2019 (11) TMI 666 - HC - VAT and Sales Tax

Revision of assessment - levy of purchase tax - challenge to the revision notices was on the ground that the goods dealt with by the appellants were classified under 4th schedule and therefore, exempted from levying tax under Section 15 of the Act - section 27 of TNVAT Act - whether Section 15 of the Act exempts from tax both on sale and purchase of pulses and grams covered by Entry 68 of 4th schedule by specifying the turnover limit of ₹ 500/- crores in a year? HELD THAT - The matter pertains to rate of tax and particularly on the classification of goods and these are the issues to be decided by the Assessing Officer at the first instance. The appellants/petitioners should not be permitted to by-pass the normal procedure and the writ Court cannot exercise its jurisdiction against the proposal to revise the turnover. It is true that the appellants/petitioners are aggrieved by certain circulars issued by the Commissioner of Commercial Taxes, which may bind the Assessing Officer not the dealer, who was not a party to the circular. In fact, there is also a power for the Commissioner to revise the circular, when a third party files a revision petition stating that the circular should not be applied to their case - There are several decisions of the Division Bench of this Court, which have clearly held as to how the Assessing Officer has to independently proceed with the matter. The apprehension of the appellants is that the Assessing Officer will not do so blindly following the circular. Further, the learned counsel for the appellants would contend that there are other circulars issued by the Commissioner, which are in favour of the assessee. If so, it is well open to the dealers to rely upon those circulars. While holding that the writ petitions filed against the revision notices are premature and liable to be dismissed, we vacate the finding rendered by the learned Single Judge in the impugned order with a direction to the appellants to file their objections to the revision notices within 30 days from the date of a copy of this judgment and on receipt of objections, we direct the respective Assessing Officers to adjudicate the revision notices based on the contentions advanced by the dealers in their objections and the documents that may be produced at the time when personal hearing is offered to the dealers - Appeal dismissed.

Summary

Issues:
Challenging revision notices proposing to levy purchase tax under TNVAT Act, applicability of Section 15 exemption, reliance on Supreme Court case for tax levy, dispute over Commissioner's clarification, premature writ petitions challenging assessment reopening.

Analysis:

1. Challenging Revision Notices:
The writ appeals were filed challenging the revision notices issued by the Assessing Officer under Section 27 of the TNVAT Act proposing to revise assessment and levy purchase tax. The main contention was that the goods dealt with by the appellants were exempted from tax under Section 15 of the Act as they were classified under the 4th schedule.

2. Applicability of Section 15 Exemption:
The appellants argued that Section 15 of the TNVAT Act exempts both sale and purchase of pulses and grams covered under Entry 68 of the 4th schedule, subject to a turnover limit of ?500 crores in a year. They contended that the Assessing Officer should have applied this provision instead of proposing to levy purchase tax.

3. Reliance on Supreme Court Case:
The appellants cited a Supreme Court case, State of Tamil Nadu v. M.K. Kandasami, to support their argument for levy of purchase tax under Section 12 of the Act. They emphasized that the Assessing Officer should have followed the legal precedent set by the Supreme Court in such matters.

4. Dispute Over Commissioner's Clarification:
There was a dispute regarding the clarification issued by the Commissioner of Commercial Taxes, which the appellants claimed was contrary to Sections 15 and 12 of the TNVAT Act. They argued that the Assessing Officer should not be bound by the circulars issued by third parties and should independently assess each dealer's case.

5. Premature Writ Petitions:
The High Court observed that the writ petitions challenging the revision notices were premature as the Assessing Officer had not yet exercised his revisional powers in some cases. The Court highlighted that the normal procedure should be followed, and the Assessing Officer should independently decide on the classification of goods and rate of tax.

6. Direction to File Objections:
The Court directed the appellants to file their objections to the revision notices within 30 days and instructed the Assessing Officers to adjudicate the notices based on the contentions raised by the dealers. It emphasized that the Assessing Officer should make an independent decision, unaffected by circulars or previous court orders.

7. Outcome:
Ultimately, the Court dismissed the writ appeals, vacated the previous findings, and instructed the Assessing Officers to consider each dealer's case individually and independently. The judgment aimed to ensure a fair assessment process without external influences, directing a proper review based on objections raised by the dealers.

By providing detailed analysis of each issue involved, the Court clarified the legal principles and procedural requirements for challenging revision notices and emphasized the importance of independent assessment by the Assessing Officer in tax matters.