2016 (10) TMI 896 - HC - VAT and Sales Tax

Jurisdiction of action taken after 20 years without providing opportunity of being heard - TNVAT Act, 2006 - order of assessment or any notice not served to petitioner - action taken after 20 years - whether the impugned order of demand tenable? - Held that - this impugned proceeding was without proper opportunity to the petitioner, and it is also barred by limitation. Above all, it has to be pointed out that the respondent would be entitled to effect recovery of the tax arrears, even assuming it is due only within a reasonable time, and considering somewhat similar provisions under the TNGST Act, the Hon ble Supreme Court in the case of State of Punjab and others Vs. Bhatinda District Cooperative Milk Producers Union Ltd. 2007 (10) TMI 300 - SUPREME COURT OF INDIA observed that, The Revisional Authority, being a creature of the statute, while exercising its revisional jurisdiction, would not be able to determine as to what would be the reasonable period for exercising the revisional jurisdiction in terms of Section 21 (1) of the Act . Court has no hesitation to hold that the impugned order is barred by limitation, and the action initiated for recovery of dues after about 20 years is highly unreasonable, rendering the impugned demand as unsustainable in the eye of law - petition allowed - decided in favor of petitioner.

Summary

Issues:
Challenge to notice of demand for tax under Tamil Nadu Value Added Tax Act, 2006 for assessment years 1993-94 to 1994-95.
1. Validity of the notice issued after 20 years without proper notice or order of assessment.
2. Jurisdictional validity of the action taken under Section 16 of the Act after such a long period.

Analysis:
The petitioner contested a notice of demand dated 13.07.2015, requiring payment of taxes for the assessment years 1993-94 to 1994-95 under the Tamil Nadu Value Added Tax Act, 2006. The challenge was based on two primary grounds. Firstly, the demand was issued after 20 years without any prior notice or assessment order served to the petitioner. Secondly, it was argued that even if the respondent had the authority to revise the assessment under Section 16 of the Act, such action should have been taken within the prescribed time limit, making the current action after 20 years jurisdictionally questionable.

In response, the respondent claimed that the final assessment orders were passed on 29.11.1995 and duly served to the Firm's Partner, Mrs. Geetha, on 14.12.1995 via registered post. However, the letter sent to the other Partner, Mr. Rajamanickam, was returned, and the assessment order sent to the Mill premises was not successfully delivered. The respondent relied on postal acknowledgments to support their position, showing delivery to Mrs. Geetha on 14.12.1995.

The petitioner disputed the authenticity of the postal acknowledgment, alleging discrepancies in dates and signatures. Upon comparing the signature on the acknowledgment with Mrs. Geetha's admitted signature, the court found discrepancies. Despite the respondent's attempt to enforce the demand based on a revision of assessment under Section 16 of the Tamil Nadu General Sales Tax Act, 1959, the court noted that the proceeding lacked proper opportunity for the petitioner and was time-barred.

Citing a Supreme Court case, the court emphasized that the revisional authority must act within a reasonable time frame. In this case, the court found the 20-year delay in initiating recovery actions highly unreasonable and unsustainable in the eyes of the law. Consequently, the court allowed the Writ Petition, set aside the impugned order, and closed the connected Miscellaneous Petition without costs.