2019 (12) TMI 1477 - HC - VAT and Sales Tax

Issuance of pre-assessment notices dated 05.04.2007 to the petitioner - period prior to the repeal of the TNGST Act 1959 - TNVAT Act 2006? - HELD THAT - For the respective assessment years it appears that the petitioner had not filed sales tax returns and had not paid tax. Therefore the 2nd respondent issued summons to the petitioner to produce relevant documents. Since there were no compliance by the petitioner a proposal notice was issued to arrive at an assessment based on the best judgment method. The petitioner was asked to file its reply on or before 10.11.2006. However the petitioner again failed to comply - Under Sub-Clause (a) of 88(3) of TN VAT Act 2006 there is saving of proceedings already initiated under the repealed TNGST Act 1954. Under Sub- clause (b) of the said provision tax due under the repealed enactment shall be levied assessed and collected under the Provisions of the Act as if T.N.VAT Act 2006 was in force during the period in dispute. Before the procedure contemplated under Rules 11 and 12 of the TNGST Rules 1959 could be completed the TNGST Act 1959 came to be repealed and substituted with T.N. VAT Act 2006. There is not only saving of the proceedings initiated but also a right to proceed further in respect of tax demands due under TNGST Act 1959 as if the said Act had been in force all along prior to 1.1.2007 under Section 88(3) of T.N. VAT Act - Under the new enactment there is no procedure for getting concurrence of the Jurisdictional Deputy Commissioner. Therefore the impugned notices are to be deemed to have been issued under Section 88(3)(b) of the T.N. VAT Act 2006 and continued. Petition dismissed.

Summary

Issues:
Jurisdiction of issuing pre-assessment notices under TNVAT Act, 2006 for the period prior to the repeal of TNGST Act, 1959.

Analysis:
The main issue in this case revolves around the validity of the pre-assessment notices issued by the 1st respondent to the petitioner under the TNVAT Act, 2006 for the period before the repeal of the TNGST Act, 1959. The petitioner argues that the notices lack jurisdiction as they were issued without the concurrence of the Deputy Commissioner as required under Rule 15(6) of the TNGST Rules, 1959. On the other hand, the respondents contend that there is a saving provision under Section 88(3) of the TN VAT Act, 2006, making the notices valid. They also highlight the petitioner's failure to comply with summons and produce necessary documents, leading to the issuance of the impugned notices.

The court examined the arguments presented and reviewed the records. It noted that the petitioner had not filed sales tax returns or paid taxes for the relevant assessment years. The 2nd respondent had issued summons to the petitioner for document production, which the petitioner failed to comply with, leading to a proposal notice for assessment based on the best judgment method. Despite multiple opportunities, the petitioner did not respond adequately, prompting the issuance of the impugned notices.

The judgment delves into the provisions of Section 88(3) of the TN VAT Act, 2006, which includes saving clauses for proceedings initiated under the repealed TNGST Act, 1959. It clarifies that actions or proceedings already initiated under the old Act can be continued under the new Act. Additionally, it outlines the transition provisions for tax assessment and collection under the new regime, emphasizing the continuity of enforcement powers and procedures.

The court analyzed the erstwhile Rule 15(6) of the TNGST Rules, 1959, which required the assessing officer to finalize tax assessments with the concurrence of the Deputy Commissioner. However, before this procedure could be completed, the TNGST Act, 1959 was replaced by the TN VAT Act, 2006. The judgment concludes that as the new enactment does not mandate concurrence from the Deputy Commissioner, the impugned notices are deemed to be valid under Section 88(3)(b) of the TN VAT Act, 2006.

In the final decision, the court dismisses the writ petitions, directing the petitioner to respond to the impugned notices within 30 days. It instructs the tax authorities to consider all objections raised by the petitioner, including jurisdictional issues, and proceed to pass appropriate orders in accordance with the law. The judgment leaves all issues open for further decision based on the petitioner's response to the notices.