2020 (1) TMI 892 - HC - VAT and Sales Tax

Court Invalidates Tax Assessments Due to Procedural Errors, Emphasizes Compliance with Statutory Requirements

Shri Pankaj Behari Saha Versus The State of Tripura, The Principal Secretary, Finance Department, Government of Tripura,

The court found that the notice issued under Section 27(2) of the TVAT Act was without jurisdiction as no prior notice under Section 24 was issued, ... Validity of assessment order - time limitation - notices for audit assessments in relation to such returns were issued, however, no final orders of assessment were passed before the period of limitation prescribed under the Act - HELD THAT:- The provisions contained in Section 27 of the TVAT Act are vastly different from the provisions for self-assessment under Section 29, provisional assessment under Section 30 and most significantly, the audit assessment under Section 31 of the TVAT Act - The special powers can be exercised only in relation to a dealer to whom notice has been issued by the Commissioner under Section 24 of the Act. Section 24 refers to issuance of notice only under sub-section (2) of the Act. Necessarily, therefore, unless and until such notice is issued in terms of sub-section (2) of Section 24 of the TVAT Act, the TVAT authorities cannot invoke the powers under Section 27 of the TVAT Act. Any other view would defeat the very scheme of the said Chapter providing for audit assessment and limitation for completing in such assessment as provided under Section 33 of the Act. The respondent authorities cannot be allowed to circumvent the limitation provision for completing audit assessment by permitting resort to the powers of summary adjustments under Section 27 which are peculiar in nature and are available only in case where notice under sub-section (2) of Section 24 of the Act has been issued to a dealer. The impugned orders under Section 27 of the TVAT Act are set aside - petition allowed. Issues Involved:1. Jurisdiction and validity of the notice issued under Section 27(2) of the Tripura Value Added Tax Act, 2004 (TVAT Act).2. Time-barred assessments and limitations under the TVAT Act.3. Procedural requirements and compliance under Sections 24 and 27 of the TVAT Act.Detailed Analysis:Jurisdiction and Validity of Notice under Section 27(2) of the TVAT Act:The petitioner contended that the notice issued by the Superintendent of Taxes under Section 27(2) of the TVAT Act was without jurisdiction. The petitioner argued that the assessments for the years 2010-11 to 2012-13 had become time-barred, and no notice under Section 24 of the TVAT Act was issued, which is a prerequisite for invoking Section 27(2). The court analyzed Section 27, which pertains to the scrutiny of returns, and emphasized that this provision is not for full assessment but for verifying the correctness of the return details. The court concluded that the special powers under Section 27 can only be exercised in relation to a dealer to whom a notice has been issued by the Commissioner under Section 24(2). Since no such notice was issued, the invocation of Section 27 was deemed improper and without jurisdiction.Time-Barred Assessments and Limitations:The petitioner highlighted that the assessments for the relevant years were not completed within the prescribed time limit, making them time-barred. The court referred to Section 33 of the TVAT Act, which stipulates that no assessment under Sections 31 and 32 shall be made after the expiry of five years from the end of the tax period. The court noted that the respondent authorities attempted to circumvent this limitation by resorting to Section 27, which was not permissible. The court invalidated the assessments and any consequent demand notices as they were issued beyond the statutory time limit.Procedural Requirements and Compliance under Sections 24 and 27:The court examined the procedural requirements under Sections 24 and 27 of the TVAT Act. Section 24 mandates every registered dealer to furnish returns in the prescribed form and manner. Section 27 allows for the scrutiny of returns to verify the correctness of calculations and tax payments. However, the court clarified that Section 27 can only be invoked if a notice under Section 24(2) has been issued, which pertains to cases where the Commissioner has reason to believe that the turnover of sales of a dealer has exceeded the taxable limit. The court found that the respondent authorities did not issue such a notice, thereby failing to comply with the procedural requirements. Consequently, the actions taken under Section 27 were invalidated.Conclusion:The court set aside the impugned orders issued under Section 27 of the TVAT Act and invalidated any demand notices consequent to such orders. The petitions were disposed of accordingly, emphasizing the necessity of adhering to the procedural and jurisdictional requirements under the TVAT Act. The court's judgment reinforces the importance of following statutory provisions and limitations in tax assessments.