2024 (1) TMI 510 - HC - VAT and Sales Tax

Assessment orders under Tamil Nadu Entry Tax Act valid despite limitation challenges under Section 16(5)

M/s. IFB Industries Ltd, Rep. By its Authroised Signatory Mr. Yaganti Venkata Narayana Versus The Assistant Commissioner (ST), The State of Tamil Nadu, Rep. By its Secretary to Government, Chennai

M/s. IFB Industries Ltd, Rep. By its Authroised Signatory Mr. Yaganti Venkata Narayana Versus The Assistant Commissioner (ST), The State of Tamil Nadu, ... Issues Involved:1. Whether the impugned assessment orders are barred by limitation.2. Applicability of exemption under the TNGST Act to the Entry Tax Act.3. Relevance of Revenue Neutrality principle.4. Legality of the assessment orders under the Entry Tax Act.Summary:1. Limitation Issue:The petitioner contended that the assessment orders for the years 2003-04 to 2006-07 were barred by limitation, as the notices were issued beyond the six-year period stipulated by Section 16 of the TNGST Act, which applies to the Entry Tax Act by virtue of Section 10. The court examined whether the period during which the validity of the Entry Tax Act was challenged before the Supreme Court should be excluded. It was held that the time spent in litigation regarding the validity of the Entry Tax Act must be excluded under Section 16(5) of the TNGST Act, making the assessments within a reasonable period.2. Exemption Applicability:The court found that the exemption under the TNGST Act for sales to CSD does not automatically extend to the Entry Tax Act. The impugned orders correctly stated that the exemption under the TNGST Act does not apply to the Entry Tax Act in the absence of a specific exemption.3. Revenue Neutrality:The petitioner argued that the entire exercise was revenue neutral, as any Entry Tax paid would be set off against the liability under the TNGST Act. The court acknowledged the principle of Revenue Neutrality and referenced the Supreme Court's judgment in Associated Cement Companies, which held that the entitlement to set-off under the Entry Tax Act depends on the liability under the General Sales Tax Act, not on the actual payment of taxes. The court remitted the matter back to the Assessing Authority to reconsider the assessments in light of the principles of Revenue Neutrality.4. Legality of Assessment Orders:The court examined whether the assessments were original assessments or reassessments of escaped turnover. It was concluded that if the impugned orders were treated as original assessments, they must be made within a reasonable period, which, considering the exclusion of the litigation period, was met. If treated as reassessments, they were within the limitation period under Section 16 of the TNGST Act.Conclusion:The court remitted the matters back to the Assessing Authority for reconsideration, emphasizing the principles laid down in the Associated Cement Companies case and the relevance of Revenue Neutrality. The writ petitions were disposed of, and the connected miscellaneous petitions were closed.