2020 (8) TMI 572 - HC - VAT and Sales Tax

Court invalidates tax assessments, orders reassessment with proper reasoning. Clarification on VAT Act application.

FAABER PAINTS PVT. LTD. Versus ASSISTANT COMMISSIONER (CT), SRIPERUMBUDUR ASSESSMENT CIRCLE, VARADARAJAPURAM AND ANOTHER

FAABER PAINTS PVT. LTD. Versus ASSISTANT COMMISSIONER (CT), SRIPERUMBUDUR ASSESSMENT CIRCLE, VARADARAJAPURAM AND ANOTHER - [2020] 77 G S.T.R. 416 (Mad) Issues:Challenging assessment orders from 2006-07 to 2010-11; Proper application of mind by assessing officer; Consideration of objections; Remittance of matters back to assessing authority; Interpretation of section 18(1) of the Tamil Nadu Value Added Tax Act, 2006.Analysis:The petitioner challenged the assessment orders passed by the first respondent for the years 2006-07 to 2010-11. The petitioner argued that the assessing officer did not properly consider the documentary evidence but relied on statements from enforcement officials. Citing the decision in Amutha Metals v. Commercial Tax Officer, the petitioner contended that the assessing officer failed to apply his mind independently. The court agreed that the assessment orders were passed without due consideration of objections and solely based on enforcement officials' proposals. Therefore, the court set aside the assessment orders and directed the assessing officer to reconsider the objections raised by the petitioner with proper reasoning and in accordance with the law.In a related matter, a Division Bench judgment in a different case clarified the application of section 18(1) of the Tamil Nadu Value Added Tax Act, 2006. The court held that the sale of goods to a company in a special economic zone, followed by 100% export, attracts section 18(1) as per section 5(3) of the Central Sales Tax Act, 1956. This interpretation led to the quashing of an order that misapplied the provisions of section 18. The court dismissed the appeal, upholding the earlier judgment based on the specific facts and legal provisions involved.Despite the detailed counter-affidavit filed by the first respondent justifying the assessment orders, the Government Advocate did not contest the petitioner's submissions. Considering the arguments, relevant case law, and the necessity for a proper assessment process, the court decided to set aside the assessment orders and remit the matters back to the first respondent. The petitioner was directed to submit necessary objections with supporting evidence within two weeks, after which the first respondent would reevaluate and pass appropriate orders within three weeks, ensuring a fair opportunity for the petitioner to be heard.In conclusion, the court set aside the assessment orders for the specified years and instructed a fresh assessment process, emphasizing the importance of proper consideration of objections and adherence to legal requirements. The judgment highlights the significance of independent assessment by the officer and the need for a thorough and lawful evaluation of objections raised by taxpayers in tax assessment proceedings.