2021 (12) TMI 845 - HC - VAT and Sales Tax

Reopening of assessment - Section 27 of the Tamil Nadu Value Added Tax Act, 2006 - attachment of Bank Accounts - Assessment Years namely 2010-2011, 2011-2012, 2012-2013, 2013-2014, 2014- 2015 and 2015-2016 - HELD THAT - The proper method was to determine tax by invoking best judgement method under the Act. Considering the fact that the said petitioner has also not participated in the proceedings before the respondents by responding to the notice issued prior to the assessment order dated 21.12.2018 nor paid any amount. The impugned orders dated 21.12.2018 are quashed subject to the petitioner in W.P.No.11414 of 2021 etc., batch in depositing a sum of ₹ 25 lakhs within a period of 60 days from the dated of receipt of copy of this order with the respondent as and when such deposit is made by the petitioner within the aforesaid period, in two instalments the respondent shall take up the case and pass fresh order on merits and in accordance with law. The impugned orders which stand quashed subject to payment of the amount within the prescribed period, shall be treated as Show Cause Notice to the petitioner - petition disposed off.

Summary

Issues involved:
1. Validity of assessment orders for multiple years
2. Legality of attaching bank account
3. Justification for tax demand and penalty
4. Compliance with tax proceedings and appeal process

Analysis:

Issue 1: Validity of assessment orders for multiple years
The petitioners challenged the assessment orders issued for the years 2010-2016, claiming them to be illegal, arbitrary, and ultra vires. The petitioner, engaged in a business under a specific name, surrendered the Registration Certificate under the Tamil Nadu Value Added Tax Act, 2006. Despite receiving notices for assessment, the petitioner failed to cooperate, leading to the enforcement wing's surprise visit and subsequent demand for turnover details. The court noted the lack of sincerity from the petitioner in addressing the tax liability, as no appeal was filed or tax amount deposited. The court quashed the impugned orders, directing the petitioner to deposit a specified amount within 60 days for a fresh assessment.

Issue 2: Legality of attaching bank account
The respondent justified attaching the bank account of the petitioner's father, claiming both petitioners lived in the same house and were part of the same joint family. Although the attachment was lifted later, the respondent sought to continue it until the due amount was paid by the other petitioner. The court observed the connection between the main and additional places of business but emphasized the need for proper justification and legal basis for such actions.

Issue 3: Justification for tax demand and penalty
The total tax due, along with penalties, was detailed for each assessment year, amounting to a significant sum. The court raised concerns about the lack of clarity on how the tax amounts were determined and the absence of records to support the demands. It emphasized the need for invoking the best judgment method under the Act and ensuring the petitioner's participation in the proceedings to establish a fair assessment process.

Issue 4: Compliance with tax proceedings and appeal process
The court highlighted the petitioner's non-cooperation and failure to participate in the assessment proceedings, leading to the quashing of the impugned orders. It outlined a specific deposit requirement and procedural steps for the petitioner to follow, including responding to a show cause notice and presenting defenses within specified timelines. Failure to comply with the deposit directive would result in the revival of the quashed orders, allowing the respondent to recover the determined amounts lawfully.

In conclusion, the court clarified the independence of the petitioners as separate assesses under the Tamil Nadu Value Added Tax Act, 2006, disposing of the son's writ petition while allowing the father's petition. The connected miscellaneous petitions were closed without any cost orders.