2015 (9) TMI 45 - HC - VAT and Sales Tax

Re-opening of Assessment Fixation of tax rate at 16% against 10% Writ court while deciding issue relating to issuance of show cause notice to re-open assessment held that revenue was not justified in reopening assessment as assessments were complete and tax was paid by assessee Held that - Supreme Court in Mathuram Agrawal vs. State of Madhya Pradesh 1999 (10) TMI 125 - Supreme Court of India and Manish Maheshwari vs. Assistant Commissioner of Income-tax and Another 2007 (2) TMI 148 - SUPREME COURT OF INDIA held that admittedly there was ambiguity with regard to rate of tax payable by assessees and benefit of said ambiguity should be extended to assessees and not to Revenue Present court fully in agreement with holding that assessments in respect of respondent / assessee having been completed pursuant to order passed by Special Tribunal and tax at rate of 10% was also collected, Revenue was not justified in demanding tax at 16% by seeking to reopen concluded assessments by issuing clarification No ground to interfere with impugned order passed in writ petition Decided against revenue.

Summary

Issues:
Challenge to notice proposing to reopen assessment based on clarification issued by the first appellant under TNGST Act.

Analysis:
The appeal by the Commercial Taxes Department challenged a common order in a batch of writ petitions, focusing on the order in W.P.No.19331 of 2008. The department had preferred appeals in some cases but had not numbered them, leading the court to conclude that the common order would bind the department. The respondent, a dealer in decorative laminated sheets, contested a notice proposing to reopen their assessment based on a clarification by the first appellant under the TNGST Act. The clarification initially set the tax rate at 16% but was later revised to 10% based on a Tribunal order. The respondent argued that the assessments were final, and the first appellant had no authority to change the rate retrospectively.

The court considered whether the first appellant's clarification, based on a Supreme Court interpretation of the Central Excise Tariff, was valid under the TNGST Act. Previous court decisions were cited, emphasizing that interpretations under different statutes may not be directly applicable. The respondent contended that the Tribunal's decision and the unchanged TNGST Act entry supported their position. Legal precedents highlighted the need for prospective application of tax clarifications to avoid undue hardship on taxpayers.

Ultimately, the court agreed with the Writ Court's decision, finding that the Revenue's demand for tax at 16% after completed assessments at 10% was unjustified. The court upheld the writ petition's decision, stating that the appellants failed to provide sufficient grounds for interference. Consequently, the writ appeal was dismissed with no costs incurred.