2021 (2) TMI 496 - HC - VAT and Sales Tax

Works Contract - recovery of tax alongwith penalty - appellant's argument was that they are civil contractors and in terms of Section 6(4) of the Act, payment of tax for the works contract done is based on the receipts for the relevant assessment year and taxes are to be paid by the appellant when the appellant receives payment or receivable from the person, for whom the works contract was undertaken by the appellant - HELD THAT - Considering the fact that the assessments are of the years 2012-13 and 2013-14, that the matters are dragged on till now, that apart from the taxes, which were remitted by the dealer in the year 2015, the Department has not been able to recover tax nor the penalty, which has been quantified in the impugned assessment orders passed in the year 2017 and that the assessment orders remain as paper orders, this Court is of the view that one more opportunity can be granted to the appellant to go before the Assessing Officer by producing the original records to substantiate their claim. However, such an option shall be given subject to a stringent condition. The appellant shall pay 50% of the disputed tax for each of the assessment years within a period of 60 days from the date of receipt of a copy of this common judgment and if the payment is made for both the assessment years within the time stipulated, the appellant will be entitled to treat the assessment orders dated 23.1.2017 for the years 2012-13 and 2013-14 as show causes notices, give their explanation, appear before the Assessing Officer on the date to be fixed by him and produce original records to justify their stand - Appeal allowed.

Summary

Issues:
Appeal against assessment orders under Tamil Nadu Value Added Tax Act, 2006 - Challenge of dismissal of writ petitions for availability of alternate remedy - Dispute regarding filing option letters under Section 6 of the Act - Allegations of fabricated records by the Department - Request for opportunity to establish the claim before the Assessing Officer.

Analysis:
The judgment by the Madras High Court involved appeals against assessment orders under the Tamil Nadu Value Added Tax Act, 2006. The writ petitioner, a registered dealer, challenged the assessment orders dated 23.1.2017 for the years 2012-13 and 2013-14, contending that they had filed option letters under Section 6 of the Act but assessments were done under Section 5 instead. The Department disputed the authenticity of the acknowledgments produced by the appellant, alleging them to be fabricated records. The appellant, a civil contractor, argued that tax payment for works contracts was based on receipts and payments received in subsequent years. However, the Department maintained that the appellant failed to provide original records, proof of timely filing of returns, and regular tax payments.

The High Court noted that despite previous directives to the Department, the issue of filing option letters remained unresolved. The Single Judge declined to entertain the writ petitions due to lack of proof of exercising the option to pay tax under Section 6, as the Department claimed the option letters were fabricated. The appellant sought an opportunity to establish their claim before the Assessing Officer. The Court acknowledged the prolonged nature of the case and the pending tax recovery by the Department, leading to the decision to grant the appellant one more chance to present original records before the Assessing Officer.

In granting the appellant another opportunity, subject to a stringent condition, the High Court allowed the writ appeals, setting aside the Single Judge's order. The appellant was directed to pay 50% of the disputed tax for each assessment year within 60 days. Upon compliance, the assessment orders dated 23.1.2017 would be treated as show cause notices, enabling the appellant to provide explanations and present original records before the Assessing Officer for a fresh decision. Failure to meet the prescribed condition within the specified time would result in automatic dismissal of the appeals. The judgment concluded with the closure of connected CMPs and no cost implications.