TaxTMI 
TaxTMI 
2023 (10) TMI 488
X X X X Extracts X X X X
X X X X Extracts X X X X
....that these matters have been grouped together and disposed 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 f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....posing maximum penalty under Section 27(1)(c Deemed assessment 31.10.2012 (6 year period expires on 31.10.2018) 01.10.2021 - Order does not mention section under which it is passed Assessment 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 20....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ovisions of Section 27 provide for a period of six years from the date of assessment for revision of the assessment and the question that arises in these cases is as to the point of commencement of the six year period. According to the assessee, the period ought to commence from 31st of October 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 unl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t' as utilized in Section 27, would connote not just a regular assessment but also a re-assessment. Two decisions were cited by the revenue, Deputy Commissioner of Commercial Taxes Vs. H.R. Sri Ramulu, [(1977) 1 SCC 703] [(1977) 39 STC 177] & Kundanlal Srikisan Mathura (U.P.) Vs. Commissioner of Sales Tax (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 Punj....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt order. In line with the general 21 principles of Value Added Tax wherein it is en- visaged that there will be no compulsory assessment at the end of each year, the Government decided to dispense with the existing procedure of passing an assessment order by the assessing authori- ty and to replace it with a system of deemed assessment. The inten- 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 Assessin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....escribed manner for the purpose of detailed scrutiny regarding the correctness of the returns submitted. Such selection is for conduct of revision of assessment, whereunder necessary, on a random basis, though in terms of the prescription in this regard. The provisions are more or less the same both pre and post 2012. 21. Section 22(4) provides for the framing of an assessment to the best of the officer'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, assesst....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... may be made at any time within 6 years from the expiry of the year to which the tax relates. 27. Both provisions are extracted below: Pre 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 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 sat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ty, 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. Post 2012: 27. Assessment of escaped turnover and wrong availment of input tax credit.- (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. 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 rat....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... years from the date of order 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. 34. Section 27(3) and the clauses thereunder provide for levy of penalty. Sub-Section (5) states that power of revision of assessment may be exercised even though the original order of assessment, if any, passed in the matter, has been the subject matter of an appeal or revision. Sub-Section (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 d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onable time and not thereafter. Several decisions were cited in support of that proposition. In those decisions, the Court had held that limitation of four years should be taken as reasonable for exercise of power under Section 201(1) / 201 (1A). 39. That contention was rejected citing a judgment of three judges of the Hon'ble Supreme Court in Uthaman Mambeo Mahale vs. Vithal Deo (AIR 1997 SC2695 and of the Bombay and Calcutta High Courts to conclude that if the Court feels that the power has been exercised for valid and bonafide reasons, then, the time taken for exercise of such power should be considered reasonable. The test is thus 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y in line with the principles of natural justice. 44. Such an assessment would have to be preferred to a deemed assessment passed under Section 22(2) deeming the returns and annexures to be in order. Likewise, even in the event a speaking order has been accepting the returns under Section 22(2), the officer may invoke section 22(4). Under Section 22(2) where the officer intends to accept the returns and annexures filed, there is no necessity for opportunity to have been afforded to the assessee and hence there is no statutory stipulation in that regard. The argument is that 31.10.2017 should be construed as the limitation for passing of an order 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 p....