2022 (7) TMI 228 - HC - VAT and Sales Tax

Maintainability of petition - requirement of pre-deposit - Validity of assessment order - interstate purchase of timber - grant of sufficient time before passing an order - Circular No.7 dated 03.02.2014 - violation of principles of natural justice - HELD THAT - The requirement under the Circular has been fully satisfied in this case, since, even while receiving letter dated 27.03.2019, there is an endorsement made by the officer in the delivery book of the petitioner restricting the time sought till 05.04.2019. Thus, it is not open to the petitioner to contend that he was unaware of whether the time sought was granted or not. Principles of natural justice - HELD THAT - The petitioner has no case as sufficient opportunity has been granted to the petitioner and there has been no effective compliance to any of the notices that had been issued. However, there is one point that survives on merits, since the petitioner would contend that since the entirety of the project has been undertaken by the contractor who has remitted the tax liability, nothing survives in its hands. While the construction of the 47 Villas had been entrusted to the sub-contractor, the scope of work that remained in the hands of the petitioner was the construction of its own offices and the restaurants and various amenities that would be shared by them with the Villas as well. In such an event, some portion of the contract value would be attributable to the petitioner also - there being neither violation of the principles of natural justice nor infirmity in the procedure followed by the authority and since the question that survives is a mixed question of law and fact that can only be answered by the authority, the petitioner is relegated to statutory appeal. Pre-deposit - HELD THAT - The preliminary question of whether any tax liability survives in the hands of the petitioner must be determined by the respondent at the first instance. Such a determination will be made by the respondent within three weeks from date of institution of the appeal, after hearing the petitioner. Petition disposed off.

Summary

Issues:
Challenge to assessment orders under Tamil Nadu Value Added Tax Act, 2006 for the periods 2011-12 to 2015-16, violation of principles of natural justice, liability for tax in the hands of the petitioner, determination of tax liability, pre-deposit condition for appeal.

Analysis:

The writ petitions challenged assessment orders passed under the Tamil Nadu Value Added Tax Act, 2006 for specific periods. The petitioner, a family-owned company, had developed 47 Villas and entrusted construction to a sub-contractor. The enforcement wing inspected the premises and demanded tax due to interstate timber purchase, which was successfully challenged earlier. Show cause notices were issued, granting multiple extensions for responses. Despite the extensions, the petitioner failed to provide the required details, citing family issues. The Assessing Authority set a final deadline for response.

Regarding the claim of violation of natural justice, the court found that sufficient opportunities were given to the petitioner, and no effective compliance was made with the notices. However, a question on the merits remained concerning the tax liability. The petitioner argued that since the contractor remitted tax, no liability existed. The court noted that the contractor's tax payment needed verification, as the entire contract value might not have been taxed. The petitioner's involvement in constructing offices and amenities implied some tax liability.

The court emphasized that the determination of tax liability was a factual matter best left to the authority. The petitioner was advised to pursue a statutory appeal within three weeks. On the issue of pre-deposit for the appeal, the court directed the respondent to determine if any tax liability existed for the petitioner within three weeks of the appeal's filing. If no liability was found, the appeals would proceed without pre-deposit; otherwise, compliance with pre-deposit conditions was required. The writ petitions were disposed of accordingly, without costs, and connected petitions were closed.