2019 (12) TMI 881 - HC - VAT and Sales Tax

Reassessment - Alleged escapement of turnover - polyster, cotton blended yarn - violation of condition of the Notification in G.O.Ms.No.111, Commercial Taxes and Religious Endowments, dated 7th April 1998 - consignment/branch transfers of the goods - change of opinion - HELD THAT - In view of the terms employed in the said Notification dated 7th April 1998, examining the facts of the Assessee itself, the Assessing Authority himself had applied the reduced rate of 2% of the sale of the stable fibres yarn on the Assessee in terms of the said Notification and the said issue stood concluded by the Clarification issued by the learned Commissioner under Section 28-A of the Act on 21.10.1999. Therefore, it was not open to the Assessing Authority to invoke his reassessment powers conferred under Section 16(1) of the Act on the same set of facts. Admittedly, there were no different facts available before the Assessing Authority and the same consignment transfer of cotton yarn to the extent of ₹ 1,56,23,382.32 was sought to be made the basis for impugned reassessment proceedings under Section 16(1) of the Act, whereas the said facts had already been considered by the earlier Assessing Authority for the very same period on the basis of a binding order passed by the Commissioner under Section 28-A of the Act on 21.10.1999 - The impugned reassessment notice, sitting over the view of Commissioner is nothing but judicial and hierarchical indiscipline on the part of Assessing Authority and misuse of such powers. The impugned reassessment notice does not refer to the binding order of the Commissioner under Section 28-A of the Act at all. The impugned reassessment notice under Section 16(1) of the Act by the learned Assessing Authority on 06.06.2001 is based on a mere change of opinion and without any other reason whatsoever and the same is not permissible under Section 16(1) of the Act - Petition allowed.

Summary

Issues:
Reassessment notice under Section 16(1) of the Tamil Nadu General Sales Tax Act, 1959 for alleged escaped turnover of polyster-cotton blended yarn by the Assessee during 1999-2000.

Analysis:

1. Background and Allegations:
The writ petition was filed by M/s. Golden Spinning Mills (P) Limited against a reassessment notice under Section 16(1) of the Act dated 06.06.2001. The notice aimed to initiate reassessment proceedings for the year 1999-2000, alleging that the Assessee violated the conditions of a notification by making consignment transfers of cotton yarn, leading to the alleged escaped turnover of polyster-cotton blended yarn.

2. Petitioner's Argument:
The petitioner's counsel contended that the earlier Assessing Authority had already considered the same facts and found no violation of the notification's conditions. They argued that the Assessee was entitled to the concessional rate of 2% on inter-state sale of man-made staple fibres yarn, based on a clarification issued by the Commissioner of Commercial Taxes.

3. Clarification and Previous Assessment:
The Commissioner's clarification stated that the Assessee was eligible for the concessional rate of 2% as they had not made any consignment transfers of man-made staple fibre yarn outside the State. The earlier Assessment Order also allowed the exemption claimed by the Assessee on consignment sales, based on verified documents.

4. Impugned Notice and Contradictions:
However, the impugned notice issued on 06.06.2001 alleged a violation of conditions, citing consignment transfers of cotton yarn and stating that the Assessee was ineligible for the concessional tax rate. The court noted that the Assessing Authority's reassessment was based on a mere change of opinion without any new material, contradicting the earlier decision and the Commissioner's clarification.

5. Judicial Discipline and Conclusion:
The court found that the reassessment notice was unwarranted and constituted judicial and hierarchical indiscipline. It highlighted that the Assessing Authority failed to consider the binding order of the Commissioner and misused their powers. Consequently, the court quashed the impugned notice dated 06.06.2001, ruling in favor of the Assessee in the writ petition.