2017 (9) TMI 946 - HC - VAT and Sales Tax

Jurisdiction - time limitation - whether the first respondent, in exercise of his powers under Section 32 of the TNGST Act, while purporting to pass orders of assessment could do so, beyond the period of limitation stipulated under Section 16 of the TNGST Act, 1959? - Held that - the notices issued to the petitioners contain seven pages, which are common to all the petitioners. In fact, these seven pages appear to be photo stat copies, which are commonly prepared and the name of the dealer has been filled up in hand at the appropriate place. Thus, the entire purpose behind issuing impugned notices is to re-open the concluded assessment - the pattern adopted by the first respondent is identical to that of the pattern adopted by the respective Assessing Officers for either earlier or subsequent assessment years. Hence, the first respondent had no new material to come to the conclusion that the assessments have to be re-opened, as it is prejudicial to the interest of the Revenue, and he forms such opinion on enquiry being made. If that is the factual position, then, obviously, the first respondent cannot exercise the powers, what could not have been done by the Assessing Officer, as the statement was recorded much after the assessments were completed, and the same are clearly barred by limitation, as it is beyond the period of five years. The power under Section 16(1) is wide enough and cannot be said to be limited to assessment of assessable turnover under that sub-section by the Assessing Authority only. It is to be invoked in all cases, where, a statutory functionary under the Act assumes jurisdiction to assess the escaped turnover. Therefore, it was held that, in passing an original order of assessment, the Board exceeded its powers under Section 34, and that the order was also passed beyond time. Therefore, the order was held to be unenforceable in law. The material sought to be relied upon was available with the Assessing Officer for the relevant assessment year. As noticed, the Assessing Officer himself, in the subsequent assessment orders has referred to the very same materials, which are contained in the earlier notice, and hence, the impugned notices are unsustainable - the impugned notices are wholly without jurisdiction - petition allowed - decided in favor of petitioner.

Issues Involved:
1. Validity of notices issued under Section 32 of the Tamil Nadu General Sales Tax Act (TNGST Act).
2. Time-barred nature of the impugned notices.
3. Jurisdiction and power of the Deputy Commissioner under Section 32 of the TNGST Act.
4. Relevance and reliance on extraneous materials for re-opening assessments.
5. Impact of existing assessment orders on the validity of re-opened assessments.

Detailed Analysis:

1. Validity of Notices Issued Under Section 32 of the TNGST Act:
The petitioners challenged the notices issued by the first respondent on 30.07.2004, alleging that the purchases from certain dealers were fabricated and aimed at evading tax. The first respondent proposed to reject the exemption claims and re-determine the taxable turnover, imposing penalties under Sections 12(3)(b) and 10(3) of the TNGST Act. The notices were issued by the Deputy Commissioner exercising special powers under Section 32 of the TNGST Act, which allows for the revision of orders prejudicial to the interests of the revenue.

2. Time-Barred Nature of the Impugned Notices:
The petitioners contended that the notices were time-barred as they were issued beyond the five-year limitation period stipulated under Section 16 of the TNGST Act. The court noted that the power under Section 16 is to assess escaped turnover within five years from the expiry of the relevant year. The Deputy Commissioner’s powers under Section 32 are also subject to a five-year limitation period. The court referenced several decisions, including A. Velayutha Raja Vs. Board of Revenue (CT), Reliance Motor Company Pvt. Ltd. Vs. State of Tamil Nadu, and M/s. P. Narayansamy Vs. State of Tamil Nadu, which established that revisional powers must adhere to the same limitation period as original assessments.

3. Jurisdiction and Power of the Deputy Commissioner Under Section 32 of the TNGST Act:
The court examined whether the Deputy Commissioner could issue notices under Section 32 beyond the limitation period prescribed under Section 16. It was held that Section 32 allows the Deputy Commissioner to revise orders prejudicial to revenue but must adhere to the five-year limitation period. The court emphasized that the Deputy Commissioner cannot exercise powers that the Assessing Officer could not, especially when the assessments were completed and the material relied upon was available at that time.

4. Relevance and Reliance on Extraneous Materials for Re-Opening Assessments:
The court found that the notices issued to the petitioners were based on a statement recorded from one S. Mahendra Kumar Jain after the assessments were completed. The court held that relying on such extraneous materials, which were not part of the original assessment record, was improper. This reliance on post-assessment statements was insufficient to justify re-opening the assessments.

5. Impact of Existing Assessment Orders on the Validity of Re-Opened Assessments:
The court noted that the sellers from whom the petitioners purchased goods had already been assessed to tax for the relevant years, and those assessment orders were intact. This further invalidated the impugned notices as there was no new material justifying the re-opening of assessments. The court concluded that the impugned notices were issued without jurisdiction and were unsustainable.

Conclusion:
The court allowed W.P.Nos.24437, 26998, 27330, and 27345 of 2004, quashing the impugned notices. Similarly, W.P.No.34269 of 2004 was also allowed, following the same reasoning. All writ petitions were allowed without costs, and the connected miscellaneous petitions were closed.

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