2007 (8) TMI 670 - HC - VAT and Sales Tax

Belated return - penalty imposed - Held that - Admittedly, in the present case, the last date for filing returns for the financial year 2001-02 was April 20, 2002 and the petitioner-company have submitted their returns within the specified period. Though the assessment proceedings have been commenced in the year 2002 and the department issued a show-cause notice, dated July 28, 2004, the respondent has passed the impugned assessment order only on July 30, 2007, after three years from the date of issue of notice. It is explicit under section 8(5) that no order of assessment under sub-section (3) or (4) shall be made after the expiry of three years from the last date prescribed for filing of returns of the particular period. The impugned order is set aside, in respect of its effect for the period between September 2001 to March 2002 and in respect of tax for the period from April 1, 2001 to August 17, 2002, the assessing authority has stated that the monthly tax due has been paid belatedly.Therefore, as regards the penalty under section 15(2) of the Act for the belated payment is concerned, the respondent is directed to issue a fresh notice, calling upon the petitioner to file their objection and provide an opportunity of personal hearing as contemplated under the Act. It is made clear that the impugned order is set aside only for the limited extent of penalty period between September 2001 to March 2002

Summary

Issues:
1. Jurisdiction of assessing authority to pass the impugned order under the Entry Tax Act.
2. Validity of penalty imposed under section 15(1) and 15(2) of the Entry Tax Act.
3. Compliance with principles of natural justice in the assessment process.

Analysis:
1. Jurisdiction of Assessing Authority:
The petitioner challenged the order of the respondent dated March 30, 2007, under the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990. The petitioner argued that the assessment order should have been passed within three years from the last date prescribed for filing returns for the relevant period. The last date for filing returns for the assessment year 2001-02 was April 20, 2002, and the assessment order was passed on July 30, 2007, beyond the statutory time limit. The court held that the impugned order was time-barred under section 8(5) of the Act, and therefore, the assessing authority had no jurisdiction to pass the order.

2. Validity of Penalty Imposed:
The petitioner contended that the penalty imposed under section 15(1) and 15(2) of the Entry Tax Act was in violation of principles of natural justice. The court noted that penalty under section 15(2) for belated payment can only be levied after providing the assessee with an opportunity for a personal hearing. The court directed the respondent to issue a fresh notice to the petitioner, allowing them to file objections and providing a personal hearing before levying any penalty under section 15(2). The impugned order was set aside for the limited extent of the penalty period between September 2001 to March 2002.

3. Compliance with Principles of Natural Justice:
The petitioner raised concerns regarding the violation of principles of natural justice in the assessment process, particularly regarding the penalty imposed by the respondent. The court emphasized the importance of providing a personal hearing to the assessee before levying any penalty under section 15(2) of the Entry Tax Act. The court directed the respondent to ensure compliance with the principles of natural justice by issuing a fresh notice and providing the petitioner with an opportunity for a personal hearing as required by law.

In conclusion, the High Court of Madras held that the impugned order was time-barred and set it aside for the limited extent of the penalty period. The court directed the assessing authority to comply with the statutory provisions and principles of natural justice while reassessing the penalty under section 15(2) of the Entry Tax Act. The writ petition was disposed of with the above directions, and no costs were awarded.