2017 (7) TMI 1209 - HC - VAT and Sales Tax

Pre-assessment notice - TNGST Act 1956 - the Assessing Officer seeks to achieve indirectly what he could not achieve directly in the assessment under the CST Act - Held that - The respondent having accepted that the transactions are covered by Form-H they cannot reopen the issue and if permitted to do so the respondent would be violating his own order under the CST assessment dated 31.10.2005. Hence the impugned notice issued under the TNGST Act is wholly without jurisdiction and liable to be set aside - petition allowed - decided in favor of petitioner.

Summary

Issues:
1. Pre-assessment notice issued under the Tamil Nadu General Sales Tax Act (TNGST Act), 1956 for the assessment year 2003-04.
2. Treatment of transactions as inter-state sales and taxation at a higher rate.
3. Validity of the observations made by the Assessing Officer under the CST Act assessment.
4. Jurisdictional aspect of invoking Section 7(A) of the TNGST Act.
5. Reopening of issues covered by Form-H under the CST Act.

Analysis:
The High Court of Madras addressed the grievances of sister concerns regarding a pre-assessment notice issued under the TNGST Act for the assessment year 2003-04. The Assessing Officer's actions were scrutinized, revealing a peculiar case where relief was granted under the CST Act but sought indirectly under the TNGST Act, indicating an attempt to achieve indirectly what was not possible directly in the CST assessment. The court noted the identical nature of the transactions and focused on the facts presented in one of the cases. The petitioner's objections were detailed and supported by legal and factual positions, emphasizing being a direct export house with provisional invoices due to foreign buyers' requirements for clearances and financial processes.

The court highlighted the Assessing Officer's rare acceptance of objections and decision based on facts in the CST assessment, where relief was rightly granted to the petitioner. However, a critical mistake was noted in the assessment, where an observation regarding export sale invoices predating purchase invoices was made, suggesting jurisdiction under the TNGST Act. This observation was deemed incorrect, as the entire export sales were found exempt under the CST Act assessment. The court emphasized that once relief was granted under the CST Act, the respondent could not proportionately tax the export sales under the TNGST Act, invoking Section 7(A) without jurisdiction.

The court concluded that the respondent's attempt to reopen issues covered by Form-H under the CST Act was unjustifiable, as it would contradict the previous order under the CST assessment. Consequently, the impugned notice under the TNGST Act was deemed without jurisdiction and set aside, leading to the allowance of the writ petitions without costs. The connected miscellaneous petitions were also closed as a result of the judgment.