2016 (7) TMI 1664 - HC - VAT and Sales Tax

Levy of Entry Tax - purchase value of the motor vehicle after adding 2% towards insurance and other incidental charges - Jurisdiction - whether entry tax cannot be charged at the time of sale of the vehicle and it is not within the power of the assessing authority to assess the importer long after import has been made? - time limitation - HELD THAT - The legal issue involved in this Writ Petition is squarely covered by the decision of the Hon'ble Division Bench in SRI BALAKRISHNA TRANSPORT VERSUS COMMERCIAL TAX OFFICER, TAMBARAM I ASSESSMENT CIRCLE, CHENNAI 2009 (2) TMI 787 - MADRAS HIGH COURT , wherein the identical issue was considered, though in respect of a JCB Vehicle, however, that does not in any manner, affect the application of judgment in the present proceedings. It was held in the case that The Entry Tax Act provides time-limit for making a best judgment assessments, as well as reassessment. When there is no specific provision in the Entry Tax Act for assessing a person who fails to furnish returns, the respondent was not entitled to make an assessment after a considerable point of time. It is trite that in case the words used in a taxation statute are plain and unambiguous they have to be interpreted in such a manner so as to give full effect to the wording of the statute. As pointed out by the Hon'ble Division Bench, unless there is a express provision, authorising the assessing officer to collect tax from the importer, who failed to file returns, as provided under Section 7 of the Entry Tax Act, the respondent would have no jurisdiction to make assessment for the purpose of recovery of entry tax. The Impugned order is held to be without jurisdiction - Petition allowed.

Summary

Issues:
1. Jurisdiction of assessing authority to impose entry tax at the time of sale of a vehicle.
2. Authority of assessing officer to assess an importer long after import has been made.
3. Validity of assessment under the TNGST Act.
4. Bar on assessment due to limitation period.

Analysis:
1. The petitioner, a partnership firm, purchased a car on Hire Purchase basis and later sold it. The respondent assessed the petitioner for tax and entry tax based on the sale value of the vehicle. The petitioner challenged the assessment on grounds of jurisdiction, stating that entry tax cannot be charged at the time of sale, and the assessment was beyond the authority of the assessing officer. The Hon'ble Division Bench's decision in a similar case was cited, stating that unless there is an express provision authorizing the assessing officer to collect tax from an importer who failed to file returns, the assessment for entry tax would lack jurisdiction.

2. The legal issue of assessing an importer long after the import has been made was addressed by the Hon'ble Division Bench's decision. The court emphasized that the Entry Tax Act does not provide for assessing a person who failed to furnish returns. Therefore, the assessing authority cannot assess an importer long after the import based on details provided post-demand notice. The court highlighted the importance of plain interpretation of taxation statutes and the necessity of specific provisions for tax collection to avoid unauthorized levies.

3. The petitioner had disclosed the sale of the capital asset under the TNGST Act during the relevant year. However, the assessment by the respondent was challenged on grounds of jurisdiction and authority. The court's decision emphasized the need for express provisions authorizing the assessing officer to collect tax from importers who fail to file returns, as required by the Entry Tax Act. Without such provisions, the assessment for entry tax lacks jurisdiction.

4. The court held that the impugned order was without jurisdiction, following the decision of the Hon'ble Division Bench. Consequently, the Writ Petition was allowed, the impugned order was quashed, and the connected miscellaneous petition was closed without costs. The judgment highlighted the importance of legal provisions and jurisdictional limits in tax assessments to ensure fairness and adherence to statutory requirements.