2019 (12) TMI 1055 - HC - VAT and Sales Tax

Validity of pre-revision notices - case of respondent is that the pre-revision notices, though based wholly on VSI-3 proposals of the Enforcement Wing, merely call upon the petitioner to file objections to the issues set out therein and the present Writ Petitions are thus pre-mature - HELD THAT - The Assessing Authority, in the matter of framing of assessments has to apply his mind to the issues that arise from the return of turnover filed by a dealer/assessee. However, orders of assessment are routinely passed based wholly on the proposals received from the Enforcement Wing and this case is no different. Though the impugned notice itself does not state so, the respondents in their common counter dated 12.10.2018, admit in paragraph 4 that the preassessment notices were issued 'to implement the VSI-3 proposals received from the Enforcement Wing (Group-V) Coimbatore'. The purpose of pre-revision notices/preassessment proposal is not for implementing Enforcement Wing proposals but for putting forth issues that arise from the returns of turnover filed by a dealer/assessee, to the dealer/assessee for response and rebuttal. Such issues are to be identified by an officer by independent application of mind only. No doubt, it is incumbent upon the Officer to study the enforcement proposals and he is permitted to deviate from the same where he believes that the same do not give rise to an assessable issue. The first respondent will issue pre-assessment proposals/pre-revision notices after due and independent application of mind within a period of three (3) weeks from date of receipt of a copy of this order and after hearing the petitioner and considering its reply, orders of assessment shall be passed within a period of four (4) weeks from date of conclusion of personal hearing. Petition allowed.

Summary

Issues:
Challenge to pre-revision notices based on Enforcement Wing proposals and failure to dispose of representation before issuing notices.

Analysis:
The petitioner challenged pre-revision notices dated 21.08.2018 for the periods 2011-12 to 2016-17 under the Tamil Nadu Value Added Tax Act, 2006. The notices were challenged due to a pending representation filed by the petitioner questioning the validity of a stock reconciliation statement obtained from third parties. The petitioner argued that the notices were issued during the pendency of the representation, citing a previous judgment for support.

The petitioner's counsel contended that the impugned notices should be quashed, and a direction should be given to dispose of the pending representation before initiating assessment proceedings.

On the other hand, the respondents' counsel argued that the notices were based on VSI-3 proposals from the Enforcement Wing, calling for the petitioner to file objections. He claimed that the writ petitions were premature and requested their dismissal, urging the petitioner to respond to the notices.

The court noted that assessments are typically based on proposals from the Enforcement Wing, as admitted by the respondents in their counter. However, the purpose of pre-revision notices is to present issues arising from the dealer's turnover returns for the dealer's response and rebuttal. The court emphasized the requirement for independent application of mind by the Assessing Authority to identify assessable issues.

Acknowledging the historical practice of seeking approval for deviations from Enforcement Department proposals, the court highlighted a recent circular allowing Assessing Authorities to finalize assessments independently if they disagree with the proposals, emphasizing the need to adhere to legal principles.

Based on the admission that the impugned notices were Enforcement-based, the court set aside the notices, citing a previous judgment with similar circumstances where the notices were quashed. The court directed the first respondent to issue revised notices after independent consideration and hearing the petitioner, with assessment orders to be passed promptly thereafter.

Consequently, the court quashed the impugned notices, allowed the writ petitions, and ordered no costs to be incurred. The connected Miscellaneous Petitions were closed as a result.