2018 (3) TMI 906 - HC - VAT and Sales Tax

Jurisdiction of Tribunal - Whether the Hon ble Sales Tax Appellate Authority, committed an error of law in not entertaining the appeal filed by the petitioners under Section 58 of the TNVAT Act, 2006 and wrongly applying the Third Proviso to Section 58(1) which would apply only when the remand made by the first appellate authority was for fresh assessment and not when the remand was coupled with directions and adverse findings? Whether the Hon ble Sales Tax Appellate Tribunal committed an error of law in failing to note that the embargo contained in the Third Proviso to Section 58(1) of TNVAT Act, 2006, was intended to reduce multiplicity of proceedings and therefore by its very nature could not apply when the remand made by the first appellate authority contained adverse directions and findings? Held that - The impugned order having been passed by the Appellate Deputy Commissioner (CT) under Section 51(3) is an appealable order - In terms of third proviso under Section 58(1), no appeal shall be admitted against an order passed by the Appellate Deputy Commissioner under Section 51 or by the appellate Joint Commissioner under Section 52 as the case may be setting aside the assessment and directing the assessing authority to make a fresh assessment. Therefore, the embargo placed under the said proviso would operate when the appellate authority exercising power either under Section 51 or 52 sets aside the assessment order and remands the matter for fresh assessment. Tax cases allowed in favor of assessee.

Summary

Issues:
Jurisdiction of the Sales Tax Appellate Authority and Tribunal under the TNVAT Act, 2006.

Analysis:
The petitioner, a public limited company registered as a dealer under the TNVAT Act and CST Act, was assessed by the respondent for the years 2007-08 to 2013-14. The assessment was based on supplies made under a replacement scheme where expired medicines were returned and destroyed. Appeals were filed challenging the assessment orders. The Appellate Deputy Commissioner remanded the matter for fresh disposal, but the Tamil Nadu Sales Tax Appellate Tribunal held the appeals as not maintainable citing the third proviso to Section 58(1) of the TNVAT Act.

The key issue revolved around the interpretation of the third proviso under Section 58(1) of the TNVAT Act, which restricts appeals against orders setting aside assessments and directing fresh assessments. The High Court analyzed the appellate authority's order and found that while there was a remand, it was limited to a specific aspect of the assessment and not a complete setting aside of the assessment order. The Court held that the Tribunal erred in not entertaining the appeals filed by the petitioner as the proviso did not apply to the circumstances of the case.

The Court emphasized that the appellate authority's decision was based on the merits of the matter and did not set aside the assessment order entirely. The remand was specific to one issue, and the other aspects were findings on the merits. Therefore, the Tribunal's decision to sustain the objection of maintainability based on the third proviso was incorrect. The Court directed the Tribunal to entertain the appeals and hear the matter on merits, highlighting that the proviso did not bar the appeals in this case.

In conclusion, the High Court allowed the tax cases, answering the questions of law in favor of the petitioner. The Tribunal was instructed to consider the appeals and proceed with the case in accordance with the law. No costs were awarded in this matter.