period limit for damand notice from sales tax TNVAT

[venkat eswaran]

Dear all,

We are registered dealer in tamilnadu under TNVAT. we have completed CST assessment up to 2012-13 and VAT I assessment also up to 2011. We received demand notice now for Assessment year 2006-07. Assessement over and order received in 2011 itself. AG audit also over up to 2011. What is the time limit to reopen the assessment under TNVAT. up to how many years we need to keep record under sales tax and CST act?

Kindly share your views thanks in advance

Venkat

[SURENDRA BABU MUTHYALA]

Hi Venkat

It is not specified whether notice for re-assessment has been given observing procedural formalities or straight away any demand notice has been generated now without any show cause notice and served the order to pay any taxes etc.

First of all, The TNVAT department can revise the assessment once finalized earlier as per Section 27 for the following reasons:

(1) (a) Where, for any reason, the whole or any part of the turnover of business of a dealer has escaped assessment to tax, the assessing authority may, subject to the provisions of sub-section (3),at any time within a period of six years from the date of assessment, determine to the best of its judgment the turnover which has escaped assessment and assess the tax payable on such turnover after making such enquiry as it may consider necessary.

(b) Where, for any reason, the whole or any part of the turnover of business of a dealer has been assessed at a rate lower than the rate at which it is assessable, the assessing authority may, at any time within a period of six years from the date of assessment, reassess the tax due after making such enquiry as it may consider necessary.

(2) Where, for any reason, the input tax credit has been availed wrongly or where any dealer produces false bills, vouchers, declaration certificate or any other documents with a view to support his claim of input tax credit or refund, the assessing authority shall, at any time, within a period of six years from the date of assessment, reverse input tax credit availed and determine the tax due after making such a enquiry, as it may consider necessary:

Provided that no order shall be passed under sub-sections (1) and (2) without giving the dealer a reasonable opportunity to show cause against such order.

You say that the assessment for the year 2006-07 has been completed and now you have received the .demand notice. For the year 2006-07 the TNVAT dept. introduced Rue 87-A. which reads that assessment of a dealer under the Tamil Nadu General Sales Tax Act, 1959 ( Tamil Nadu Act I of 1959)or under the Tamil Nadu Additional Sales Tax Act, 1970 (Tamil Nadu Act 14 of 1970), in respect of the assessment for the period from the 1st day of April 2006 to the 31st day of December 2006, shall be on the basis of the return filed by him, within such time and in such manner as may be prescribed and such return shall be accepted in accordance with the Rules as may be prescribed.

So you have to analyze the issue in the circumstances narrated above.

Just bear in mind that any assessment can be reopened within a period of six years from the date of original assessment but in the circumstances explained above. But the tax office should serve you a notice before the proposed revision. If the assessment relate to 2006-07 Rule 87-A referred to above is to be followed.

I believe you got it.

AI Summary

Reassessment limitation: tax authority may reopen assessments within statutory period for escaped turnover, with pre-notice and hearing. An assessing authority may reopen a TNVAT assessment within six years from the date of assessment for escaped turnover, lower assessed rates, or wrongly availed input tax credit supported by false documents, but must conduct enquiries and give the dealer a reasonable opportunity to show cause; assessments for the April-December 2006 period are governed by Rule 87-A and must be based on the dealer's prescribed return.