Reassessment limitation and freight suppression under Tamil Nadu VAT: deemed assessment date controlled limitation, but unsupported additions failed.

Reassessment under the Tamil Nadu VAT framework was treated as timely for assessment years 2007-08 to 2010-11 because the deemed assessment date under the proviso was 30.06.2012, so notice issued on 12.08.2016 fell within the six-year period for escaped assessment. The contention that the proviso did not apply was rejected. Freight suppression additions, including for assessment year 2014-15, were found unsustainable because they rested on flat freight figures and undefined internet-based material without a rational or credible evidentiary foundation. The assessment orders were therefore set aside and the matters remitted for fresh consideration after hearing the assessee.

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Issues: (i) whether the reassessment proceedings for assessment years 2007-08 to 2010-11 were barred by limitation under the Tamil Nadu Value Added Tax Act, 2006; (ii) whether the freight suppression additions for the relevant assessment years, including assessment year 2014-15, were sustainable on the material relied upon by the assessing officer.

Issue (i): whether the reassessment proceedings for assessment years 2007-08 to 2010-11 were barred by limitation under the Tamil Nadu Value Added Tax Act, 2006.

Analysis: The limitation for escaped assessment is six years from the date of deemed assessment. For the assessment years commencing from 2006-07 and ending with 2010-11, the proviso to the deemed assessment provision fixes 30.06.2012 as the date of deemed assessment. Since the reassessment notice was issued on 12.08.2016, the proceedings were initiated within six years from 01.07.2012. The contention that the proviso was inapplicable was rejected.

Conclusion: The reassessment proceedings for assessment years 2007-08 to 2010-11 were not barred by limitation.

Issue (ii): whether the freight suppression additions for the relevant assessment years, including assessment year 2014-15, were sustainable on the material relied upon by the assessing officer.

Analysis: The additions were founded on flat freight figures fixed per consignment, with reference to purported internet-derived information, without demonstrating a rational or credible basis for the alleged suppression. The comparative figures in the assessment records showed that the freight adopted was disproportionate to the value of the consignments. For assessment year 2014-15 also, the rectification order continued to rely on internet-based material without disclosing its nature or relevance. The additions, therefore, lacked a reasonable evidentiary foundation and warranted interference.

Conclusion: The freight suppression additions were unsustainable and the assessment orders were liable to be interfered with.

Final Conclusion: The assessment orders were set aside and the matters were sent back for fresh consideration after giving the petitioner an opportunity of hearing.

Ratio Decidendi: Reassessment under the value added tax law must rest on a legally sustainable computation and rational material, and when the statute fixes a deemed assessment date by proviso, limitation runs from that date for escaped-assessment proceedings.

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