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2019 (11) TMI 423 - HC - VAT and Sales TaxSpecial scheme of assessment - transitional period between the phasing out of the TNGST Act and the coming into force of the Tamil Nadu Value Added Tax Act, 2006 - Section 12C and Rule 15(5-E) of the Tamil Nadu General Sales Tax Act 1959 - service of SCN - Notice dated 02.03.2007 had been issued though served on the assessee/petitioner on 11.05.2007 - petitioner objected to the preassessment process on 21.05.2007 relying both on the expedited process of assessment set out under Section 12 C and seeking a personal hearing prior to conclusion of assessment proceedings - principles of natural justice. HELD THAT - The question of suppression does not merely mean a difference in the interpretation of law vis-a-vis the petitioner and the respondent. In the present case, it is a legal dispute as to whether the transaction in question constitutes works contract, taxable at 4% or sale of equipment, taxable at 20%. Though the Assessing Authority, in the present case, has proceeded to assess the transaction as sale of equipment, taxable at the rate of 20%, that by itself cannot lead to an inference of suppression and a bonafide difference of opinion on the interpretation of a taxing statute cannot be ruled out. In the facts and the circumstances of the present case, particularly bearing in mind that no personal hearing has been granted to the petitioner, I am inclined to set aside the assessments, to be re-done de novo for both periods 2004-05 and 2005-06, on merits. The assessee shall appear before the Assessing Authority on 30.10.2019 at 10.30. a.m. No further notice need be issued in this regard. Assessment periods 2002-03, 2003- 04 and 2004-05 - Orders of assessment dated 27.02.2007 are impugned in relation to assessment periods 2002-03 and 2003-04 and show cause notice dated 27.02.2007 for the period 2004-05 - whether the provisions of Section 12C and the procedure for expedited assessment provided therein could also be sought by an assessee where there had been proceedings for assessment initiated even prior to 01.04.2006? - HELD THAT - The tenor of Section 12C, to my mind, appears to be that assessments in relation to the periods prior to 01.04.2006 'shall' be on the basis of return and the declarations prescribed and such returns shall be accepted without requiring the presence of the dealer or production of books of accounts subject to the satisfaction of the conditions stated therein. This indicates that an order under Section 12C will have to be passed in cases where an assessee satisfies all the prevalent conditions even if proceedings for assessment have been initiated in respect of the periods in question. After all, the clarificatory circular issued by the Special Commissioner makes it clear that the purpose of Section 12 C and the corresponding Rule is to bring to an end proceedings for assessment as expeditiously as possible, if the officer is prima facie satisfied with the return and the exemptions sought by the assessee, subject to the conditions stipulated in the Rule. An assessment under Section 12 C must be framed even in respect of periods where there has been exchange of communication by way of pre-assessment notice, objections as well as personal hearing afforded to the petitioner prior to 01.04.2006, such proceedings pending completion as on 01.04.2006. The impugned orders of assessment though dated 27.02.2007 do not refer to the provisions of Section 12 C at all - Admittedly, in these cases the assessee has only invoked the applicability of Section 12C only after completion of assessment, by communication dated 19.03.2007 wherein for the first time Section 12 C is referred to and a request made to the Assessing Officer to cancel the assessment order and to recall the same. This request has been pending with no reply, hence prompting the assessee to approach this Court by way of the present Writ Petitions. The assessee has prima facie discharged the burden cast upon it to establish that the transactions in question constitute branch transfers and nothing further. The Assessing Authority has, on the other hand, not conclusively established suppression in order to take the present assessment out of the ambit of Section 12 C - impugned order as well as SCN set aside. Validity of orders of assessment dated 16.01.2007 passed in terms of the provisions of the Tamil Nadu General Sales Tax Act, 1959 - HELD THAT - Orders of assessment in respect of the periods 2002-03 and 2005-06 are placed on file to establish that identical claims of exemption have been made by the petitioner for the previous and later years and the Assessing Authority has, on an examination of relevant documents, accepted the claim for exemption. The conclusion of the Assessing Authority turns on the position that the petitioner has not supplied cotton yarn for export but has, in fact, supplied cloth manufactured from out of the cotton yarn, for export. Learned counsel for the Revenue is unable to produce a copy of the Clarification and instead circulates a copy of the Exemption Notification to which I have already made reference. The fact that the petitioner has indeed supplied manufactured cotton is not denied by it - the case of the petitioner is admitted, simply on the anvil of consistency. Though a ground has been raised questioning the validity of the present assessment in the light of Section 12 C of the TNGST Act, this ground is given up by the learned counsel for the petitioner in the course of the hearing. Petition allowed.
Issues Involved:
1. Applicability of Section 12C of the Tamil Nadu General Sales Tax Act, 1959 (TNGST Act) for expedited assessments. 2. Criteria for deemed assessments under Section 12C and Rule 15(5-E) of the Tamil Nadu General Sales Tax Rules. 3. Allegations of tax suppression and its impact on eligibility for Section 12C. 4. Consistency in the application of exemption notifications for sales of cotton yarn to exporters. Detailed Analysis: 1. Applicability of Section 12C for Expedited Assessments: The Government of Tamil Nadu introduced Section 12C in the TNGST Act to facilitate a smooth transition from the TNGST regime to the TNVAT regime. This provision aimed to expedite the completion of assessments for periods prior to 01.04.2006. Section 12C allowed assessments to be completed based on returns filed by dealers without requiring their presence or production of books of accounts, provided certain conditions were met. The court noted that Section 12C was intended to ease the transition and should be applied to all pending assessments for periods before the effective date. 2. Criteria for Deemed Assessments under Section 12C and Rule 15(5-E): Rule 15(5-E) outlined specific conditions that dealers must satisfy for assessments under Section 12C. These included timely submission of prescribed returns, declarations, and certificates, no attempts to conceal or suppress tax liability exceeding ?25,000, no arrears of tax, and the assessment not relating to the first or last year of business. The court emphasized that these conditions were critical for the appreciation of issues in the writ petitions. 3. Allegations of Tax Suppression and Impact on Eligibility for Section 12C: The court examined cases where the Assessing Authority denied the benefit of Section 12C due to alleged tax suppression. For instance, in W.P.Nos.18254 and 18255 of 2008, the Assessing Authority rejected the request for assessment under Section 12C for 2004-05 because the dealer commenced business during the assessment year and was found to have suppressed tax. However, for 2005-06, the court noted that the alleged suppression was a legal dispute over the interpretation of whether the transaction was a works contract or a sale of equipment. The court held that a bona fide difference of opinion on the interpretation of a taxing statute could not be equated with suppression. Consequently, the court set aside the assessments for both periods and directed a de novo assessment. 4. Consistency in Application of Exemption Notifications for Sales of Cotton Yarn to Exporters: In W.P.Nos.12166 and 12167 of 2007, the petitioner challenged the rejection of their claim for exemption on the sale of cotton yarn to exporters. The court noted that the Assessing Authority had accepted similar claims for previous and subsequent years. The rejection was based on a clarification issued in 2006, which was not provided to the petitioner at the time of assessment. The court emphasized the need for consistency and set aside the impugned orders, allowing the writ petitions. Conclusion: The court allowed the writ petitions, emphasizing the need for finality in long-pending assessments and consistency in the application of tax laws. The Assessing Authorities were directed to conduct de novo assessments, considering all relevant materials and providing personal hearings to the petitioners. The court also highlighted that allegations of suppression must be established beyond reasonable doubt to deny the benefit of Section 12C.
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