Annual VAT assessment cannot be finalised before audit report time expires; provisional assessment after year-end was unsustainable.

A provisional assessment for only part of an assessment year could not be sustained after the year had ended where the statute contemplated a complete annual assessment. The Madras HC noted that the authority had to make a final assessment after hearing the assessee rather than keep the matter provisional. It also held that, where the dealer's turnover crossed the statutory threshold and the time for filing the audit report under the Tamil Nadu VAT law had not expired, the assessing authority was bound to await that report before finalising assessment. The impugned assessment was quashed, leaving completion of assessment open after the audit report was filed and considered in accordance with law.

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Issues: (i) Whether a provisional assessment for part of the assessment year could be sustained after the year had ended. (ii) Whether the assessing authority was bound to await the audit report required under the VAT law before completing assessment.

Issue (i): Whether a provisional assessment for part of the assessment year could be sustained after the year had ended.

Analysis: The assessment related only to a part of the year, while the relevant assessment year had already concluded. In such a situation, the assessment authority was not entitled to proceed on a provisional basis when the statute contemplated completion of assessment for the whole year. The earlier binding view relied upon in the judgment treated a post-year provisional assessment as unsustainable and permitted the authority to make a final assessment after hearing the assessee.

Conclusion: The provisional assessment for part of the year could not be sustained and was liable to be set aside.

Issue (ii): Whether the assessing authority was bound to await the audit report required under the VAT law before completing assessment.

Analysis: Where the dealer's turnover exceeded the statutory threshold, Section 63A of the Tamil Nadu Value Added Tax Act, 2006 required submission of an audited report within the prescribed time, and Rule 16-A(1) of the Tamil Nadu Value Added Tax Rules, 2007 allowed filing within nine months from the end of the year. Because the time for filing the audit report had not yet expired, the assessing authority was required to wait for that report before finalising the assessment.

Conclusion: The assessing authority was bound to await the audit report before passing the final assessment order.

Final Conclusion: The impugned assessment was quashed, and the matter was left open for completion of assessment after the audit report was filed and considered in accordance with law.

Ratio Decidendi: A provisional assessment cannot be maintained after the close of the assessment year where the statute provides a prescribed period for furnishing the audit report needed for completing the annual assessment.

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