act regarding assessment and liability to pay tax; Justification of assessment order by the assessing authority; Legal obligation to file return under the Act; Applicability of Supreme Court judgment clarifying definition of 'motor vehicle'; Assessment authority's power to assess importer for failure to furnish return; Statutory limitations for assessment and reassessment; Interpretation of plain and unambiguous taxation statutes; Authority to levy tax on importer who failed to file returns; Consideration of penalty under the Act.Analysis:The judgment pertains to an appeal challenging an order directing payment of entry tax under the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990 after a considerable period of seven years. The appellant, a firm, imported an Escort JCB excavator in 1995, which was not liable for registration under the Motor Vehicles Act at that time. The assessing authority issued a notice in 2001, followed by an assessment order in 2002, imposing entry tax and penalty. The appellant contested the levy, citing absence of legal obligation to register the vehicle and file returns at the time of import.The learned single judge opined that the appellant was not required to register the vehicle in 1995, and only after a Supreme Court judgment in 2001 did the necessity for registration arise. However, the appellant was directed to pay tax as per the assessment order, leading to the present appeal. The appellant argued that the Act lacked provisions for assessing an importer for failure to submit a return, emphasizing no liability existed at the time of import due to the vehicle not meeting registration criteria.The Special Government Pleader defended the assessment order, citing Rule 12 of the Entry Tax Rules permitting information gathering for assessments. The Act aimed to prevent sales tax evasion on vehicles brought into Tamil Nadu. The Act defined 'motor vehicle' in alignment with the Motor Vehicles Act, 1988, and mandated tax on vehicles liable for registration in the state. Sections 7, 7A, and 8 outlined filing returns, assessment procedures, and limitations for assessments and reassessments.The judgment highlighted the significance of the Supreme Court's clarification on the definition of 'motor vehicle' in 2001, post which the assessing authority issued the notice and assessment order. The absence of a specific provision in the Act for assessing importers failing to file returns constrained the authority's power to assess post-import based on subsequent clarifications. The judgment stressed interpreting plain taxation statutes without adding provisions not explicitly stated.Ultimately, the Court held the assessing authority unjustified in demanding entry tax from the appellant, emphasizing the absence of legal provision enabling assessment for failure to file returns. The Court referenced a Supreme Court case on reasonable exercise of jurisdiction in the absence of prescribed limitations for reassessment. As the penalty was set aside by the single judge and not appealed, the Court deemed it impermissible for the respondent to collect penalty, allowing the writ appeal and setting aside the payment directive.