Court Overturns Assessment Orders, Emphasizes Factual Verification for "Invisible Loss" Percentage

The court set aside the assessment orders challenged by the petitioner, a registered dealer under the Tamil Nadu Value Added Tax Act. It emphasized the need for factual verification in determining the "invisible loss" percentage and directed a fresh assessment with factory inspection. The court clarified that the pendency of appeals did not affect the validity of previous decisions, ordering a re-assessment in accordance with the law. The impugned orders were overturned, and the matters were remitted for fair consideration, ensuring compliance with legal provisions without awarding costs.

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Issues:
1. Calculation of invisible loss percentage by the assessing authority.
2. Interpretation and application of Section 19(2)(5) of the Tamil Nadu Value Added Tax Act, 2006.

Analysis:

1. Invisible Loss Percentage Calculation:
The petitioner, a registered dealer under the Tamil Nadu Value Added Tax Act, challenged the assessment orders for various assessment years. The primary issue was the correctness of the percentage of loss of materials, known as "invisible loss," as computed by the assessing authority. The court referred to a previous case, Interfit Techno Products Ltd. Vs. Principal Secretary/Commissioner of Commercial Taxes, where it was held that dealers must establish that certain circumstances specified in the law were not present in their manufacturing process. The court emphasized that adopting a uniform percentage for invisible loss without factual verification was unjustified. The court directed a fresh assessment with an inspection of the factory and consideration of the dealer's objections to determine the actual loss accurately.

2. Interpretation of Section 19(2)(5) of the Act:
Regarding the effect of Section 19(2)(5) of the Act, the respondent mentioned pending writ appeals challenging a previous decision in Everest Industries Limited Vs. State of Tamil Nadu. However, the court noted that the mere pendency of appeals did not stay the previous decision's orders. Therefore, the court directed a re-assessment in accordance with the existing law, emphasizing that the pendency of appeals did not affect the validity of the previous decision. Consequently, the impugned orders were set aside, and the matters were remitted back to the respondent for fresh consideration, allowing the petitioner to submit additional objections and ensuring a fair assessment process in compliance with the law.

In conclusion, the court allowed the writ petitions, set aside the impugned orders, and directed a re-assessment based on factual verification and compliance with the legal provisions. No costs were awarded, and the connected miscellaneous petitions were closed.

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