2024 (3) TMI 64 - HC - VAT and Sales Tax

VAT assessments can be issued beyond five years when no returns filed under Rule 7 TNVAT Rules 2007

M/s. Indira, proprietrix, M/s. Bala Enterprises Versus The Assistant Commissioner (State Tax), The State Tax Officer, The Assistant Commissioner (Sales Tax), The State Tax Officer, Chennai

The HC dismissed the petition challenging assessment notices issued after five years. The court held that since no returns were filed by the petitioner ... Time Limitation for reopening of assessment - impugned notice were issued after a lapse of five years for these assessment years - HELD THAT:- If no returns were filed or if the returns filed were incomplete or returns filed were incorrect or did not accompany any of the documents prescribed with proof of payment of tax, the Assessing Officer has to make a proper enquiry and assess a dealer to the best of this judgement, subject to such conditions as may be prescribed, after the completion of the year. There are no records to substantiate that the petitioner had filed returns in time for the respective assessment years in various assessment circles as is contemplated in Rule 7 of the TNVAT Rules, 2007. No Assessment Order was passed by the Assessing Officer for the years in question. Therefore, question of either inferring deemed assessment as is contemplated under section 22 (1) and (2) of the TNVAT Act, 2006 or actual assessment would not arise for the purpose of computation of limitation under Section 27 of the TNVAT Act, 2006. Since no Assessment Order came to be passed, question of the petitioner getting an opportunity to file a fresh return as is contemplated under section 22 (6) (a) (b) or (c) of the TNVAT Act, 2006 also did not arise - Since no returns were filed by the petitioner in time or thereafter as is prescribed under Rule 7 of the TNVAT Rules, 2007, it has to be construed that the Impugned Assessments dated 23.12.2019 is the first assessment passed by the Assessing Officer under Section 22(4) of the TNVAT Act, 2006. The limitation for reopening the Assessment under Section 27 of the TNVAT Act, 2006 will apply only six years thereafter. Therefore, there is no merits in the challenge to the Impugned Order. Since the demand has now been confirmed there cannot be any interference with the Impugned Notices issued to the respective banks attaching the accounts of the petitioners maintained with them. Petition dismissed. Issues Involved:1. Validity of the impugned notices and assessment orders.2. Compliance with statutory provisions and circulars.3. Timeliness and limitation of the assessment orders.4. Procedural lapses and their impact on the assessment.Summary:1. Validity of the Impugned Notices and Assessment Orders:The petitioner challenged the notices dated 08.05.2019 and 29.05.2019, and the assessment orders dated 23.12.2019, confirming tax demands for the period between 2009-2010 and 2014-2015. The petitioner argued that the notices were issued five years after a search conducted on 21.07.2014, violating Section 65(4) of the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act, 2006) and Circular No.Q3/3259/2010. The petitioner also contended that their accounts were frozen without prior notice on 12.06.2019 and 14.06.2019, before the assessment orders were passed.2. Compliance with Statutory Provisions and Circulars:The petitioner relied on the decision in Joint Commissioner (CT), Chennai & Others Vs Original Vel Sporting News (W.A.No.1757 of 2019) and argued that the tax liability determination under Section 27 of TNVAT Act, 2006 was beyond the period of limitation. The respondents countered that the orders were well-reasoned, and the petitioner failed to maintain proper books of accounts or provide necessary documents during the inspection. The court noted that the circular issued by the Principal Secretary/Commissioner of Commercial Taxes was not binding on the petitioner or the court, as held by the Supreme Court in Commissioner of Central Excise, Bolpur Vs. M/s. Ratan Melting and Wire Industries.3. Timeliness and Limitation of the Assessment Orders:The court examined the timeline for the assessment years and noted that the assessment for 2009-2010 to 2012-2013 was barred by limitation, while the assessments for 2013-2014 and 2014-2015 were within the permissible period. The court emphasized that Section 22(4) and Section 25(1) of the TNVAT Act, 2006, deal with situations where returns are incomplete, incorrect, or not filed. The court concluded that since no returns were filed in time or thereafter, the impugned assessments dated 23.12.2019 were the first assessments passed by the Assessing Officer under Section 22(4) of the TNVAT Act, 2006.4. Procedural Lapses and Their Impact on the Assessment:The court found that there were no records to substantiate that the petitioner had filed returns in time for the respective assessment years. Therefore, the deemed assessment or actual assessment did not arise for computation of limitation under Section 27 of the TNVAT Act, 2006. The court held that the limitation for reopening the assessment under Section 27 would apply only six years after the first assessment, and thus, there was no merit in the challenge to the impugned order. Consequently, the writ petition was dismissed, and the petitioner was directed to pay the necessary court fees for filing an appeal.Conclusion:The writ petition was dismissed, and the petitioner was directed to pay the necessary court fees for each of the notices and impugned orders. The court emphasized that the petitioner should have filed separate writ petitions challenging the notices or sought leave from the court. No costs were awarded, and connected miscellaneous petitions were closed.