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2024 (9) TMI 1708 - HC - VAT / Sales TaxChallenge to Assessment Orders - the orders were within the time frame or not - penalty imposed u/s 22(5) of the TNVAT Act was within the period of limitation or not - HELD THAT - Section 22(4) of TNVAT Act 2006 is a stand-alone provision which is applicable in the above three circumstances. The limitation under Section 27(1)(a) of TNVAT Act 2006 or under Section 22(5) of TNVAT Act 2006 cannot be read into Section 22(4) of TNVAT Act 2006 - Under Section 22(4) of TNVAT Act 2006 there is no period of limitation prescribed for either initiating or passing an order. However it should be within reasonable period. In case where any of the above three circumstances in Section 22(4) of TNVAT Act 2006 are attracted the Assessing Authority can also impose penalty equal to One Hundred and Fifty Percent (150%) of the difference of the tax assessed and the tax already paid as per the returns with a caveat that such penalty cannot be imposed after a period of six years from the date of the Assessment Order and after reasonable opportunity of showing cause against such imposition. The limitation under Section 22(5) of TNVAT Act 2006 for imposing penalty also cannot be said to have expired for any of Assessment Years as the last date would have expired only on 30.10.2021 30.10.2022 and 30.10.2023 whereas notices for reassessment under Section 22(4) of TNVAT Act 2006 were issued well before the time limit under Section 22(5) of TNVAT Act 2006 during the period when the Country was still under intermittent lockdown due to outbreak of Covid-19 pandemic. The date of assessment for all the Assessment Years is 11.01.2021. Therefore penalty imposed under Section 22(5) of TNVAT Act 2006 for all the three years were well within the period of limitation. Conclusion - i) There is no period of limitation under Section 22(4) of TNVAT Act 2006 for passing an order if any of the three circumstances stipulated in Paragraph 24 are attracted. ii) Though no period of limitation has been prescribed under Section 22(4) of TNVAT Act 2006 such period has to be exercised within a reasonable period. The powers that have been exercised under Section 22(4) and Section 22(5) of TNVAT Act 2006 are within reasonable period. iii) The limitation for imposing penalty is 6 years in terms of Section 22(5) of TNVAT Act 2006. The challenge to the Impugned Assessment Orders has to therefore fail - petition disposed off.
ISSUES PRESENTED and CONSIDERED
The primary issues considered in this judgment are:
ISSUE-WISE DETAILED ANALYSIS Relevant legal framework and precedents: The legal framework centers around Sections 22(2), 22(4), and 22(5) of the TNVAT Act. Section 22(2) deals with deemed assessment, Section 22(4) pertains to the best judgment assessment in cases of incomplete or incorrect returns, and Section 22(5) involves the imposition of penalties. The Court considered conflicting judgments from previous cases: Tvl.Pupa Lineraa and KAG India Private Limited. The former held that the limitation under Section 27(1)(a) applies to Section 22(4), while the latter held that Section 22(4) could be invoked independently within a reasonable period. Court's interpretation and reasoning: The Court interpreted that Section 22(4) of the TNVAT Act does not prescribe a specific limitation period for initiating or passing an order. However, any action under this section must be taken within a reasonable period. The Court noted that the limitation for imposing penalties under Section 22(5) is six years from the date of the assessment order. Key evidence and findings: The Court found that the petitioner had submitted incorrect details in the returns, leading to a shortfall in tax payments. The assessment orders were issued after the deemed assessment dates but within a reasonable period considering the circumstances, including the COVID-19 pandemic. Application of law to facts: The Court applied the law by determining that the invocation of Section 22(4) was timely as there is no explicit limitation period, and the actions were taken within a reasonable period. The penalties under Section 22(5) were also imposed within the permissible six-year limitation period. Treatment of competing arguments: The petitioner argued that the assessment orders were issued beyond the permissible period, relying on the decision in Tvl.Pupa Lineraa. However, the respondent contended that Section 22(4) allows for assessments at any time within a reasonable period, as supported by the KAG India Private Limited case. The Court sided with the latter interpretation, emphasizing the lack of a statutory limitation period under Section 22(4). Conclusions: The Court concluded that the assessment orders and penalties were validly issued within the framework of the TNVAT Act. The challenge to the assessment orders failed. SIGNIFICANT HOLDINGS Preserve verbatim quotes of crucial legal reasoning: The Court held: "There is no period of limitation under Section 22(4) of TNVAT Act, 2006 for passing an order, if any of the three circumstances stipulated are attracted." Core principles established:
Final determinations on each issue:
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