2016 (9) TMI 664 - HC - VAT and Sales Tax

Assessment order challenge dismissed, petitioner granted reassessment opportunity.

The court dismissed the plea that the assessment order was barred by limitation under section 16 of the TNGST Act for the year 1997-98. The petitioner was ... Limitation for assessment under Section 16(1)(a) of the TNGST Act - best judgment assessment - exclusion of period during pendency of appeal or proceedings under Section 16(6) of the TNGST Act - commencement of assessment proceedings versus investigation by issuance of summons for books - opportunity to produce books, documents and to re do assessment on receipt of objectionsLimitation for assessment under Section 16(1)(a) of the TNGST Act - exclusion of period during pendency of appeal or proceedings under Section 16(6) of the TNGST Act - commencement of assessment proceedings versus investigation by issuance of summons for books - Whether the impugned best judgment assessment for the year 1997-98 was barred by limitation - HELD THAT: - The Court examined the chronology: an original assessment order dated 10.03.2000 was followed by an appeal to the Appellate Authority (rejected as time barred) and an original petition before the Special Tribunal which was allowed by order dated 23.12.2002. Sub section (6) of Section 16 mandates exclusion of the period during which appeals or proceedings before the Appellate Authority or Special Tribunal are pending when computing limitation for assessment or reassessment. Applying that exclusion, the period between the original assessment order and the Tribunal's order is to be excluded. The issuing of summons for production of books (27.01.2003 and 12.03.2003) prior to 31.03.2003 and related pre assessment activity was considered in context; the Court held that proceedings had been validly commenced within the period and, on applying the exclusion, the best judgment notice dated 10.02.2004 could not be impugned as time barred. The petitioner's objection that the assessment was beyond the five year cut off was therefore rejected. [Paras 6]The assessment is not barred by limitation; the plea of limitation is rejected.Best judgment assessment - opportunity to produce books, documents and to re do assessment on receipt of objections - Whether the best judgment assessment was completed in a proper manner and what remedial course should follow - HELD THAT: - The Court found that the assessee did not cooperate in the assessment proceedings, having failed to produce books of accounts and not responding to the best judgment notice. Noting the petitioner's claim that purchases were from registered dealers and that supporting documents exist, the Court declined to quash the assessment outright. Instead, the Court granted the petitioner liberty to treat the assessment order as a show cause notice and to submit objections within two weeks of receiving the copy of the order. On receipt of objections and production of documents and books, the assessing authority is directed to afford an opportunity of hearing, peruse the materials, and re do the assessment in accordance with law, thereby permitting fresh consideration of the matter on merits. [Paras 9]Liberty granted to the petitioner to file objections and produce books; respondent directed to afford opportunity, consider documents and re do the assessment in accordance with law.Final Conclusion: Writ petition disposed: the challenge that the best judgment assessment for 1997-98 is time barred is rejected; petitioner granted two weeks to submit objections and produce books, and the assessing authority directed to afford opportunity and re do the assessment in accordance with law. Issues Involved:Challenge to assessment order under TNGST Act for the year 1997-98 based on best judgment, Barred by limitation under section 16 of TNGST Act, Proper manner of passing the assessment order.Analysis:Issue 1: Challenge to assessment order under TNGST Act for the year 1997-98 based on best judgmentThe petitioner challenged the assessment order passed under the Tamil Nadu General Sales Tax Act, 1959 for the year 1997-98, conducted on a best judgment basis. The petitioner failed to produce the books of accounts despite summons, leading to the completion of the assessment resulting in the impugned order. The petitioner contended that the assessment proceedings were time-barred under section 16(1)(a) of the TNGST Act. Legal precedents were cited to support the argument that the assessment notice issued after the cut-off date was barred by limitation.Issue 2: Barred by limitation under section 16 of TNGST ActThe respondent argued that the proceedings were initiated before the cut-off date, and the issuance of summons prior to the end of the limitation period validated the assessment process. A distinction was made between the investigation of facts and the initiation of proceedings based on the discovery of facts. The court analyzed the timeline of events, including previous assessment orders, appeals, and tribunal decisions, to determine the validity of the assessment within the limitation period.Issue 3: Proper manner of passing the assessment orderThe court noted the lack of cooperation from the petitioner during the assessment proceedings, including non-submission of objections and failure to produce necessary documents. The petitioner sought an opportunity to demonstrate purchases from registered dealers with available documents. The court, while rejecting the limitation argument, granted liberty to the petitioner to treat the proceedings as a show cause notice. The petitioner was given a chance to submit objections and present relevant documents for a reassessment by the respondent in accordance with the law.In conclusion, the court dismissed the plea that the assessment order was barred by limitation, allowing the petitioner to present objections and evidence for a reassessment. The writ petition was disposed of with instructions for the respondent to re-do the assessment after considering the petitioner's submissions.