2021 (5) TMI 924 - HC - VAT and Sales Tax

Court rules in favor of work contractors, setting aside assessment orders under TNVAT Act.

The Court set aside the impugned orders in all Writ Petitions, ruling in favor of the petitioners, registered work contractors. The Court held that the ... Revision of assessment order - principles of natural justice - Levy of purchase grievance of the petitioner is that the second respondent passed the impugned Revision of Assessment order even without any new/fresh facts, de hors the records and on mere change of opinion - Section 22(2) of the TNVAT Act - HELD THAT:- The issues involved in these present writ petitions are squarely covered by the order of this Court in batch of Writ Petitions in M. RAVICHANDRAN, N. SENTHILKUMAR, P. DHASARATHAN, B. SUBRAMANIAN, R. RAJAGOPAL VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, STATE TAX OFFICER [2018 (12) TMI 1885 - MADRAS HIGH COURT] where it was held that It has been consistently held that the reopening of assessment by change of opinion is impermissible. Petition allowed. Issues:1. Quashing of impugned proceedings of the second respondent under TNVAT Act.2. Revision of assessment order under Section 27 of the TNVAT Act.3. Legality of penalty imposition under Section 22(5) and Section 27(3) of the TNVAT Act.4. Reopening of assessment by change of opinion.5. Validity of reassessment proceedings initiated following objections of internal audit.6. Levy of purchase tax on works contractors under Section 12 of the TNVAT Act.7. Deemed sales transactions and tax implications.Analysis:1. The petitioners, registered work contractors, filed Writ Petitions to quash the impugned proceedings of the second respondent under the TNVAT Act. They contested that the revision of assessment order under Section 27 was done without new facts, de hors the records, and on mere change of opinion, contrary to the TNVAT Act provisions.2. The learned counsel for the petitioners cited a similar order of the Court in a batch of Writ Petitions and urged to quash the impugned orders. The Special Government Pleader for the respondents argued that the impugned orders were passed after scrutiny of assessment files and relevant records, justifying no interference.3. The Court referred to previous judgments regarding penalty imposition under Section 22(5) and Section 27(3) of the TNVAT Act, emphasizing that penalties should form part of the assessment order and not be imposed separately. The Court set aside the penalty orders imposed separately, following established legal principles.4. It was noted that the impugned exercise of reassessment was not based on new material but on a change of opinion, which is impermissible as per legal precedents. The Court cited relevant case laws and reiterated that reopening of assessment solely based on a change of opinion is not allowed.5. The initiation of reassessment proceedings following objections from internal audit was scrutinized. The Court highlighted that reassessment cannot be solely based on a change of opinion at a subsequent stage, as established in legal precedents.6. The Court delved into the levy of purchase tax on works contractors under Section 12 of the TNVAT Act, referencing relevant case laws to determine the tax implications of deemed sales transactions. It was concluded that the petitioners, already taxed on a specific count, cannot be additionally burdened with purchase tax, leading to setting aside of the impugned orders.7. Considering the comprehensive analysis and legal principles discussed in previous judgments, the Court set aside the impugned orders in all Writ Petitions, allowing the petitions and closing the connected miscellaneous petitions without costs.