2021 (2) TMI 245 - HC - VAT and Sales Tax

Maintainability of petition - availability of statutory appeal remedy of appeal - Reopening of assessment - Exemption from tax or not - tea dust - soap - hand made matches - Section 84 of the TNVAT Act - AO rejected the petition on the ground that the power under Section 84 can be invoked only for correction of clerical and arithmetical mistakes alone and therefore, the petition is not maintainable - HELD THAT - There is a primordial mistake committed by the Assessing Officer by invoking Section 84 of the Act for reopening the assessment. Mr.Mohammed Shaffiq, learned Special Government Pleader appearing for the respondent is right in his submission that power to reopen assessment is traceable to Section 27 of the TNVAT Act. It is the further submission of the learned Special Government Pleader that at best making a reference to Section 84 of the Act in the show cause notice dated 30.04.2014 can be treated as quoting a wrong provision and if the goods sold by the appellant- Society to the fair price shops are exigible to tax, then there is an error in the assessment, which needs to be rectified. Under normal circumstances, we would have laboured on this issue, but the facts of the present case precludes us from doing so. It is not as if the Assessing Officer was not aware of what was the scope of his power under Section 84 of the Act as could be seen from the order dated 09.10.2014, wherein he states that the power can be exercised only for correction of clerical and arithmetical mistakes - thus it cannot be accepted that the submission that referring to Section 84 in the show cause notice dated 30.04.2014 was quoting a wrong provision of the Act. In any event, if the assessment has to be reopened, it requires to be done in terms of Section 27(1) of the Act. The Assessing Officer is bound to disclose as to under which Sub-Section, he proposes to bring the case of the dealer for assessing the turn over on the ground that the sale has escaped assessment or the dealer has been assessed at a lower rate than the rate at which it is assessable. A plain reading of the show cause notice dated 30.04.2014 will clearly show that there is no such proposal made by the Assessing Officer assuming the Assessing Officer invoked his power under Section 27(1) of the Act - the Assessing Officer did not go into the correctness of the claim made by the appellant by referring to G.O.P.No.272, Revenue dated 11.02.1967, which was issued when the erstwhile Tamil Nadu General Sales Tax Act was invoked and the Entry 43 of Part B of Fourth Schedule of the TNVAT Act. The reopening of the assessment is bad in law - If we are to approve the stand taken by the Assessing Officer in the order dated 09.10.2014 and hold that the power under Section 84 of the Act is to correct only arithmetical and clerical mistakes, then we have to consequently hold that the reopening of the assessment invoking Section 84 of the Act vide notice dated 30.04.2014 and the consequential revised assessment order dated 09.06.2014, as illegal. Petition is allowed.

Summary

Issues:
Reopening of assessment under Section 84 of the TNVAT Act for correction, Scope of power under Section 84 vs. Section 27 for assessment reopening, Correctness of Assessing Officer's actions, Availability of statutory appeal remedy and its impact on writ petition.

Analysis:
1. Reopening of Assessment under Section 84: The appellant challenged the order passed under the TNVAT Act for the assessment year 2012-13. The Assessing Officer invoked Section 84 to reopen the assessment, claiming the appellant's exemption claims for certain goods supplied to the Public Distribution System were incorrect. The appellant contended that the goods were exempted under various government orders and circulars. The Assessing Officer proceeded to redetermine the turnover, leading to the appellant filing a petition under Section 84 for rectification.

2. Scope of Power under Section 84 vs. Section 27: The High Court analyzed the Assessing Officer's actions in invoking Section 84 for reopening the assessment. It was argued that the power to reopen assessment is actually traceable to Section 27 of the TNVAT Act, not Section 84. The court noted that the Assessing Officer was aware of the limitations of Section 84, as indicated in the order, but still proceeded with the reassessment under this section. The court emphasized that if the assessment needed to be reopened, it should be done in accordance with Section 27(1) of the Act, which requires specific disclosure by the Assessing Officer.

3. Correctness of Assessing Officer's Actions: The court found that the Assessing Officer did not provide adequate reasons for rejecting the appellant's claims and did not address the relevant government orders and circulars cited by the appellant. The court highlighted that the Assessing Officer failed to pass a speaking order when the appellant raised objections and filed an application under Section 84, which could have clarified the issues. Ultimately, the court concluded that the reopening of the assessment was legally flawed.

4. Statutory Appeal Remedy and Writ Petition: The respondent opposed the writ petition by citing the availability of a statutory appeal remedy, which the appellant did not utilize within the stipulated time frame. However, the court held that the Assessing Officer's actions were incorrect, and the appellant's appeal was justified. The court referred to a previous decision to support the interpretation of Section 84 and the need for correcting errors in assessments. Consequently, the court allowed the appeal, set aside the orders passed by the Assessing Officer, and quashed the revised assessment orders dated 09.06.2014 and 09.10.2014.

In conclusion, the High Court's judgment focused on the correct application of statutory provisions, the Assessing Officer's obligations in reassessment, and the appellant's right to challenge the assessment through appropriate legal channels. The court's detailed analysis clarified the legal errors in the assessment process and upheld the appellant's appeal, emphasizing the importance of procedural correctness and adherence to statutory provisions in tax assessments.