2024 (2) TMI 495 - HC - VAT and Sales Tax

Validity of assessment order - entitlement for benefit of deemed assessment - period of limitation expired prior to the issuance of the revision notice - breach of principles of natural justice - HELD THAT - The petitioner did not participate in the proceedings. The documents on record also reflect that the tax liability was determined largely in view of the mismatch between data provided by the petitioner when compared with data provided by the petitioner's suppliers. It is in the interest of justice to provide an opportunity to the petitioner to place relevant documents on record and contest the tax demand. Solely for that reason, the impugned orders warrant interference. Assessment orders dated 27.08.2021 in respect of assessment years 2011-2012 and 2012-2013 are quashed on the ground of being barred by limitation - assessment orders pertaining to assessment years 2013-2014, 2014-2015 and 2015-2016 are quashed and these matters are remitted for re-consideration - Petition disposed off.

Summary

Issues involved:
The issues involved in this judgment include the challenge to assessment orders for multiple assessment years, the applicability of limitation periods, the impact of incomplete or incorrect returns on deemed assessments, breach of natural justice principles in assessment proceedings, and the need for the petitioner to have an opportunity to contest tax demands.

Assessment Year 2011-2012 and 2012-2013:
The petitioner argued that there was a deemed assessment for these years and the limitation period should be calculated from the date of deemed assessment. The court found that even if the case fell under a different provision due to incomplete returns, the limitation period had expired before the revision notices were issued. Consequently, the assessment orders for these years were quashed on the ground of being time-barred.

Assessment Year 2013-2014, 2014-2015, and 2015-2016:
The petitioner contended that the revision notices and assessment orders for these years were based on mismatches and were issued without giving a proper opportunity to participate, especially considering the onset of the Covid-19 pandemic. The court observed that the petitioner had not been able to participate in the proceedings, and the tax liability was determined mainly based on data mismatches. In the interest of justice, the court decided to quash these assessment orders and remit the matters for reconsideration to allow the petitioner to contest the tax demands.

Deemed Assessment and Limitation:
The court referred to the provisions of the TNVAT Act regarding deemed assessments and incomplete or incorrect returns. It was established that a dealer who does not file a return cannot benefit from deemed assessment. Additionally, the court cited a previous case where it was concluded that the limitation period specified in the Act also applied to proceedings initiated for incomplete or incorrect returns. This clarification was crucial in determining the outcome of the case for the assessment years in question.

Principles of Natural Justice and Opportunity to Contest:
The court emphasized the importance of natural justice principles and providing the petitioner with a fair opportunity to contest tax demands. It noted that the petitioner had not participated in the assessment proceedings, and the tax liability was determined based on data mismatches. Therefore, the court intervened to ensure that the petitioner could present relevant documents and contest the tax demands, leading to the quashing of the assessment orders for these years.

Final Orders and Directions:
The judgment concluded by quashing the assessment orders for the time-barred years and remitting the matters for reconsideration for the other years. The petitioner was granted three weeks to reply to the revision notice and given the right to a personal hearing. The assessing officer was directed to issue fresh assessment orders within two months after considering the petitioner's submissions. The writ petitions were disposed of with no costs, and connected miscellaneous petitions were closed.