2021 (10) TMI 1418 - HC - VAT and Sales Tax

Assessment Order Invalidated for Exceeding Six-Year Limit Under Section 27(1)(a) of TNVAT Act

The court held that the revised assessment order dated 30.03.2021 was invalid as it exceeded the six-year limitation period under Section 27(1)(a) of the ... Validity of impugned revised assessment under Section 27 of the TNVAT Act - barred by time limitation or not - HELD THAT:- Here in the case in hand, admittedly, return has been filed by the petitioner/dealer on and before 31st October 2013, since it is a succeeding year for the assessment year 2012-2013. Since, no notice has been issued on the alleged reason that the return has not been filed in the prescribed form by the petitioner/dealer and 31st day of October 2013, also passed, on such date, the deeming provision has to be given effect to and accordingly, the petitioner has to be treated as deemed assessee for the year 2012-2013. Once the dealer is assessed under the deeming provision and under Sub Section 2 of Section 22 of the TNVAT Act, then, whether there can be any scope for the Assessing Authority to once again reassess it by invoking the Sub Section 4 of Section 22 of the TNVAT Act itself is a question - Once the deeming assessment is made, that can be treated as an assessment, but before the deeming assessment is made or accepted, Section 22(4) of the TNVAT Act can very well be invoked and in that case the dealer can be assessed to the best of its judgment by the Assessing Officer and if anything is done under Section 22(4) of the TNVAT Act before 31st October of the succeeding year of the concerned assessment year, then the re-assessment order or the assessment order made under Section 22(4) of the TNVAT Act can be treated as assessment within the meaning of Section 2 (4-A) of the TNVAT Act and the limitation of six years under Section 27 (1) (a) of the TNVAT Act can also start from that assessment. Once a deeming provision comes into effect, for every assessment year, 31st October of the succeeding year is to be taken as a date where deeming provision comes into effect and every such return filed by the assessee within the time should be treated as a deemed assessment - before the expiry of the deeming assessment period, the revenue wanted to invoke the best judgment theory by invoking Section 22(4) of the TNVAT Act that would be possible for the revenue. However, once the deeming assessment is completed at the end of 31st October of the succeeding year, then that date shall be construed as an assessment date for the purpose of taking the limitation of six years for invoking the proceedings of revised assessment under Section 27 (1) (a) of the TNVAT Act. This Court has no hesitation to hold that the impugned assessment order is unsustainable and accordingly it is liable to be interfered with - Petition allowed. Issues Involved:1. Validity of the revised assessment order under Section 27 of the TNVAT Act.2. Limitation period for invoking Section 27 of the TNVAT Act.3. Interpretation of 'assessment' under Section 2(4-A) of the TNVAT Act.4. Applicability of the deeming provision under Section 22(2) of the TNVAT Act.Detailed Analysis:1. Validity of the revised assessment order under Section 27 of the TNVAT Act:The petitioner challenged the revised assessment order dated 30.03.2021 issued under Section 27 of the TNVAT Act, arguing that it was barred by limitation. The petitioner had ceased business activities and canceled the registration under the TNVAT Act on 01.06.2016. Despite this, the respondent issued a show-cause notice on 22.02.2021 for revising the tax assessment for the year 2012-2013. The petitioner contended that the revised assessment was beyond the permissible six-year period from the date of the original assessment.2. Limitation period for invoking Section 27 of the TNVAT Act:The petitioner argued that the limitation period for invoking Section 27(1)(a) of the TNVAT Act should commence from 31st October 2013, as the assessment year in question was 2012-2013. According to Section 22(2) of the TNVAT Act, the return filed by the petitioner was deemed to have been accepted by 31st October 2013. Therefore, the six-year limitation period would end by 31st October 2019. The show-cause notice issued on 22.02.2021 was beyond this period, rendering the revised assessment invalid.3. Interpretation of 'assessment' under Section 2(4-A) of the TNVAT Act:The respondent contended that the term 'assessment' under Section 2(4-A) of the TNVAT Act includes reassessment or revision of assessment. They argued that the reassessment made on 30.09.2016 should be considered the starting point for the limitation period. Therefore, the notice issued on 22.02.2021 was within the permissible period. The respondent relied on Supreme Court decisions to support their argument that the limitation period should commence from the date of reassessment, not the original assessment date.4. Applicability of the deeming provision under Section 22(2) of the TNVAT Act:The court analyzed the deeming provision under Section 22(2) of the TNVAT Act, which states that a dealer is deemed to have been assessed if the returns are filed in the prescribed form and accompanied by the necessary documents and proof of tax payment. The court emphasized that the intention of the legislature was to close the chapter by giving a deeming provision, making the assessment final on the 31st day of October of the succeeding year. The court concluded that once the dealer is deemed to have been assessed, the question of reassessment does not arise. The limitation period for invoking Section 27(1)(a) should start from the date of the deemed assessment, i.e., 31st October 2013.Conclusion:The court held that the revised assessment order issued on 30.03.2021 was unsustainable as it was beyond the six-year limitation period prescribed under Section 27(1)(a) of the TNVAT Act. The court set aside the impugned assessment order and allowed the writ petition, concluding that the show-cause notice issued on 22.02.2021 was invalid due to the expiry of the limitation period.