1991 (2) TMI 359 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of reassessment orders under Section 16(1)(a) of the Tamil Nadu General Sales Tax Act, 1959.
2. Whether reassessment under Section 16(1)(a) nullifies the original assessment orders.
3. Entitlement of the assessee to a refund of taxes paid under the original assessment orders.
4. Applicability and interpretation of the precedent set in Deputy Commissioner (C.T.) v. Indian Refrigeration Industries Private Limited [1980] 46 STC 264.

Detailed Analysis:

1. Validity of Reassessment Orders under Section 16(1)(a) of the Tamil Nadu General Sales Tax Act, 1959:
The court examined the provisions of Section 16(1)(a) which empower the assessing authority to determine the turnover that escaped assessment and assess the tax payable on such turnover within five years from the expiry of the year to which the tax relates. The court clarified that the power exercised under Section 16(1)(a) is not a power of revision or review but is an original jurisdiction power limited to the escaped turnover. The term "reassessment" is not used in Section 16(1)(a), indicating that the escaped turnover is assessed for the first time, not reassessed.

2. Whether Reassessment under Section 16(1)(a) Nullifies the Original Assessment Orders:
The court held that an order made under Section 16(1)(a) does not affect the operative force of the original assessment, which retains both its character and identity. The original assessment is not reopened or revised in the proceedings under Section 16(1)(a). The reassessment under Section 16(1)(a) is confined to the escaped turnover and does not obliterate the original assessment. The court emphasized that the original assessment retains its distinctive character and operative force even after an order under Section 16(1)(a) is made.

3. Entitlement of the Assessee to a Refund of Taxes Paid under the Original Assessment Orders:
The court rejected the assessee's claim for a refund of taxes paid under the original assessment orders. The court reasoned that the original assessments were not nullified by the reassessment orders under Section 16(1)(a). The court stated that accepting the assessee's argument would place a premium on those whose total turnover had escaped assessment initially, which is opposed to commonsense, morality, legality, and equity. The taxes paid on the original assessments were collected from customers, and therefore, the assessee is not entitled to a refund.

4. Applicability and Interpretation of the Precedent Set in Deputy Commissioner (C.T.) v. Indian Refrigeration Industries Private Limited [1980] 46 STC 264:
The court scrutinized the reliance placed on the judgment in Deputy Commissioner (C.T.) v. Indian Refrigeration Industries Private Limited [1980] 46 STC 264. The court noted that the observations in the 1980 case were made in a different context and were not applicable to the present case. The court emphasized that the 1980 judgment dealt with a situation where the reassessment included the original turnover, which was not the case here. The court clarified that the principle laid down in the 1980 judgment does not apply universally to all orders made under Section 16(1)(a). The court also highlighted that the judgments of the Supreme Court cited in the 1980 case were in different contexts and did not consider the specific issue of the limited scope of assessment under Section 16(1)(a).

Conclusion:
The court concluded that the reassessment orders under Section 16(1)(a) did not nullify the original assessment orders, and the assessee was not entitled to a refund of taxes paid under the original assessments. The court set aside the judgment of the learned single judge and dismissed the writ petitions filed by the assessee. The writ appeals were allowed, and no costs were awarded.