2020 (4) TMI 271 - HC - VAT and Sales Tax

Principles of natural justice - inter-state sale or not - respondent has justified the impugned order on the ground that though notice was issued to the petitioner, the petitioner did not file any reply and therefore, the impugned order came to be passed - HELD THAT - Notice dated 19.01.2012 was issued after the inspection was carried on 17.08.2004 by the enforcement wing of the Commercial Tax Department and records were seized from the petitioner s factory and its depot in Pondicherry. After the records were ceased, notices were issued on 19.01.2012 - Meanwhile, TNVAT Act, 2006 came into forced substituted to the TNGST Act, 1959. As per Section 12-C of the TNGST Act, the respondent was required to complete the assessment based on the returns already filed, without insisting on documents or the presence of dealer. As per Section 12-C of the TNGST Act, 1959, the respondent ought to have passed a deemed assessment order based on the returns filed by the petitioner. The said assessment can be re-opened under the provisions of the TNGST Act, 1959 read with Section 88 of the TNVAT Act, 2006 - without passing a deemed assessment order under Section 12-C of the TNGST Act, 1959, the respondent has straight away issued a pre-assessment notice dated 19.01.2012 to the petitioner based on the inspection carried out by he enforcement official on 17.08.2004 for the Assessment Year 2004- 05. The notice dated 19.01.2012 issued to the petitioner was in order though it relied on the findings of the investigation of the enforcement wing in 2004 as there were enough materials for the respondent to re-open the assessment for escaped turnover - petitioner ought to have participated in the said proceeding and given a proper reply to the said notice. However, the petitioner failed to file a reply. The case is remitted back to the respondent to pass a fresh order in accordance with law - petition allowed by way of remand.

Summary

Issues Involved:
Challenging an order passed by the respondent in CST for the Assessment Year 2004-05 regarding turnover claimed as transfer against C-Form and F-Form.

Analysis:
The petitioner, engaged in manufacturing, transferred stock to its Pondicherry depot through appointed agents. A surprise inspection raised suspicions of branch transfer non-compliance. A notice was issued in 2012 based on findings from 2004 inspection. The respondent dropped inter-state sale proceedings but disallowed claimed turnover against C-Form and F-Form. The respondent justified the order due to the petitioner's lack of reply to the notice.

The notice was issued post-inspection and after the enactment of TNVAT Act, 2006, replacing TNGST Act, 1959. Section 12-C of TNGST Act required assessment completion based on filed returns without dealer presence. The respondent, without a deemed assessment order under Section 12-C, issued a pre-assessment notice in 2012 based on 2004 inspection. The incorporation of Section 12-C aimed to end incomplete assessments, allowing for reopening under TNGST Act, 1959 and TNVAT Act, 2006.

The notice was deemed valid as there were grounds for reassessment due to escaped turnover. The petitioner's failure to reply led to the impugned order. However, before using the best judgment method, a proper corrigendum notice should have been issued, which was not done. The court set aside the order, remitting the case for a fresh order in compliance with the law, treating the impugned order as a corrigendum to the show cause notice.

The petitioner must reply within thirty days, and the respondent must pass appropriate orders within sixty days, completing proceedings within ninety days. The writ petition was disposed of with no costs, and the connected Miscellaneous Petition was closed.