TaxTMI 
TaxTMI 
TaxTMI 
2023 (10) TMI 488
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.... vide this common order. There is hence no necessity to refer to the merits of any of the matters and rival submissions have been heard solely on the legal ground. A tabulation of the relevant dates and events is placed below, solely in aid of setting the context for deciding the legal issue : S. No. Name of the assessee Period of assessment Notice Orders Impugned Order National Traders 2008-2009 (W.P.No.19921 of 2021 17.02.2020 - Pre Assessment notice issued along with demand of reversal of input credit. Deemed assessment 30.06.2012 (6 year period expires on 30.06.2018) 20.01.2021 - Order passed under Section 27 of the TNVAT Act Assessment order- 20.01.2021 2009-10 (W.P.No.19924 of 2021) 12.09.2019 - Pre assessment notice for declarations under the CST Act along with input credit reversal under the TNVAT Act. Deemed assessment 30.06.2012 (6 year period expires on 30.06.2018) 29.03.2021 - Order under Section 27 of the TNVAT Act Assessment order - 29.03.2021 2010-2011 (W.P.No.19926 of 2021) 01.02.2021 - Pre assessment notice for declarations under the CST Act along with input credit reversal under the TNVAT Act. Deemed assess....
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....essment order - 01.10.2021 2012-13 (W.P.No.24684 of 2021) 29.05.2020 - Notice alleging that certain transactions were not reported and proposing maximum penalty under Section 27(1)(c) Deemed assessment 31.10.2013 (6 year period expires on 31.10.2019) 01.10.2021 - Order does not mention under which it is passed Assessment order - 01.10.2021 Mohan Enterprises 2014-15 (W.P.No.2735 of 2022) 15.12.2021 - Proposal to redetermine taxable turnover and levy tax at 14.5% Deemed assessment 31.10.2015 (6 year period expires on 31.10.2021) Notice - 15.12.2021 - Proposed to redetermine taxable turnover and levy tax at 14.5% 2007-08 (W.P.No.19925 of 2021) 15.02.2021 - Proposal to reverse the ITC Deemed assessment 30.06.2012 (6 year period expires on 30.06.2018) 31.03.2021 - Order does not mention section under which it is passed Assessment order -31.03.2021 Supreme Industrial Co. 2008-09 (W.P.No.19918 of 2021) 15.02.2021 - Proposal to reverse the ITC Deemed assessment 30.06.2012 (6 year period expires on 30.06.2018) 31.03.2021 - Order does not mention under which it is passed Assessment order - 31.03.2021 2009-10 (....
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....ber of the succeeding year as provided under Section 22(2) of the Act. Per contra, it is the contention of the revenue that the provisions of Section 22(4) provide for the framing of best judgement/regular assessment and thus in cases where an order under Section 22(4) had been passed that would be the point of commencement of limitation of six years. 5. They would also argue that there is no statutory limitation provided for framing of assessment under Section 22(4) of the Act and as such an assesment may be framed at any time. Further, there is no bar on the number of occasions when revision may be effected. Every subsequent order of revision may be passed at any time within six years from passing of the previous order of assessment. 6. I will address the last submission first. Though technically, there is no bar on the number of re-assessments that may be made, this would not permit unlimited revisions of assessment availing the benefit of limitation set out under Section 27 computed from the last of the assessments, as there would then be no finality of assessment at any stage. That apart, every new round of re-assessment has to relate to an issue that has not been addressed ....
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....ax (U.P.), [(1987) 1 SCC 684] [(1987) 65 STC 62] for the proposition that limitation must commence from date of order of reassessment and not from the date of original deemed assessment. 11. The learned Judge accepted the challenge holding that (i) Commencement of limitation for revision of assessment would be 31st of October of the succeeding period. (ii) In effect, the limitation for passing of an order under Section 22(4) was also held subject to the limitation under Section 22(2) of the Act, being the 31st October of the succeeding year. (iii) Once an order of assessment is deemed to have been passed under Section 22(2) the question of passing an order under Section 22(4) thereafter does not arise. 12. The above order is stated to be pending in writ appeal. Before me, the revenue relies upon the judgement of the Hon'ble Apex Court in State of Punjab vs. Bhatinda District Coop Milk Producers Union Ltd (2007 11 SCC 363), and Kerala and Allahabad High Courts in Parisons Foods (P) Ltd vs. State of Kerala vs. State of Kerala decided on 12.04.2017 (WA No.1076 of 2013)and Mass Awash Pvt Ltd vs. Commissioner of Income tax (International Taxation) and another ([2017] 83 taxmann.....
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....tion of the Government in this regard was announced while moving the demand for grants of the Commercial Taxes Department in Au- gust 2011. Accordingly, a draft Bill has been prepared in consulta- tion with the Law Department and will be introduced in the ongoing session of the Assembly. This measure once implemented will go a long way in making the interface of the trading public with the De- partment more simple and transparent. At the same time in order to avoid misuse by potential tax evaders, the current system of detailed scrutiny of twenty percent of the cases selected at random by the Commissioner of Commercial Taxes regarding the correctness of the returns submitted by the dealers, will continue. 17. Section 22(2), both pre and post 2012 are extracted below: Pre 2012: 22. Procedure to be followed by Assessing Authority.- (1) The assessment in respect of the dealer shall be on the basis of return relating to his turnover submitted in the prescribed manner within the prescribed period. (2)The assessing authority shall accept the returns submitted for the year, by the dealer, if the returns are accompanied by the proof of payment of tax and the documents prescribed, an....
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....s judgement. Prior to 2012, this provision could be invoked only if a dealer does not file returns but post 2012, it can be invoked in two situations: firstly, if no return is submitted by the dealer or secondly, if the returns submitted are found to be incomplete, incorrect or unaccompanied by necessary documents or proof of payment of tax. The section specifically requires the officer to afford a hearing to the assessee prior to completion of proceedings under this section, both prior to, and post 2012. There is no limitation provided under this section. 22. Both provisions are extracted below: Pre 2012: 22(4) If no return is submitted by the dealer for that year, the assessing authority shall, after making such enquiry as it may consider necessary, assessthe dealer to the best of its judgment, subject to such conditions as may beprescribed: Provided that before taking action under this sub-section, the dealer shall be given a reasonable opportunity of being heard. Post 2012: 22 (4) If no return is submitted by the dealer for any period of the year or if the return filed is in complete or incorrect, or if not accompanied with any of the documents prescribed or proof of....
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....y, at any time within a period of five years from the expiry of the year to which the tax re- lates, assess or re-assess the dealer to the best of its judgment on the turnover of such sales or purchases after making such enquiry as it may consider necessary and after giving the dealer a reason- able opportunity to show cause against such assessment. (2) The provisions of sub-sections (3) to (8) of Section 27, shall, as far as may be, apply to assessment or re-assessment under sub-section (1) as they apply to the re-assessment of escaped turnover under sub-section (1) of Section 27. Post 2012: 24. Assessment of sales shown in accounts at low prices.- (1) If the assessing authority is satisfied that a dealer has, with a view to evade the payment of tax, shown in his accounts, sales or purchases of any goods, at prices which are abnormally low compared to the prevailing market price of such goods, it may, at any time within a period of [six years] from the expiry of the year to which the tax relates, assess or re-assess the dealer to the best of its judgement on the turnover of such sales or purchases after making such enquiry as it may consider necessary and after giving the de....
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.... 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. 31. Section 27(1)(b) is identically couched and provides for the same limitation except that it relates to revision of assessment for the reason that the turnover of a dealer has been assessed at a rate lower than the rate at which it was assessable. Both provisions are extracted below: Pre 2012: 27(1)(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 five years from the date of order of assessment by the assessing authority, re- assess the tax due after making such enquiry as it may consider necessary. Post 2012: 27(1)(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], re-assess the tax due after....
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....tion (6) states that in computing the period of limitation for assessment/re-assessment under Section 27, the time during which the proceedings for assessment or re-assessment remained stayed under orders of a Civil Court/competent authority, shall stand excluded. 35. Likewise, Section 27(7) excludes time during which an appeal/other proceeding in respect of any other assessment or re-assessment involving a question of law having a direct bearing on the assessment/re-assessment in question, was pending before the High or Supreme Courts and Section 27(8) excludes the time during which an appeal proceeding in respect of assessment or re-assessment of the same or part of the turnover made under any other enactment was pending before any appellate or revisional authority or the High/Supreme Courts. 36. This completes the scheme of the Act in relation to assessments/re- assessments. The issue that arises relates to the point of initiation of the 5 year period for effecting revision of assessments under Section 27 of the Act. The judgement in Bhatinda District Co-ooperative Milk Producers Union (supra) was rendered in the context of the exercise of power of suo motu revision under Sect....
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....hus to examine whether the power has been exercised by a competent authority, and for a reasonable period and for any period that was beyond reasonable, whether the delay was unjust, arbitrary or whimsical or whether it was for valid reasons. 40. In Parisons foods, a Division Bench of the Kerala High Court considered the question as to whether assessments under the Central Sales Tax (CST) Act should be completed under the extended time provided under the Kerala High Court General Sales Tax Act and Rules. The Bench noted the argument of the assessee that no specific time limit had been prescribed under Section 6(4) of the CST Rules and thus, such issue would have to be completed within a reasonable time. Since the maximum period for reassessment under the CST Act as stipulated under Rule 6(7) or 6(8) of the Rules was four years, the original assessment should have been completed within such period of four years as well. 41. The above argument had been rejected by the learned Single Judge, who was of the view as no time factor could be read into Rule 6(5). In that connection, the learned Judge had noted that Section 17 of the Kerala General Sales Tax Act had extended the time for c....
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....er under Section 22(4). This argument cannot be accepted for the reason that the schemes of assessment under Sections 22(2) and 22(4) are different and distinct. 45. The former is an assessment based upon and accepting the returns and annexures filed by an assessee and is also deemed to have been passed if no written order under Section 22(2) is passed by the 31st of October 2017. The power of best judgement assessment kicks in if the officer finds that the return is incomplete or incorrect, unaccompanied by the prescribed documents or proof of payment of tax. In such an event, the officer is to issue notice to the assessee, enter into detailed verification of the returns and annexures, hear the assessee and pass an order of assessment under Section 22(4) of the Act. 46. This then is the regular assessment which is framed after thorough scrutiny of returns and hearing the assessee. This exercise will be undertaken in the returns selected on random basis under Section 22(3) as well as any others where the officer feels the returns and annexures are incomplete or incorrect, unaccompanied by the prescribed documents or proof of payment of tax. The use of the phrase 'incomplete or in....