2016 (10) TMI 896 - HC - VAT and Sales Tax

Court deems 20-year tax recovery delay unreasonable, sets aside order under VAT Act.

The court found the 20-year delay in initiating tax recovery actions under the Tamil Nadu Value Added Tax Act, 2006 highly unreasonable. The respondent's ... Limitation - revisional jurisdiction under Section 16 of the Tamil Nadu General Sales Tax Act, 1959 - service of assessment order - recovery of tax arrears - reasonableness of delayLimitation - reasonableness of delay - revisional jurisdiction under Section 16 of the Tamil Nadu General Sales Tax Act, 1959 - Impugned demand dated 13.07.2015 for assessment years 1993-94 to 1994-95 is barred by limitation and unsustainable - HELD THAT: - The Court examined the initiation of recovery proceedings approximately 20 years after the assessment years and the absence of a contemporaneous opportunity to the petitioner. Although the respondent relied on revision under the earlier sales tax statute and on purported service of the assessment order, the proceedings initiated after such an extended period were held to be highly unreasonable. The Court noted the authority relied upon by the respondent on revisional power but concluded that, on the facts of this case, the delay of about two decades renders the demand unsustainable in law. Consequently the impugned demand could not be maintained and was set aside. [Paras 6, 7, 8]Writ petition allowed; impugned order set aside as barred by limitation; no costs.Final Conclusion: The High Court allowed the writ petition and set aside the notice of demand dated 13.07.2015 as barred by limitation in respect of assessment years 1993-94 and 1994-95; connected proceedings closed. Issues:Challenge to notice of demand for tax under Tamil Nadu Value Added Tax Act, 2006 for assessment years 1993-94 to 1994-95.1. Validity of the notice issued after 20 years without proper notice or order of assessment.2. Jurisdictional validity of the action taken under Section 16 of the Act after such a long period.Analysis:The petitioner contested a notice of demand dated 13.07.2015, requiring payment of taxes for the assessment years 1993-94 to 1994-95 under the Tamil Nadu Value Added Tax Act, 2006. The challenge was based on two primary grounds. Firstly, the demand was issued after 20 years without any prior notice or assessment order served to the petitioner. Secondly, it was argued that even if the respondent had the authority to revise the assessment under Section 16 of the Act, such action should have been taken within the prescribed time limit, making the current action after 20 years jurisdictionally questionable.In response, the respondent claimed that the final assessment orders were passed on 29.11.1995 and duly served to the Firm's Partner, Mrs. Geetha, on 14.12.1995 via registered post. However, the letter sent to the other Partner, Mr. Rajamanickam, was returned, and the assessment order sent to the Mill premises was not successfully delivered. The respondent relied on postal acknowledgments to support their position, showing delivery to Mrs. Geetha on 14.12.1995.The petitioner disputed the authenticity of the postal acknowledgment, alleging discrepancies in dates and signatures. Upon comparing the signature on the acknowledgment with Mrs. Geetha's admitted signature, the court found discrepancies. Despite the respondent's attempt to enforce the demand based on a revision of assessment under Section 16 of the Tamil Nadu General Sales Tax Act, 1959, the court noted that the proceeding lacked proper opportunity for the petitioner and was time-barred.Citing a Supreme Court case, the court emphasized that the revisional authority must act within a reasonable time frame. In this case, the court found the 20-year delay in initiating recovery actions highly unreasonable and unsustainable in the eyes of the law. Consequently, the court allowed the Writ Petition, set aside the impugned order, and closed the connected Miscellaneous Petition without costs.