2014 (11) TMI 1028 - HC - VAT and Sales Tax

High Court overturns VAT application rejection under Section 84, emphasizes document review.

M/s. Sujana Towers Limited Versus The Assistant Commissioner (CT),

The High Court allowed the Writ Petition challenging the rejection of the application under Section 84 of the Tamil Nadu Value Added Tax Act. The Court ... Procedure of raising demand of VAT on unreported sale - re-assessment or rectification of any error apparent on the face of the record. - As per the SCN, it is seen that the petitioner has effected sale of assets during the year 2010-2011 and they have not produced any proof for having reported the said sales and paid tax to the Department. Therefore, it was proposed to levy tax at 4% on the sale value. Apart from that, there was a proposal to impose penalty under Sections 27 and 28 of the Act at 150%. - The respondent stated that Section 84 of the Act can be invoked only for the error apparent on the face of the record viz., Clerical errors and Arithmetical mistakes etc. But it cannot be invoked for considering the records filed after the assessment notice. The said notice is challenged in this writ petition. - Tamil Nadu Value Added Tax Act (TNVAT) Held that:- the observation in the impugned notice, that Section 84 cannot be invoked for considering the records filed after the assessment is over, is an incorrect observation, since the records were never called for and those records were anterior to the Pre-Assessment Notice and the transaction is said to have been disclosed in the balance sheet which was produced by the petitioner along with the reply dated 14.05.2014. Hence, this Court is satisfied that the respondent should exercise its jurisdiction under Section 84 of the Act. Writ Petition is allowed and the impugned order is quashed and the matter is remanded to the respondent for fresh consideration to take into consideration the documents produced by the petitioner along with the petition filed under Section 84 of the Act, after affording an opportunity of personal hearing to the petitioner and pass a reasoned order on merits and in accordance with law. - Decided in favor of assessee. Issues:Challenge to rejection of application under Section 84 of the Tamil Nadu Value Added Tax Act.Analysis:The petitioner, a registered dealer under the Tamil Nadu Value Added Tax Act, challenged the rejection of their application under Section 84 of the Act through a Writ Petition. The petitioner, a Public Limited Company engaged in trading activities of iron and steel, faced a notice proposing to revise an earlier assessment due to alleged discrepancies in reporting sales of assets. The petitioner contended that the balance sheet inspected was a consolidated statement for all subsidiary companies, not specific to the Chennai Branch. Despite providing explanations and supporting documents, the respondent issued an assessment order demanding tax and penalty.The respondent, in defense, argued that Section 84 of the Act could only rectify errors apparent on the face of the record, excluding post-assessment submissions. However, the High Court analyzed Section 84 and emphasized that it allows rectification of any error on the face of the record, not limited to arithmetical or clerical errors. The Court noted that the assessment order was based on a new premise not raised in the pre-revision notice, rejecting the petitioner's contentions for not providing specific documents not previously requested.The Court found that the respondent's rejection of the petitioner's claim based on missing documents not called for during the process was an error apparent on the face of the assessment order. The documents provided by the petitioner were not new but supported their assertion that the transactions were related to the Head Office in Hyderabad, as disclosed in the balance sheet submitted earlier. Consequently, the Court allowed the Writ Petition, quashed the impugned order, and remanded the matter to the respondent for fresh consideration, emphasizing the importance of considering the documents submitted by the petitioner under Section 84, after granting a personal hearing and passing a reasoned order in accordance with the law.