2018 (1) TMI 404 - HC - VAT and Sales Tax

Validity of assessment order - whether the respondent can be justified in holding that the petitioner has not opted to pay tax under Section 7-C of the TNGST Act? - Held that - under the TNGST Act or the Rules framed thereunder, there is no separate form provided or any separate method provided for exercising the option to pay tax under Section 7-C of the TNGST Act. Therefore, it can be safely concluded that the assessee by filing a return and paying tax under Section 7-C of the TNGST Act amounts to exercising option under the said provision. Thus, the respondent committed an error in holding that the petitioner did not exercise his option. Therefore, the first question is answered in favor of the petitioner and against the revenue. Whether the respondent can re-open the assessment without there being a prior order from the Commissioner in accordance with Rule 15(5-B) of the TNGST Rules? - Held that - on perusal of the original assessment order dated 29.05.2003, the respondent has clearly stated that such order is subject to random selection for detailed scrutiny under Section 12(1-A) of the TNGST Act. Thus, the respondent was fully aware that the assessment can be revised only subject to random selection under Section 12(1-A) of the TNGST Act. In order to effect such revision, the procedure under Rule 15(5-B) of the TNGST Rules have to be followed - decided against Revenue. Petition allowed.

Summary

Issues:
1. Whether the petitioner opted to pay tax under Section 7-C of the TNGST Act.
2. Whether the respondent can re-open the assessment without a prior order from the Commissioner as per Rule 15(5-B) of the TNGST Rules.

Analysis:

Issue 1:
The petitioner, a registered dealer under the TNGST Act, challenged an assessment order for the year 2000-01. The primary issue was whether the petitioner had opted to pay tax under Section 7-C of the TNGST Act. The petitioner had indeed opted for this tax payment method, as evidenced by filing returns and paying tax at 2%. The respondent's assertion that the petitioner did not exercise this option was found to be incorrect. The court referenced a case to establish that filing returns and paying tax under Section 7-C constitutes exercising the option, as no specific form or method is prescribed for such an exercise under the Act.

Issue 2:
The second issue revolved around the respondent's authority to re-open the assessment without following the procedure under Rule 15(5-B) of the TNGST Rules. The original assessment order indicated that any revision would be subject to random selection for scrutiny under Section 12(1-A) of the TNGST Act. The petitioner argued that the procedure under Rule 15(5-B) was not adhered to. The court agreed, highlighting that the respondent's power under Section 16-AA of the TNGST Act could only be invoked if turnover had escaped assessment under Section 7-C, which was not the case here. A previous case was cited to support the petitioner's position that assessment under Section 7-C should not be compelled to undergo regular assessment processes. Consequently, the court ruled in favor of the petitioner, quashing the impugned proceedings.

In conclusion, the court found in favor of the petitioner on both issues, emphasizing the validity of the petitioner's tax payment option under Section 7-C and the necessity for adherence to procedural requirements before re-opening assessments under the TNGST Act.