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2024 (2) TMI 953 - HC - VAT and Sales TaxValidity of two Notices dated 13.01.2020 issued by the first respondent for the assessment year 2012-2013 and 2013-2014 - notices are within Jurisdiction or not - no certificate was issued to the petitioner in Form S to claim exemption under proviso to Sub Clause (c) to Section 13(1) of the TNVAT Act, 2006 read with Rule 9 of the TNVAT Rules, 2007 - HELD THAT - Whether the petitioner was liable to pay tax under Section 5 or 6 of the TNVAT Act, 2006 is not clearly forthcoming from the documents filed before this Court. It is quite possible that the petitioner had opted to pay tax under Section 5 of the TNVAT Act, 2006 and therefore had obtained Form S Certificate of no tax liability under proviso to Section 13(1) of the TNVAT Act, 2006 read with TNVAT Rules, 2007 but had failed to pay the tax. This would require a fresh determination. However, it remains unexplained, as to why, by the CMRL having opted to pay tax at compounded rate under Section 6 of the TNVAT Act, 2006, the petitioner would procure Form S from the Commercial Tax Department under proviso to Section 13(1) of the TNVAT Act, 2006 read with 9(2) of the TNVAT Rules, 2007. This require a proper explanation by the petitioner. Therefore, if CMRL had failed to deduct the amounts under Section 13(1) of the TNVAT Act, 2006, machinery under Section 13(8) of the TNVAT Act, 2006, is to be directed only against CMRL. Therefore, to that extent the Impugned Notices are without jurisdiction. The 2% demand proposed in the Impugned Notices is to be directed only against CMRL and not on the petitioner. Therefore the proposed demand in the Impugned Notices are quashed. However, liberty is given to the Commercial Tax Department to complete the assessment if the petitioner was liable to pay tax under Sections 5 and Section 6 of the TNVAT Act, 2006. Petition allowed.
Issues Involved:
1. Jurisdiction of the respondent to issue impugned notices. 2. Validity and issuance of Form S certificates. 3. Responsibility for Tax Deducted at Source (TDS) under TNVAT Act, 2006. 4. Liability of the petitioner under Sections 5 and 6 of the TNVAT Act, 2006. Summary: 1. Jurisdiction of the Respondent to Issue Impugned Notices: The petitioner challenged the jurisdiction of the respondent to issue two notices dated 13.01.2020 for the assessment years 2012-2013 and 2013-2014. The petitioner argued that the impugned notices were without jurisdiction as the responsibility to deduct TDS lies with the "person" responsible for payment, not the petitioner. The court observed that if CMRL failed to deduct amounts under Section 13(1) of the TNVAT Act, 2006, the machinery under Section 13(8) should be directed against CMRL, making the impugned notices without jurisdiction. 2. Validity and Issuance of Form S Certificates: The petitioner claimed to have obtained Form S certificates for exemption from TDS for the respective contracts. However, the respondent argued that there were no records of such certificates in their office. The court noted that the petitioner failed to furnish proof or documentary evidence for the issuance and renewal of Form S certificates for the financial years 2012-2013 and 2013-2014. This required a fresh determination. 3. Responsibility for Tax Deducted at Source (TDS) under TNVAT Act, 2006: The court detailed the responsibilities under Section 13 of the TNVAT Act, 2006, which mandates the person responsible for paying any amount to a dealer for executing a works contract to deduct tax at specified rates. The court clarified that the burden of proving tax payment lies with the dealer claiming the deduction. Any failure to deduct tax entails proceedings against the person responsible under Section 13(8). 4. Liability of the Petitioner under Sections 5 and 6 of the TNVAT Act, 2006: The court noted that it was not clear whether the petitioner was liable to pay tax under Section 5 or 6 of the TNVAT Act, 2006. It was possible that the petitioner had opted to pay tax under Section 5 and obtained Form S but failed to pay the tax, requiring fresh determination. The court allowed the Commercial Tax Department to complete the assessment if the petitioner was liable to pay tax under Sections 5 and 6. Conclusion: The court quashed the proposed demand in the impugned notices, directing that any demand should be against CMRL. The writ petitions were allowed with the observations that the Commercial Tax Department could complete the assessment of the petitioner's tax liability under Sections 5 and 6 of the TNVAT Act, 2006. No costs were imposed, and connected miscellaneous petitions were closed.
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