2021 (2) TMI 298 - HC - VAT and Sales Tax

Court grants writ, sets aside order, remands to Assessing Officer. Instructions to apply Siemens, Philips, National Time cases.

The court allowed the writ petition, set aside the impugned order, and remanded the matter back to the Assessing Officer to apply the decisions in Siemens ... Refund the additional sales tax collected - Section 55 of TNGST Act - HELD THAT:- It goes without saying that the assessment made on the petitioner by the second respondent requires to be revised by following the law, which has been laid down in the aforesaid mentioned decisions. Therefore, we are of the view that the Tribunal should have exercised its jurisdiction and issued appropriate directions to the Assessing Officer instead of rejecting the application filed by the petitioner under Section 55 of the Act. The impugned order is set aside and the matter is remanded back to the Assessing Officer to apply the aforesaid mentioned decisions and pass fresh orders in accordance with law - Petition allowed by way of remand. Issues Involved:1. Legality of splitting the assessment year for levying additional sales tax.2. Validity of the Tribunal's reliance on the Siemens Ltd. decision.3. Application of Section 55 of the TNGST Act for rectification of assessment.4. Calculation of additional sales tax based on the taxable turnover for the financial year 1996-97.Issue-wise Detailed Analysis:1. Legality of Splitting the Assessment Year for Levying Additional Sales Tax:The petitioner contended that the assessment year should not be split into two parts for levying additional sales tax. They argued that the turnover for the assessment year 1996-97 should be considered as a whole from 01.04.1996 to 31.03.1997. The petitioner claimed that their taxable turnover for the entire year was below Rs. 100 crores, thus, additional sales tax collected for the period from 01.04.1996 to 31.07.1996 was without authority of law under Article 365 of the Constitution of India. The court, referencing the decisions in Siemens Ltd. and Philips India Limited, concluded that the financial year could be bifurcated for applying different rates of additional sales tax due to statutory amendments within the same financial year.2. Validity of the Tribunal's Reliance on the Siemens Ltd. Decision:The Tribunal rejected the petitioner’s application by relying on the Siemens Ltd. decision. The petitioner argued that the Siemens Ltd. decision was accepted by the Government and not appealed in the Supreme Court, thus it should be applied to revise the assessment. The court confirmed that the law on the subject was settled by Siemens Ltd. and further elaborated by Philips India Limited and National Time Co., which clarified that the liability to pay additional sales tax was incurred as per the original provision of Section 2(1)(a) for the period from April 1, 1996, to July 31, 1996.3. Application of Section 55 of the TNGST Act for Rectification of Assessment:The petitioner filed an application under Section 55 of the TNGST Act to revise the assessment and refund the additional sales tax collected. The respondents argued that Section 55 was not applicable as the matter related to the Tamil Nadu Additional Sales Tax Act, 1970. However, the court held that Section 55 of the TNGST Act could be applied for rectification as the Tamil Nadu Additional Sales Tax Act is not a self-contained code and must be read together with the TNGST Act. The court cited the Supreme Court decision in S. Kodar v. State of Tamil Nadu and other relevant cases to support this interpretation.4. Calculation of Additional Sales Tax Based on the Taxable Turnover for the Financial Year 1996-97:The court reviewed the calculation of additional sales tax and found that the Assessing Officer should have considered the taxable turnover for the entire financial year. The court noted that the decision in Siemens Ltd. and subsequent cases established that for the period up to July 31, 1996, the unamended Section 2(1)(a) applied, and for the period from August 1, 1996, the amended Section 2(1)(aa) applied. The court directed the Assessing Officer to revise the assessment by calculating the additional sales tax based on the turnover up to July 31, 1996, and applying the appropriate rates for the respective periods.Conclusion:The court allowed the writ petition, set aside the impugned order, and remanded the matter back to the Assessing Officer to apply the decisions in Siemens Ltd., Philips India Limited, and National Time Co. The Assessing Officer was instructed to pass fresh orders in accordance with the law within eight weeks, after affording an opportunity of personal hearing to the petitioner.