2016 (8) TMI 669 - HC - VAT and Sales Tax

Deemed sales turnover - Nature of contract receipt shown in the balance sheet - the petitioner submitted that the contract receipt shown in the balance sheet actually does not represent any contract receipts from prospective flat buyers for construction of flats and hence, such contract receipt amount shown in the balance sheet cannot be taken for the purpose of arriving deemed sales turnover liable to tax under the Act. Held that - the respondent does not accept the deemed sales turnover as assessed by the petitioner, then the respondent should conduct an enquiry and examine the books of accounts and thereafter pass a speaking order and the respondent should not have completed the assessments as done in the instant cases. Hence, this Court is not inclined to direct the petitioner to make any further payments, as the petitioner is entitled to an opportunity. In the light of the above, the impugned orders are held to be non speaking orders and are in violation of the principles of natural justice. Writ petitions are allowed - Matter remanded back.

Summary

Issues:
Challenge to assessment orders under the Tamil Nadu Value Added Tax Act, 2006 for the years 2009-10 to 2014-15.

Analysis:
The petitioner, a developer and civil contractor engaged in promoting apartment complexes, contested assessment orders under the Tamil Nadu Value Added Tax Act, 2006 for the years 2009-10 to 2014-15. The petitioner's business was inspected, and defects were noted, leading to the issuance of notices by the respondent. Despite being unregistered at the time of inspection, the petitioner later registered under the Act. The petitioner argued that they had already paid tax on deemed sales turnover based on the percentage completion method advised by their auditor. They contended that the contract receipt in their balance sheet did not represent receipts from flat buyers, thus should not be considered for tax calculation.

Regarding penalties, the petitioner cited precedents to argue against levying penalties on assessed turnovers found in the dealer's accounts. They emphasized the quasi-judicial role of the Assessing Officer, referencing relevant court decisions. The petitioner requested a personal hearing, which was not granted, and assessments were made without fully considering the petitioner's objections and evidence. The respondent's assessment orders lacked detailed examination and were deemed non-speaking orders, violating principles of natural justice.

The Additional Government Pleader suggested directing the petitioner to pay 50% of the demanded amount for further opportunities, but the petitioner had already paid taxes on the deemed sales turnover as per their accounts. The court ruled in favor of the petitioner, quashing the impugned orders and remitting the matters back to the respondent for fresh consideration. The respondent was instructed to review the petitioner's objections, documents, conduct necessary inquiries, provide a personal hearing, and redo the assessment in compliance with the law. The court deemed the impugned orders as non-speaking and in violation of natural justice principles, closing the case without costs.