2016 (1) TMI 377 - HC - VAT and Sales Tax

Disallowance of exemption claim - sale of Maize - TNVAT - Held that - What was sold by the appellant was Maize. Even the Assessing Officer does not dispute that what was sold by the appellant was Maize. But, unfortunately, the Assessing Officer had gone by the fact that the person to whom Maize was sold, used it as waste for poultry feeding. There is nothing either in the Act or in the circulars to indicate that the eligibility of a product for exemption depended upon its usage. The exemption was a product based exemption and not user based exemption or an assessee based exemption. Therefore, this is a case where the Assessing Officer committed a jurisdictional error warranting interference by this Court. Hence, the writ appeal is allowed, the order of the learned Judge is set aside - Decided in favour of assessee.

Summary

Issues:
Challenge to order of assessment based on exemption claim for Maize under TNVAT Act, 2006.

Analysis:
The appellant, a registered dealer of Maize and other products, claimed exemption for Maize under Entry No.19 of Part-B of the IV Schedule to TNVAT Act, 2006, reporting a Nil taxable turnover each month. However, the Assessing Officer issued a notice proposing to disallow the exemption claim, alleging that the Maize sold by the appellant was being used as waste for poultry feeding. The appellant contended that the exemption should not depend on the usage of the product. The Assessing Officer, disregarding the appellant's objections, passed an order disallowing the exemption claim. The appellant's writ petition challenging this order was dismissed by the learned Judge on the grounds of an alternative appeal remedy being available.

The High Court, in its judgment, acknowledged the appellant's statutory alternative remedy of appeal under the Act but highlighted exceptions to the general rule against entertaining a writ petition against an assessment order. The Court emphasized that it can intervene in cases of violations of natural justice or lack of jurisdiction by the Assessing Officer. In this case, the Court noted that Maize was clearly granted exemption under Entry No.19 of Part-B of IV Schedule to the Act, as confirmed by departmental circulars. The Court pointed out that the exemption was product-based and not dependent on usage. As the Assessing Officer erred in considering the usage of Maize as a basis for disallowing the exemption claim, the Court found a jurisdictional error warranting its intervention.

Consequently, the High Court allowed the writ appeal, setting aside the order of the learned Judge and the assessment order challenged in the writ petition. The Court ruled in favor of the appellant, emphasizing that the exemption for Maize was not contingent on its usage, leading to the closure of the related miscellaneous petition. No costs were awarded in the judgment.