Advance tax demand invalid where returns were filed and disputed liability required assessment before recovery.

A notice demanding advance tax under Section 26 of the Chhattisgarh Value Added Tax Act, 2005 could not be sustained where the assessees had already filed returns, including nil returns, because the statutory condition of failure to furnish a return was not met. Since the tax liability was disputed and the exemption had been withdrawn only shortly before the notice, the department was required to complete proper assessment and determination before raising a demand. Direct recovery action without following the assessment process was therefore impermissible, and the notice and consequential recovery proceeding were invalid.

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Issues: Whether the notice demanding advance tax and the consequential recovery proceeding could be sustained under Section 26 of the Chhattisgarh Value Added Tax Act, 2005 when the returns had been filed and the liability was disputed.

Analysis: The admitted position was that the petitioners had filed their returns, including nil returns, and therefore the statutory condition of failure to furnish a return was not satisfied. The exemption had been withdrawn only shortly before the notice was issued, so the dispute as to tax liability required proper assessment and determination before any demand could be raised. In disputed cases, the department could not bypass the assessment process and proceed directly with a demand notice or recovery action.

Conclusion: The notice demanding advance tax was not validly issued under Section 26, and the consequential recovery action could not stand.

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