2011 (11) TMI 583 - HC - VAT and Sales Tax

Summary

Issues:
1. Jurisdiction and limitation of assessment proceedings for the assessment year 2003-04.

Analysis:
The petitioner sought a writ of certiorari to challenge the assessment proceedings for the assessment year 2003-04, alleging issues of limitation and jurisdiction. The petitioner was initially assessed under the Tamil Nadu General Sales Tax Act, with certain turnovers assessed under section 7C at a compounded tax rate of 10% and other turnovers under regular provisions of section 3B. A notice of reassessment was issued for the turnover under section 3B on March 31, 2006, leading to an order of reassessment on June 20, 2006. However, on March 21, 2011, a fresh notice was issued to revise the assessment under section 3B and section 7C. The petitioner challenged the reopening of the assessment under section 7C, arguing that it was beyond the five-year time limit prescribed by section 16AA of the Act, as the original assessment was made on July 12, 2005. The respondent contended that the writ petition was not maintainable, but failed to provide a satisfactory explanation for the time limit discrepancy.

The High Court scrutinized the timelines and legal provisions involved. It noted that the limitation for reopening the assessment under section 7C had expired before the notice issued on November 19, 2010, as it should have been done on or before July 11, 2010, based on the five-year limit from the original assessment date. The court found no provision to extend this limitation period, rejecting the respondent's argument based on alternative remedies. Consequently, the court ruled that the notice to revise the assessment under section 7C was invalid due to being time-barred.

Regarding the proposal to reassess turnovers related to the sale of paints and electrical goods at a higher rate, the court observed that these turnovers were not part of the initial notice for revision issued on March 31, 2006. Therefore, the court found that the same limitation issue applied to these turnovers as well. The court allowed the writ petition, quashing the proposed notice to revise the assessment for the section 7C turnover and the turnovers related to the sale of paints and electrical goods. The petitioner was given the opportunity to file objections against the levy of interest under section 24(3) within two weeks. The court concluded by closing the matter without costs.