2007 (9) TMI 587 - HC - VAT and Sales Tax

Pre deposit - Held that - In the instant case, as the pre-assessment notice was issued on March 10, 2003, after the amendment to section 31(1) of the TNGST Act and therefore, the petitioner is liable to pay 25 per cent of the disputed tax and submit satisfactory proof of payment of tax for entertaining the appeal. W.P. dismissed.

Summary

Issues Involved:
1. Requirement of pre-deposit for filing an appeal.
2. Applicability of amendments to the Tamil Nadu General Sales Tax Act, 1959.
3. Determination of the commencement of assessment proceedings.

Issue-wise Detailed Analysis:

1. Requirement of Pre-deposit for Filing an Appeal:
The petitioner sought a writ of certiorarified mandamus to quash the order demanding payment of 25% of the disputed tax as a pre-deposit for admitting the appeal. The petitioner argued that the amendment requiring a 25% pre-deposit, which came into effect in 2002, should not apply to their case as the assessment year in question was 1998-99. The court, however, concluded that the petitioner is liable to pay 25% of the disputed tax for the appeal to be entertained, as the pre-assessment notice was issued after the amendment came into effect.

2. Applicability of Amendments to the Tamil Nadu General Sales Tax Act, 1959:
The petitioner contended that the amendment mandating a 25% pre-deposit should not apply retrospectively to appeals related to periods before the amendment. The court referred to various precedents, including the Supreme Court's judgment in Hoosein Kasam Dada (India) Ltd. v. State of Madhya Pradesh, which emphasized that the critical date for the accrual of the right to appeal is the initiation of the proceedings. The court held that the amendment to Section 31(1) of the TNGST Act, which came into effect on June 3, 2002, applies to the petitioner's case because the pre-assessment notice was issued on March 10, 2003, after the amendment.

3. Determination of the Commencement of Assessment Proceedings:
The petitioner argued that the "lis" (dispute) commenced in 1998-99 when the returns were due, and thus, the pre-deposit requirement should not apply. The court, however, clarified that for unregistered dealers, the assessment proceedings commence from the date of the pre-assessment notice, not from the date of inspection or the due date of returns. The court cited the Division Bench decision in Deputy Commercial Tax Officer v. Cameo Exports, which held that the right to appeal becomes vested when the assessment proceedings are initiated, which, in the case of unregistered dealers, is from the issuance of the pre-assessment notice.

Conclusion:
The court dismissed the writ petition, concluding that the petitioner is required to pay 25% of the disputed tax as a pre-condition for the appeal to be entertained, in accordance with the amendment to Section 31(1) of the TNGST Act, 1959. The connected miscellaneous petitions were also closed.