Limitation under TNVAT and natural justice in mismatch-based assessments led to quashing and remand for fresh consideration.

The six-year limitation under Section 27(1) of the Tamil Nadu Value Added Tax Act, 2006 applies even to proceedings arising from incomplete or incorrect returns under Section 22(4), and assessment orders issued beyond that period were quashed as time-barred. For the later assessment years, the High Court found that mismatch-based demands were raised without a meaningful opportunity to furnish documents or contest the case, particularly as the revision notices preceded the Covid-19 disruption and the assessee had not participated. Those assessment orders were quashed and the matters remitted for fresh consideration after reply and personal hearing.

---

---

Issues: (i) Whether the assessment orders for assessment years 2011-2012 and 2012-2013 were barred by limitation in the context of deemed assessment and proceedings under the incomplete-return provision; (ii) whether the assessment orders for assessment years 2013-2014, 2014-2015 and 2015-2016 were liable to be set aside for breach of natural justice and remitted for reconsideration.

Issue (i): Whether the assessment orders for assessment years 2011-2012 and 2012-2013 were barred by limitation in the context of deemed assessment and proceedings under the incomplete-return provision.

Analysis: Deemed assessment under Section 22(2) of the Tamil Nadu Value Added Tax Act, 2006 arises only when the prescribed return, documents and proof of tax payment are duly furnished. Where a return is incomplete or incorrect, Section 22(4) applies. The limitation question was answered by applying the six-year period under Section 27(1) of the Tamil Nadu Value Added Tax Act, 2006 even to proceedings under Section 22(4). On that basis, the assessment orders for both years were found to have been issued after expiry of limitation.

Conclusion: The assessment orders for assessment years 2011-2012 and 2012-2013 were held to be barred by limitation and quashed.

Issue (ii): Whether the assessment orders for assessment years 2013-2014, 2014-2015 and 2015-2016 were liable to be set aside for breach of natural justice and remitted for reconsideration.

Analysis: The revision notices were issued just before the onset of the Covid-19 pandemic, the petitioner had not participated in the proceedings, and the demand was largely based on mismatch data. In these circumstances, the petitioner was found to have been denied a meaningful opportunity to place documents and contest the demand, warranting interference and a fresh consideration.

Conclusion: The assessment orders for assessment years 2013-2014, 2014-2015 and 2015-2016 were quashed and the matters were remitted for reconsideration with an opportunity of reply and personal hearing.

Final Conclusion: The writ petitions succeeded in part: the earlier assessment years were quashed on limitation, while the later assessment years were sent back for fresh adjudication after affording the petitioner a hearing.

Ratio Decidendi: The six-year limitation under Section 27(1) of the Tamil Nadu Value Added Tax Act, 2006 applies even to proceedings arising from incomplete or incorrect returns under Section 22(4), and an assessment based on mismatch data cannot be sustained without affording a reasonable opportunity of hearing.

---