TaxTMI 
TaxTMI 
2024 (1) TMI 510
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....referred to as "the CST Act"). During the relevant period, petitioner was engaged in the manufacture and sales of home appliances including washing machines. The manufacturing unit was situated in Goa. The goods so manufactured were transferred to other States including Tamil Nadu for sale of such home appliances. The petitioner's branch at Tamil Nadu received the goods so stock transferred and effected sale of such goods. A portion of such sales was made to "Canteen Stores Department" (hereinafter referred to as "CSD") during the relevant period viz., 2003-04 to 2006-07. Sale of goods by any dealer in the State of Tamil Nadu to CSD was exempted vide G.O.P.No.3125 dated 30.12.1964. 2.2. The Entry Tax Act came into force on 01.12.2001 vide notification No.II(2)CT/892(a-2)/2001 dated 30.11.2001. Washing machine was one of the item which was liable to Entry Tax Act, pursuant to its insertion as Item No.25 of the Schedule to the Entry Tax Act. The above Entry/Item was added with effect from 21.03.2003 vide Section 2 of Amendment Act No.22 of 2003. The rate of Entry Tax on washing machines was fixed at 12.5%, while the rate of tax on the sale of such washing machines was fixed at....
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....sioner had issued Circular dated 24.02.2020 withdrawing the earlier Circular dated 03.10.2007 wherein the assessing officer's were instructed not to enforce collection of pending demands relating to Entry Tax until the Apex Court decides the issue of validity of Entry Tax Act. It was stated that the petitioner's plea of the proceeding being barred by limitation overlooks the fact that the levy of Entry Tax was challenged in writ petition in W.P.No.12553 of 2002 and this Court had held the same to be invalid vide its judgment dated 22.03.2007. The above order of this Court was challenged before the Hon'ble Supreme Court wherein the validity of levy of Entry Tax was upheld vide order dated 23.08.2017. In view thereof, the period during which the proceeding relating to the validity of Tamil Nadu Entry Tax Act was pending before the High Court and the Hon'ble Supreme Court must be excluded while reckoning limitation for revision of assessment. 2.5. A common reply was filed by the petitioner vide letter dated 25.10.2020 inter alia highlighting the following: a. The tax paid under the Tamil Nadu Entry Tax Act by a dealer on Scheduled goods results in reducing ....
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....ovisionally assess the tax payable for the month. Sub Rule (5) to Rule 3 provides that if the importer submits a return without receipt from the Government Treasury or crossed demand draft for the tax paid the assessing authority shall issue a notice in Form II directing the importer to pay a sum within the time specified. In the case on hand there is no assessment under Sub-rule (4) and (5) to Rule 3 for the Assessment Years 2004-2005 to 2006-2007 and thus the returns must be deemed to be accepted provisionally. b. With the introduction of Section 12C of TNGST Act, which stands incorporated by virtue of Section 10 of Entry Tax Act, assessments must be deemed to have been made on the basis of the return. The assessment under Section 12C of the TNGST Act is to be treated as having concluded on 20.12.2006. Thus, any assessment / reassessment under Entry Tax Act in terms of Section 16 of TNGST Act, which by virtue of Section 10 of Entry Tax Act stands incorporated in the Entry Tax Act, ought to be initiated within 6 years from the date of the assessment / deemed assessment i.e., 20.12.2006 for the assessment years 2003-04 to 2006-07. In other words, any notice for the assessm....
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....vy of Entry Tax has a direct bearing on the assessments made on the petitioner. 5. Heard both sides. Perused the material on record. 6. On considering the arguments advanced by both sides it appears that the impugned order of assessment insofar as it proceeds on the premise that the exemption on the sales to CSD under the TNGST Act must be confined to that particular enactment is unexceptionable. However, it fails to see that Entry Tax paid on goods is available as set-off even in respect of goods exempt under General Sales Act as held by the Hon'ble Supreme Court in Associated Cement Companies reported in 137 STC 389. Before proceeding to examine the above judgment it may be relevant to refer to Section 4 of Tamil Nadu Entry Tax Act which reads as under: "4. Reduction in tax liability - (1) Where an importer of any scheduled goods liable to pay tax under this Act, being a dealer in scheduled goods becomes liable to pay tax under the General Sales Tax Act and additional sales tax under the Tamil Nadu Additional Sales Tax Act, 1970 (Tamil Nadu Act 14 of 1970), by virtue of the sale of such scheduled goods, then his liability under those Acts shall be reduced to th....
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....f the import value of such goods as may be specified by the State Government in a notification published in the Official Gazette subject to such conditions as may be prescribed: Provided different rates for different scheduled goods and different local areas may be specified by the State Government. (2) The tax leviable under this Act shall be paid by every dealer liable to pay tax under the Bihar Finance Act, 1981 or any other person who brings or causes to be brought into the local areas such scheduled goods whether on his own account or on account of his principal or takes delivery or is entitled to take delivery of such goods on such entry: Provided no tax shall be leviable in respect of entry of such scheduled goods effected by a person other than the dealer if, the value of such goods does not exceed 25 thousand in a year: Provided further that where an importer of scheduled goods liable to pay tax under the Act, becomes liable to pay tax under the Bihar Finance Act, 1981 (Bihar Act 5 of 1981) by virtue of sale of such scheduled goods, his liability to pay tax under the Bihar Finance Act, 1981 shall stand reduced to the extent of tax paid u....
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....s only when there is a liability. Exigibility to tax is not the same as liability to pay tax. The former depends on charge created by the statute and the latter on computation in accordance with the provisions of the statute and rules framed thereunder if any. It is to be noted that liability to pay tax chargeable under Section 3 of the Act is different from quantification of tax payable on assessment. Liability to pay tax and actual payment of tax are conceptually different. But for the exemption the dealer would be required to pay tax in terms of Section 3. In other words, exemption presupposes a liability. Unless there is liability, question of exemption does not arise. Liability arises in terms of Section 3 and tax becomes payable at the rate as provided in Section 12. Section 11 deals with the point of levy and rate and concessional rate. 20. Therefore, it cannot be said that as tax was not paid on portion of the turnover of the scheduled goods i.e. cement, the appellant assessee had no liability under the Act. It was definitely liable to pay tax under the Act, but for the exemption. There is no dispute that the appellant assessee was liable to pay tax under sub-secti....
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....y this Court in CCE v. Narayan Polyplast [(2005) 10 SCC 121] except that the period in question is August 1997 to September 1997. The grievance of the appellant is that the appellant had wrongly availed of the MODVAT credit and was liable to pay the sum amounting to Rs 6,10,580. It is stated by the learned counsel appearing on behalf of the assessee that the excise duty paid and MODVAT credit availed of were identical. Therefore the consequences of payment of excise duty after availing of MODVAT credit was revenue neutral. The appeals are accordingly dismissed. If upon verification, the submission of the respondent is found to be incorrect, liberty is granted to the appellant to mention these matters before this Court." 6.5. The impugned orders of assessment having not considered the petitioner's entitlement to set off / reduction to the extent of tax paid under the Entry Tax Act while working out the tax payable by it under the General Sales Tax Act and the relevance / applicability of the principle of Revenue Neutrality stands vitiated for failing to take into account relevant aspect/factors thereby warranting reconsideration of the issue. 7. Now coming to the issue of ....
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....of payment of any tax required to be collected under this Act, or in relation to any process connected with such assessment, re-assessment, collection or enforcement of payment as if the tax under this Act were a tax under the General Sales Tax Act." 7.1. A reading of the above provisions would show that the provisions of the TNGST Act relating to assessment, reassessment, inspection, search, seizure, payment of taxes etc., is incorporated by reference to the Entry Tax Act. The above position is not disputed rather conceded to by both sides. Importantly, Section 10 of the Entry Tax Act opens with the following set of expressions viz., "subject to the other provisions of this Act and the rules made thereunder". The above set of expressions would mean that in the event of any irreconcilable conflict between the provisions or rules under the Entry Tax Act/Rules occupying a particular field and the TNGST Act / Rules, the former i.e., Entry Tax Act/ Rules would prevail. That being the case one may have to enquire as to whether there are any provisions governing assessment/ assessment of escaped turnover / reassessment under the Entry Tax Act. On gleaning through the provisions/ Rules....
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.... trite that if no period of limitation has been prescribed, statutory authority must exercise its jurisdiction within a reasonable period. What, however, shall be the reasonable period would depend upon the nature of the statute, rights and liabilities thereunder and other relevant factors." (ii) S.B. Gurbaksh Singh v. Union of India, reported in (1976) 2 SCC 181: "15....It may well be that for an exercise of the suo moto power of revision also, the revisional authority has to initiate the proceeding within a reasonable time. Any unreasonable delay in exercise may affect its validity. What is a reasonable time, however, will depend upon the facts of each case." 9.1. That leads one to the question as to what would constitute reasonable period for the purpose of making assessment under Rule 4 of Entry Tax Rules. While on the issue of whether the impugned orders were made within a reasonable period, it may be necessary to note that the vires of the Entry Tax Act, was challenged before this Court and vide judgment dated 22.03.2007 it was held to be ultra vires. The State carried the matter in appeal to the Supreme Court. The SLP came up for hearing on 05.09.2007 as....
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.... 9.5. It is not in dispute that the provisions of Section 16 of the TNGST Act, would apply to assessment of escaped value of goods imported as well as reassessment of Entry Tax Act, by virtue of Section 10 of the Entry Tax Act. It is submitted by the learned counsel for the respondent by placing reliance on Section 16(5) of the TNGST Act, the time spent before the Supreme Court ought to be excluded even while determining whether the assessments are made within a reasonable period in terms of Rule 4 of the Entry Tax Rules. Two questions would follow viz., whether Section 16 (5) of the TNGST Act, would have relevance in determining what would constitute reasonable period for the purposes of making an assessment under Rule 4 of Entry Tax Rules. Secondly, whether time spent in challenging validity of a levy would be excluded under Section 16 (5) of the TNGST Act. It may be relevant to extract Section 16(5) of the TNGST Act which reads as under: "Section 16(5): In computing the period of limitation for assessment or reassessment under this section, the time during which any appeal or other proceeding in respect of any other assessment or reassessment is pending before the (Spec....
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....ally liable to assessment, it is only intended to declare the liability to computation of income under Section 23 and not to the application of the procedure for declaration and imposition of tax liability and the machinery for enforcement thereof.... 6...In interpreting a fiscal statute, the court cannot proceed to make good deficiencies if there be any : the court must interpret the statute as it stands and in case of doubt in a manner favourable to the taxpayer. But where as in the present case, by the use of words capable of comprehensive import, provision is made for imposing liability for penalty upon taxpayers guilty of fraud, gross negligence or contumacious conduct, an assumption that the words were used in a restricted sense so as to defeat the avowed object of the Legislature qua a certain class will not be lightly made." b) Union of India v. Vijay Chand Jain, AIR 1977 SC 1302: "3.....The words "in respect of" admit of a wide connotation; In the context of Section 23 (1-B), the expression means "being connected with". Therefore, the currency in respect of which there has been a contravention covers the sales proceeds of the foreign currency. Th....
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....of Haryana, (1988) 3 SCC 478 : 1988 SCC (Tax) 409 at page 486. "14. ..... But as we have said above, in the absence of any prescribed period of limitation, the assessment has to be completed within a reasonable period. What such reasonable period would be, would depend upon facts of each case. One view can be that it should be a period not exceeding five years as the legislature has fixed the limitation of five years for completing assessments in case of escaped turnover. " (emphasis supplied) 9.9. Applying the above judgment of the Hon'ble Supreme Court to the provisions of the Entry Tax Act, it appears to me that the limitation provided under Section 16 of the Act is indicative of what would constitute reasonable period for the purpose of assessment under Rule 4 of the Entry Tax Rules. If the impugned orders of assessments are treated as original assessment under Rule 4 of Entry Tax Rules, which does not prescribe any limitation and thus ought to be made within a reasonable period. If one bears in mind the scheme of the Act and the judgments referred to supra and the facts of the case there is no doubt in my mind that the impugned orders of assessment are made ....
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....shall now examine the legality of the impugned orders assuming that the authority to make order under Rule 4 of the Entry Tax Rules stands exhausted having not been initiated/ exercised within a reasonable period. In that event, the impugned orders would be an assessment of escaped value of scheduled goods and governed by Section 10 of the Entry Tax Act read with Section 16 of the TNGST Act. Section 16(1) of the TNGST Act reads as under : "16. Assessment of escaped turnover. - (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 (2), at any time within a period of five years from the date of order of the final assessment by the assessing authority, determine to the best of its judgement the turnover which has escaped assessment and assess the tax payable on such turnover after making such enquiry as it may consider necessary and after giving the dealer a reasonable opportunity to show cause against such assessment. (b) Where, for any reason, the whole or any part of the turnover of business of a dealer has been assessed at a ....
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....gh to include cases where no notice under section 22(2) of the Income-tax Act had been issued to the assessee and therefore his income had not been assessed at all under section 23 thereof. The said view, has been assumed to be correct by this Court in Maharaj Kumar Kamal Singh v. Commissioner of Income-tax, Bihar & Orissa [1959] Su. 1 S.C.R. 10. and Maharajadhiraj Sir Kameshwar Singh v. State of Bihar MANU/SC/0103/1959: [1959]371TR388(SC) and extended to cover a case where the first assessment was made in the course but a part of the income escaped thereform. This Court, in Commissioner of Income-tax, Bombay v. Narsee Nagsee & Co. MANU/SC/0093/1960: [1960]401TR307(SC), construing the provisions of section 14 of the Business Profits Tax Act, 1947, reviewed the law on the subject and came to the following conclusion: "All these cases show that the words "escaping assessment" apply equally to cases where a notice was received by the assessee but resulted in no assessment at all and to cases where due to any reason no notice was issued to the assessee, and, therefore, there was no assessment of his income." 11. It is true that the said decisions were given with reference to e....
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.... This was a case where the Assam Taxation (on Goods carried by Road or on Inland Water- ways) Act, 1954 was declared ultra vires by the Hon'ble Supreme Court. A new Act was passed by the same name in 1961 and published in the Gazette on 14.04.1961. The vires of the new Act was challenged in the High Court. The High Court passed an order staying all proceedings, which stay continued till 01.08.1963 when the new Act was also held ultra vires. The matter was carried in appeal before the Hon'ble Supreme Court and an interim stay of operation of judgment of High Court dated 01.08.1963 was granted thereafter stay was made absolute on 29.01.1965 subject to the condition that the assessment proceedings in respect of respondents would continue but no recovery would be made, and the respondents could initiate assessment proceedings in respect of those assessees. Notices were issued by the State after the interim order was made absolute on 29.01.1965. But by then notices were barred by limitation. Question arose as to whether in view of the interim order, the period during such interim order must be excluded in reckoning limitation, the above contention was rejected holding as follows....
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....d) b) Gokak Patel Volkart Ltd. v. CCE, (1987) 2 SCC 93 This was a case where the High Court granted an interim order only with regard to a stay of collection of duty but not against the issuance of notice. It was thus held that while calculating limitation, the period during which interim stay was in force cannot be excluded. c) Metal Forgings Vs Union of India reported in 2002 (146) E.L.T. 241(S.C.) wherein it was held as under: " It is a settled position in law that unless and until there is a specific injunction/stay granted by a competent court which restrains an authority, from issuing the required notice, merely because some interim order is made, the authorities empowered to issue such notice cannot refrain from issuing the required notice within the period of limitation nor can they plead the existence of such interim order as a defence against the plea of limitation". d) Commissioner of Central Excise, Calcutta Vs. Hindustan National Glass & Indus Limited reported in 2005 (182) E.L.T. 12(S.C.): Interim orders issued by High Court related to realization and not levy. While holding that the issuance of levy and collection....