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

The HC dismissed the petition challenging assessment notices issued after five years. The court held that since no returns were filed by the petitioner for the respective assessment years as prescribed under Rule 7 of TNVAT Rules 2007, and no assessment orders were previously passed, the impugned assessments constituted the first assessment under Section 22(4) of TNVAT Act 2006. The limitation period under Section 27 for reopening assessments would commence six years from this first assessment, not from the original assessment year. Therefore, the five-year delay argument lacked merit, and the attachment notices to banks were upheld.

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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.

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