ASSESSMENT UNDER TAMIL NADU VALUE ADDED TAX ACT, 2006

[Mr. M. GOVINDARAJAN]

 The tax under the Act shall be assessed, levied and collected in the prescribed manner.

Procedure of assessment:

• The assessment in respect of the dealer shall be on the basis of return relating to his turnover submitted in the prescribed manner and within the prescribed period;
• The assessing authority shall accept the returns submitted for the year, by the dealer, if the returns are accompanied by the proof of payment of tax and the documents prescribed, and on such acceptance, the assessing authority shall pass an assessment order;
• If no return is submitted by the dealer for that year, the assessing authority shall, after making such enquiry as it may consider necessary, assess the dealer to the best of its judgment, subject to such conditions as may be prescribed; before taking such action, the dealer shall be given a reasonable opportunity;
• Any dealer assessed in the previous point may, within a period of 30 days from the date of service of the assessment order, apply to the assessing authority for re-assessment, along with the correct and complete return as may be prescribed.   On such application the authority shall, if it is satisfied that the failure to submit return in time was due to reasons beyond the control of the applicant, cancel the assessment made and make a fresh assessment on the basis of the return submitted;
• No application shall be entertained unless it is accompanied by the satisfactory proof of the payment of tax admitted by the applicant to be due or any such installment thereof as might have become payable as the case may be;
• If the tax on the basis of cancelled assessment has already been collected and if the amount of the tax arrived at as a result of fresh assessment is different from it, any amount over paid by the dealer shall be refunded to him without interest, or the further amount of tax, if any, due from him shall be collected in accordance with the provisions of this act;
• The assessing authority, in addition to the tax levied, may impose penalty which shall be, in the case of failure to submit return 150% of the tax assessed.  No penalty shall be imposed without giving an opportunity to the assessee of being heard;
• Penalty, if any, imposed and collected shall be refunded to the dealer without interest on cancellation of the order of original assessment;
• Not exceeding 20% of the total number of such assessment shall be selected by the Commissioner in such manner as may be prescribed for the purpose of detailed scrutiny regarding the correctness of the returns submitted by the dealer and in such cases, revision of assessment shall be made, wherever necessary.

Procedure when assessee claims identical question of law is pending before High Court or Supreme Court:

• Where an assessee claims that any question of law arising in his case for an assessment year, which is pending before the assessing authority (relevant case) is identical with a question of law arising in his case for another assessment year, which is pending before High Court or Supreme Court (other case) the assessee may file a declaration in Form Q for verification in the prescribed manner;
• If the assessing authority agrees to apply in the relevant case the final decision on the question of law in other case, he shall not raise such question of law in the relevant case;
• The assessing authority may, by order, in writing, admit the claim if it is satisfied that the question of law arising in the relevant case is identical with the question of law in the other case or reject the claim if it is not satisfied;
• The order of the assessing authority is final and shall not be called in question in any proceeding by way of appeal, reference or revision under this Act;
• If the claim is admitted, the assessing authority may pass an order disposing of the relevant case without awaiting the final decision on the question of law in the other case;
• When the decision on the question of law in the other case become final, it shall be applied to the relevant case and the assessing authority shall, if necessary, amend the order in conformity with such decision.

Assessment of sales shown in accounts at low prices:

• If the assessing authority is satisfied that a dealer, with a view to evade the payment of tax, has shown in his accounts, sales or purchase of any goods, at prices which are abnormally low compared to the prevailing market price of such goods, it may, at any time within a period of five years from the expiry of the year to which the tax relates, assess or reassess the dealer to the best of its judgment on the turnover of such sales or purchases after making such enquiry as it may consider necessary;
• Reasonable opportunity shall be granted to the assessee before taking such action;
• In computing the period of limitation for assessment or re-assessment, the time during which-
  • The proceedings for assessment or re-assessment remained stayed under the orders of a civil court or other competent authority;
  • Any appeal or other proceeding in respect of any other assessment or reassessment is pending before the High Court or Supreme Court involving a question of law having a direct bearing on the assessment or re-assessment in question;
  • Any appeal or proceeding of any assessment or re-assessment of the same or part of the turnover made under any other enactment was pending before any appellate, revisional authority or the High Court or Supreme Court should be excluded;
• In making assessment the assessing authority direct the dealer to pay, in addition to the tax assessed, by way of a penalty a sum of which shall be-
  • 50% of the tax due on turnover that was willfully not disclosed if the tax due on such turnover is not more than 10% of the tax paid as per the return;
  • 100% of the tax due on turnover-if tax due is more than 10% but more than 50% of the tax paid as per return;
  • 150% of the tax due on the turnover – if tax due is more than 50% of the tax paid as per return.

In making an assessment the assessing authority shall take into account such of the following factors as may be relevant to the determination of the prevailing market price of the goods, namely-

• the price charged by other dealers at the relevant stage of sale of similar goods during the relevant period;
• the difference between the price charged by a dealer towards the purchases of the goods from the earlier seller and the price charged on the resale of the same goods;
• the difference between the price paid by the dealer towards the purchase of the goods from the earlier seller and price charged for the resale of the same goods; and
• the differential price charged on sales against bulk orders and small orders in respect of the same goods.

If the difference in prices, exclusive of the tax element, is more than 15%, the assessing authority shall examine the reasons for the variation taking into account the relationship between the parties to the transactions, the charges for after sales services, packaging, transport and other expenses incurred by subsequent sellers which add to the cost of the goods at each stage of sale by successive dealers.

                        The assessing authority shall also examine whether there is such difference in the price charged on the sales of the same goods to different customers and whether the goods are made available to all distributors or other customers and whether the goods are made available to all distributors or other customers in unlimited quantities and at the same prices.

                        After making due allowance towards the variation in prices and normal profit margin, the assessing authority shall arrive at the market price that should have been charged by the dealer and levy tax on the taxable turnover so arrived.

Assessment in certain cases:

                        If no return is submitted by the dealer within the prescribed time or if the return appears to the assessing authority to be incomplete or incorrect, the assessing authority may, after making such enquiry as it considers necessary, determine the tax payable by the dealer to the best of its judgment after giving a reasonable opportunity to the dealer.

                        If the assessing authority has reason to believe that the tax determined by it for any period was based on too low a turnover or was made at too low a rate or was based on too high a turnover or was made at too high a rate it may enhance or reduce, as the case may be, such determination of tax.   Before making an enhancement of the tax payable the assessing authority shall give a reasonable opportunity to the dealer to show cause against such enhancement and make such enquiry as it may consider necessary.

                        The determination and collection of tax shall be subject to such adjustment as may be prescribed on the completion of assessment in the manner prescribed.

Assessment of legal representatives:

                        Where a dealer dies, his executor, administrator, or other legal representative shall be deemed to be the dealer for the purposes of this Act and the provisions of this Act shall apply to him in respect of the business of the said deceased dealer, provided that, in respect of any tax or fee assessed as payable by any such dealer or any tax, or fee which would have been payable by him under this Act as if he had not died, the executor, administrator or other legal representative shall be liable only to the extent of the assets of the deceased in his hands.

Assessment of escaped turnover:

                        Where, for any reason, the whole or any part of the turnover of business of a dealer has escaped assessment to tax, the assessing authority, at any time within a period of 5 years from the date of assessment order by the assessing authority, determine to the best of its judgment the turnover which has escaped assessment and assess the tax payable on such turnover after making such enquiry as it may consider necessary.

                        Where, for any reason, the whole or any part of the turnover of business of a dealer has been assessed at a rate lower than the rate at which it is assessable, the assessing authority may, at any time, within a period of 5 years from the date of order of assessment by the assessing authority, reassess the tax due after making such enquiry as it may consider necessary.

                        No order shall be passed without giving the dealer a reasonable opportunity to show cause against such order.   The provisions relating to exclusion of period for computing the limitation and provisions relating to penalties applicable for the assessment of sales shown in accounts at low prices are applicable to the assessment of escaped turnover.

Assessment of wrong availment of input tax credit:

                        Where, for any reason, the input tax credit has been availed wrongly or where any dealer produces false bills, declaration certificate or any other documents with a view to support his claim of input tax credit or refund, the assessing authority shall, at any time, within a period of 5years from the date of order of assessment, reverse input tax credit availed and determine the tax due after making such an enquiry, as it may consider necessary.   No order shall be passed without giving the dealer a reasonable opportunity to show cause against such order.   The provisions relating to exclusion period for computing the limitation and provisions relating to penalties applicable for the assessment of sales shown in accounts at low prices are applicable to the assessment of escaped turnover.

 The assessing authority shall direct the dealer to pay as penalty a sum-

• which shall be in the case of first such detection 50% of the tax due in respect of such claim; and
• which shall be in the case of second or subsequent detections 150% of the tax due in respect of such claim.

No penalty shall be levied without giving the dealer a reasonable opportunity of being heard against such imposition.

Assessment of turnover not disclosed under compounding provisions:

                        Where, for any reason, any part of the turnover of a business of a dealer who has opted to pay tax under compounding provisions has escaped assessment from the tax, the assessing authority may, at any time within a period of 5 years from the date of order of the assessment by the assessing authority, determine to the best of its judgment the turnover which has escaped assessment and re-assessment the tax payable on the total turnover including the turnover already assessed under the said section.

            Before making the re-assessment the assessing authority may make such enquiry as it may consider necessary and give the dealer concerned a reasonable opportunity to show cause against such re-assessment.

                        The amount of tax already paid by the dealer shall be adjusted towards the amount of tax due as the result of re-assessment.   The provisions relating to exclusion period for computing the limitation and provisions relating to penalties applicable for the assessment of sales shown in accounts at low prices are applicable for the assessment of this escaped turnover.

Assessment in cases of price variation:

                        If a dealer receives in any year any amount due to price variation, which would have been included in his turnover for any previous year if it had been received by him in that year, he shall, within 30 days from the end of the year in which such amount is received, submit a return in the prescribed form to the assessing authority.  The assessing authority shall proceed to assess the tax payable on such amount.

                        If the assessing authority is satisfied that any return submitted is correct and complete, it shall assess or re-assess, as the case may be, the dealer on the basis thereof.

                        If the return submitted by a dealer appears to the assessing authority to be incorrect or incomplete, the assessing authority shall, after making such enquiry, as it may consider necessary and after taking into account all relevant materials gathered by it, assess the dealer to the best of its judgment.   If there is a willful non disclosure of assessable turnover by the dealer in addition to tax the dealer is liable to pay penalty at the rate specified in Sec. 27(3).   Before taking any action the dealer shall be given reasonable opportunity to prove the correctness and completeness of the return.

                        If no return is submitted the assessing authority, may within five years within which such return must have been submitted proceed to assess the tax payable on the amount after giving a reasonable opportunity of being heard and make such other enquiry as it may consider necessary.   In addition to the tax assessed the dealer is liable to pay a penalty at 150% of the tax assessed.   The assessing authority shall in the same order of assessment or by a separate order direct the dealer to pay such penalty.

                        If a dealer returns in any year any amount due to price variations, which would have been excluded in his turnover for any previous year if it had been returned by him in that year, he shall, within 30 days from the end of the year in which such amount is returned, submit a return in the prescribed form to the assessing authority and there upon the assessing authority shall proceed to arrive at the quantum of the tax refundable on the amount returned by the dealer.   If the assessing authority is satisfied that any return submitted is correct and complete, it shall assess or re-assess, as the case may be, the dealer on the basis thereof.