2016 (11) TMI 84 - HC - VAT and Sales Tax

Validity of order of assessment - TNVAT Act - Section 19(20) of the TNVAT Act - opportunity of being heard - Held that - reliance placed on the decision of Jayam & Co. Versus Assistant Commissioner & Anr. 2016 (9) TMI 408 - SUPREME COURT where it was upholding the vires of Section 19(20) of the Tamil Nadu Value Added Tax Act, 2006, has held that it can be given only prospective effect and not retrospective effect from January 2007 - the only issue involved in the impugned assessment orders is on account of the applicability of Section 19(20) of the TNVAT Act, this Court is of the view that the assessments can be re-done by the assessing officer, after taking note of the decision of the Hon ble Supreme Court - petitions allowed - assessment orders set aside - matter remanded to the respondent for fresh consideration - opportunity of personal hearing to be provided to the petitioner.

Summary

Issues Involved:
Challenge to assessment orders under TNVAT Act for multiple years based on Section 19(20) - Applicability of retrospective effect of Section 19(20) - Validity of assessment orders in light of Supreme Court judgment.

Analysis:

1. Challenge to Assessment Orders: The petitioner, a registered dealer under TNVAT Act and CST Act, contested the assessment orders for the years 2006-2007, 2007-2008, and 2008-2009. The petitioner argued that the assessing officer failed to consider that the selling price of goods purchased was higher than the price charged by vendors, indicating no selling below purchase price. Additionally, the petitioner claimed that expenses for promotion of vendor's goods should not affect tax liability. The petitioner emphasized the relevance of the method and manner of giving discounts in determining the nature of discounts.

2. Applicability of Section 19(20): The key issue revolved around the applicability of Section 19(20) of the TNVAT Act. The Hon'ble Supreme Court, in a separate judgment, upheld the vires of Section 19(20) but restricted its retrospective effect. The Court highlighted that the provision introduced a new mechanism for determining input tax in specific situations where goods were sold below purchase price. The Court emphasized that such a provision cannot have retrospective effect when vested rights had accrued to dealers between 2007 and 2010. Consequently, the Court set aside the retrospective application of the amendment, allowing only prospective effect.

3. Validity of Assessment Orders in Light of Supreme Court Judgment: Considering the Supreme Court's decision, the High Court concluded that the assessments could be redone by the assessing officer in line with the Court's ruling. Consequently, the Court allowed the writ petitions, set aside the assessment orders, and remanded the matter to the respondent for fresh consideration. The Court directed the respondent to re-assess the petitioner's tax liability after applying the Supreme Court's decision and affording a personal hearing to the petitioner. The Court emphasized that no costs were to be awarded in this matter.

In summary, the High Court's judgment addressed the challenges to assessment orders under the TNVAT Act, focusing on the applicability of Section 19(20) in light of a Supreme Court judgment. The Court emphasized the need for a fresh assessment in line with the Supreme Court's decision, setting aside the original assessment orders and directing the respondent to re-evaluate the petitioner's tax liability accordingly.