2019 (3) TMI 404 - HC - VAT and Sales Tax

Restoration of assessment - TNVAT Act - suo motu framing the issue and adjudicating the same which were not at all disputed by the respondent in its Appeal - restoration of levy of tax and penalty u/s 27(3) in absence of any purchase omission - Held that - In the instant case, we have seen the memorandum of appeal filed by the Revenue before the Tribunal in Form-Z and the said memorandum of appeal has disputed only two of the turnovers, which were assessed to tax and were deleted by the first appellate authority, viz., difference in sales turnover of ₹ 9,40,800/- and receipt of cartage for ₹ 3,76,435/-. The turnover, which has now been restored by the Tribunal being ₹ 5,25,000/- was never appealed against - Similarly, the Revenue did not challenge the order passed by the first appellate authority deleting the entire penalty imposed by the Assessing Officer under Section 27(3) of the TNVAT Act. Thus, the impugned order is wholly without jurisdiction. Tax case revision is allowed - the order passed by the Tribunal is set aside; and the order passed by the first appellate authority is restored - decided in favor of petitioner-dealer.

Summary

Issues:
Challenge to order passed by Tamil Nadu Sales Tax Appellate Tribunal under Tamil Nadu Value Added Tax Act, 2006 for assessment year 2009-10.

Detailed Analysis:

1. Jurisdiction of the Tribunal to restore assessment:
The main issue in this case was whether the Tribunal had the authority to reinstate the assessment made by the Assessing Officer regarding a turnover of ?5,25,000. The turnover was initially assessed to tax at 12.5% but was set aside by the first appellate authority. The Revenue only appealed on specific grounds related to different turnovers, consciously omitting the challenge to the turnover of ?5,25,000 and the deletion of penalty under Section 27 of the TNVAT Act. The Tribunal's restoration of the Assessing Officer's order on this ground was deemed beyond its jurisdiction.

2. Powers of the Tribunal as a second appellate authority:
The Tribunal, functioning as a second appellate authority, is granted powers under Section 58 of the TNVAT Act to review all materials in the assessment order, not just those raised by the appellant. It can enhance the assessment if a petition for enhancement is filed by the State within the specified period. The Tribunal's power to enhance assessment is limited if the State does not file a petition for enhancement within the stipulated timeframe.

3. Precedent on enhancement of assessment:
Referring to the case of State of Kerala vs. M/s.Vijaya Stores, the Court highlighted that in the absence of an appeal or cross-objections by the Department against a decision, the Tribunal lacks jurisdiction to enhance the assessment. In this case, the Revenue's appeal only disputed specific turnovers and did not challenge the turnover of ?5,25,000 or the deletion of penalty under Section 27(3) of the TNVAT Act. Therefore, the Tribunal's order was considered to be without jurisdiction.

Conclusion:
The Court allowed the tax case revision, setting aside the Tribunal's order and restoring the first appellate authority's decision. The substantial questions of law were answered in favor of the petitioner/dealer, with no costs imposed. The judgment emphasized the importance of jurisdictional boundaries and adherence to legal procedures in tax assessment matters.