2020 (11) TMI 279 - HC - VAT and Sales Tax

Time Limitation - discrepancies and defects in the books of accounts - Validity of assessment order - TNVAT Act. Time Limitation - case of petitioners is that orders of deemed assessment under Section 22(2) of the Act have been passed and as such, the impugned orders are barred by limitation insofar as they have been passed beyond the time limit stipulated under Section 27 of the Act - HELD THAT - The proceedings initiating an assessment should commence prior to the date of expiry of limitation. In the present case, notices initiating proceedings for revision of assessments have admittedly been issued on 17.02.2017 in all cases, before the expiry of the period of limitation. This argument is thus rejected. Defects in the books of accounts - the argument of Mr.Shaffiq is to the effect that all material particulars as required by Rule 10(6)(b)(i)(B) of the Tamil Nadu Value Added Tax Rules, 2007, have not been supplied, particularly a certificate evidencing receipt of goods returned within a period of six months from date of sale - HELD THAT - It was incumbent on the part of the Officer to have tabulated the materials filed by the assessee in the first instance and compare the same with the requirements of the aforesaid Rule and thereafter come to a conclusion as to whether the Rule stands satisfied. This exercise has not been done and the Officer merely rejects the petitioner s contention on the assumption that there is a failure to produce documentary evidence in support of the claim of sales/returns. The exercise of reconciliation has not been conducted in the manner as required by law. The impugned assessments are thus set aside. The petitioner will appear before the Assessing Officer on Monday, the 7th December, 2020 at 10.30 a.m., without awaiting any further notice in this regard, with all relevant particulars in support of its claim of sales returns and orders of assessment de novo on this aspect shall be passed within a period of four (4) weeks from 07.12.2020, in accordance with law. Petition disposed off.

Summary

Issues:
1. Bar of limitation in assessment orders under the Tamil Nadu Value Added Tax Act, 2006.
2. Interpretation of the term "determination" in the context of assessment proceedings.
3. Compliance with Rule 10(6)(b)(i)(B) of the Tamil Nadu Value Added Tax Rules, 2007 regarding submission of material particulars.

Analysis:

1. The petitioner challenged assessment orders under the Tamil Nadu Value Added Tax Act, 2006, for the periods 2009-10 to 2012-13, citing the bar of limitation. The petitioner contended that the orders were deemed assessments under Section 22(2) of the Act and thus were beyond the time limit specified in Section 27. The proviso to Section 22(2) specified dates for deemed assessments, and the court referred to the interpretation of the term "determination" in assessment proceedings as crucial in this context.

2. The court analyzed the term "determination" in light of a previous Supreme Court judgment, emphasizing that assessment proceedings are considered pending from initiation until concluded by a final assessment order. The court highlighted that the term "determine" in Rule 33 should be interpreted to include the entire assessment process, not just the final order. The court concluded that proceedings initiating an assessment should commence before the limitation period expires, and in this case, notices were issued within the prescribed time, rejecting the limitation argument.

3. Regarding compliance with Rule 10(6)(b)(i)(B) of the Tamil Nadu Value Added Tax Rules, 2007, the court found that the assessing officer failed to properly reconcile the materials submitted by the petitioner with the rule's requirements. The officer rejected the petitioner's contentions without conducting a thorough reconciliation exercise. The court held that the assessments were not conducted in accordance with the law and set them aside. The petitioner was directed to appear before the Assessing Officer with all relevant particulars, and new assessment orders were to be passed within four weeks.

In conclusion, the High Court of Madras addressed the issues of limitation in assessment orders, the interpretation of "determination" in assessment proceedings, and compliance with specific rules in the context of VAT assessments, providing detailed analysis and directions for further proceedings.