2019 (7) TMI 894 - HC - VAT and Sales Tax

Deemed Assessment - stock taking - TNVAT Act - HELD THAT - This Court is of the view that it will not serve any purpose in embarking upon the exercise of ascertaining the exact date on which impugned order was served on the writ petitioner. The impugned order has been passed on the basis of the statement given by the writ petitioner dealer to the Enforcement Wing officials - The principles in the case of NARASUS ROLLER FLOUR MILLS VERSUS THE COMMERCIAL TAX OFFICER 2015 (4) TMI 361 - MADRAS HIGH COURT comes to the aid of the writ petitioner in a slightly difference manner in the instant case. The impugned order shall be treated as SCN - Writ petitioner shall deposit 15% of the differential tax (excluding penalty) within a fortnight from the date of receipt of a copy of this order. Post payment of 15% of differential tax, in the aforesaid manner, writ petitioner shall send in its objections along with proof of payment of 15% differential tax within another fortnight therefrom. Petition disposed off.

Summary

Issues:
1. Deemed assessment under TNVAT Act
2. Discrepancies in monthly returns
3. Objections to revisional notice
4. Principle of best judgment assessment
5. Timeliness of filing writ petition
6. Consideration of objections
7. Application of Narasus principle
8. Court's decision on impugned order

Deemed Assessment under TNVAT Act:
The case involves a writ petition under the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act) concerning the entitlement of the petitioner, a dealer under the Act, to deemed assessment under Section 22. The respondent disputed the petitioner's eligibility for deemed assessment due to discrepancies in monthly returns filed by the petitioner.

Discrepancies in Monthly Returns:
The respondent contended that discrepancies in the petitioner's monthly returns for a specific period came to light during an inspection, leading to a revisional notice being issued. The objections raised by the petitioner regarding the discrepancies were considered but ultimately negated based on the difference found between actual stock and accounts during an inspection by Enforcement Officers.

Objections to Revisional Notice:
The petitioner argued that a best judgment assessment order cannot solely rely on a statement given to Enforcement Wing officials. Citing the Narasus case, the petitioner claimed that the principle established in that case supported their position.

Principle of Best Judgment Assessment:
The court deliberated on the principle of best judgment assessment and the applicability of the Narasus case. The court noted that while objections were considered, they were negated based on the discrepancy found during the inspection, which formed the basis of the impugned order.

Timeliness of Filing Writ Petition:
The respondent raised concerns about the delay in filing the writ petition, highlighting that the impugned order was dated six months prior to the filing of the petition. The petitioner explained that the order was served on them later, justifying the delay.

Consideration of Objections:
The court considered the objections raised by both parties, focusing on the grounds for negating the petitioner's objections and the reliance on the statement provided during the inspection by Enforcement Wing officials.

Application of Narasus Principle:
The court analyzed the application of the Narasus principle in the current case, noting that while the objections were considered, they were rejected based on the discrepancy observed during the inspection, which was accepted and signed by the petitioner.

Court's Decision on Impugned Order:
After evaluating all aspects, the court directed that the impugned order should be treated as a show-cause notice, requiring the petitioner to deposit a percentage of the differential tax, submit objections, and undergo a reassessment process under Section 22(4) of the TNVAT Act. The court provided specific timelines and procedures for the revised assessment, concluding the writ petition with these directions and no costs incurred.