2024 (3) TMI 2 - HC - VAT and Sales Tax

Writ appeals for tax refund dismissed as frivolous attempts to bypass proper procedures under TNVAT Act Sections 22(2) and 28

The Madras HC dismissed writ appeals filed by an appellant seeking tax refund, ruling that the petitions were frivolous attempts to circumvent established ... Refund of tax - contention of the appellant is that, by way of deduction of 2% tax at the time of payment and on his declaration of the turnover for every assessment years, he is entitled for refund of tax - whether the judgment rendered in Mahindra and Mahindra Ltd. [2020 (11) TMI 970 - MADRAS HIGH COURT] has any bearing to the case in hand? - HELD THAT:- The judgment in Mahindra and Mahindra Ltd. relied upon by the learned counsel for the appellant is in respect of entertaining a Writ Petition without exhausting alternate remedy. In the above referred case, without affording opportunity, order levying penalty was issued and therefore, without preferring statutory appeal, the assessee approached this Court. In the said circumstances, the Division Bench of this Court held that existence of alternate remedy will not disentitle the writ petitioner to invoke Article 226 of the Constitution when the action of the statutory authority is unfair and against the principles of natural justice. The facts involved in the case cited is different from the facts of the case in hand. It is not the case of the appellant that he was not given an opportunity. In fact, the impugned notice of the fourth respondent clearly indicates that the notice is to afford an opportunity for being heard and for participating in the proceedings. Therefore, by no stretch of imagination, the dictum laid in Mahindra and Mahindra Ltd. will apply to the case in hand. Section 22(2) and amendment to Section 28 of the TNVAT Act to be read together to understand the intention of the legislature. The returns filed prior to 19.06.2012 under the self assessment scheme, but no explicit assessment orders are passed in these cases. By introducing the deeming clause, the assessee gets the privilege of assessment. At the same time, to prevent escaped assessment, the authority is vested with the power to revise any return, which has been deemed to have been assessed by virtue of Section 22(2) of the TNVAT Act and such power to revise, is restricted to the period of six years. In this case, the assessing authority while causing the show cause notice has given opportunity to the assessee to participate in the proceedings. The order of the assessing authority is not final. The statute provides for appeal remedy. Hence, this Court finds that the Writ Petitions are frivolous litigations initiated by the assessee to circumvent the procedure established. Hence, this Court finds no merit in the Writ Appeals. Appeal dismissed. Issues Involved:1. Retrospective application of the amended Section 22 of the TNVAT Act.2. Legality of the revised assessment orders for the years 2006-2007 to 2010-2011.3. Exhaustion of alternative remedies before filing writ petitions.Summary:1. Retrospective Application of the Amended Section 22 of the TNVAT Act:The appellant, an engineering contractor, contended that the amended Section 22 of the TNVAT Act, which came into effect on 19.06.2012, should not be applied retrospectively. The appellant argued that the returns submitted prior to this date could not be re-opened and revised, as the deemed assessment provision should only have prospective effect. The court noted that the amendment to Section 22, which introduced a deemed assessment clause, was intended to provide a mechanism for assessing returns submitted before 19.06.2012, deeming them assessed on 30.06.2012.2. Legality of the Revised Assessment Orders for the Years 2006-2007 to 2010-2011:The appellant challenged the revised assessment orders for the years 2006-2007 to 2010-2011, arguing that the assessing authority's actions were illegal and constituted a wrongful interpretation of the statute. The court observed that the assessing authority had issued show cause notices and provided opportunities for the appellant to file objections and participate in the proceedings. The court also noted that the amendment to Section 28 of the TNVAT Act allowed for the revision of deemed assessments within a six-year period, which was adhered to in this case.3. Exhaustion of Alternative Remedies Before Filing Writ Petitions:The court emphasized that the appellant had not exhausted the alternative remedy of filing an appeal before approaching the High Court. The court cited several precedents to support the principle that writ petitions should not be entertained when statutory remedies are available. The court dismissed the writ petitions, stating that the appellant should have raised their objections before the appellate authority, which is a fact-finding body.Conclusion:The court dismissed the writ appeals, confirming the order of the learned Judge, and held that the appellant should have exhausted the alternative remedy of filing an appeal. The court found no merit in the appellant's arguments regarding the retrospective application of the amendment and the legality of the revised assessments. Consequently, the writ petitions were deemed frivolous, and the court upheld the revised assessment orders.