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2024 (6) TMI 385 - HC - VAT and Sales TaxChallenge to summon issued in Form PP calling upon the respective petitioners to furnish the documents - intention of implementing Section 81 of the TNVAT Act, 2006 - specific case of the petitioner is that summon in Form PP under Rule 16 (1) of the TNVAT Rules, 2007 applies only to a third party and not to an assessee - HELD THAT - The purpose of Section 22 (3) of the TNVAT Act, 2006 read with Rule 10 (11) of the TNVAT Rules, 2007 is to ensure that atleast 20% of the total number of such assessments are selected by the Commissioner in a manner as may be prescribed for the purpose of detailed scrutiny regarding the correctness of the returns submitted by the dealer. Wherever there is a stratified random sampling method of selection by the Commissioner, revision of assessment can be made, wherever necessary. This is in addition to the power to be exercised independently by an Assessing Officer under Section 81 of the TNVAT Act, 2006. Merely because assessment is deemed to be completed under Section 22 of TNVAT Act, 2006, ipso facto will not mean that an Assessing Officer cannot call for information from a dealer whose name features in the list under Section 22 (3) of the Act. In this case, it has been informed by the respondent Commercial Tax Department that the Commissioner of Commercial Taxes vide Letter dated 08.01.2021 bearing reference No. R5/4593/2017 has issued instructions relating to finalization of accounts relating to dealers who have been selected for detailed scrutiny under Section 22 (3) of the TNVAT Act, 2006 - there are no embargo on the respondent Commercial Tax Department from summoning the respective petitioners to furnish the records. Issuance of summons is for ascertaining to produce information. Whether the petitioners have complied with all the requirements of Section 22 (2) of the Act and whether the declarations in the returns filed by the petitioners are correct or not can be ascertained only if records are summoned. There are no merits in the present Writ Petitions and these Writ Petitions are liable to be dismissed - Petition dismissed.
Issues Involved:
1. Validity of the impugned summons issued in Form PP under Rule 16 (1) of the Tamil Nadu Value Added Tax (TNVAT) Rules, 2007. 2. Applicability of Section 81 of the TNVAT Act, 2006 to the assessee. 3. Compliance with Section 22 (3) of the TNVAT Act, 2006 and Rule 10 (11) of the TNVAT Rules, 2007. Summary: Issue 1: Validity of the Impugned Summons The petitioners challenged the summons issued in Form PP, which required them to furnish various financial documents. The summons were issued u/s 16 (1) of the TNVAT Rules, 2007, intended for implementing Section 81 of the TNVAT Act, 2006. The petitioners argued that Form PP under Rule 16 (1) applies only to third parties and not to assessees. They contended that since they had filed returns u/s 21 of the TNVAT Act, 2006, the assessment was deemed completed on 31.10.2016 for the Assessment Year 2015-2016 u/s 22 (2) of the TNVAT Act, 2006. Therefore, the power to summon documents from an assessee who has filed regular returns could only be in accordance with Section 22 (3) of the TNVAT Act, 2006. Issue 2: Applicability of Section 81 of the TNVAT Act, 2006 The court examined whether Section 81 of the TNVAT Act, 2006, which allows for the summoning of witnesses and production of documents, applies to the assessee. The court concluded that Section 81 is a generic provision and is not confined merely to third parties. It grants wide powers to the assessing authority, including summoning any person and compelling the production of any document. Therefore, the power under Section 81 is not eclipsed by the power vested under Section 22 (3) of the TNVAT Act, 2006 read with Rule 10 (11) of the TNVAT Rules, 2007. Issue 3: Compliance with Section 22 (3) of the TNVAT Act, 2006 and Rule 10 (11) of the TNVAT Rules, 2007 The court noted that Section 22 (3) of the TNVAT Act, 2006, implemented by Rule 10 (11) of the TNVAT Rules, 2007, ensures that up to 20% of the total number of assessments are selected by the Commissioner for detailed scrutiny. The Commissioner of Commercial Taxes had issued instructions for finalizing accounts for dealers selected for detailed scrutiny u/s 22 (3) of the TNVAT Act, 2006. The court found no embargo on the respondent Commercial Tax Department from summoning the petitioners to furnish records. The assessment would be deemed completed only if the petitioners complied with all requirements of Section 22 (2) of the TNVAT Act, 2006. The court held that the issuance of summons is for ascertaining compliance and correctness of the returns filed by the petitioners. Conclusion: The court dismissed the Writ Petitions, holding that the impugned summons were valid and within the jurisdiction of the assessing officer. The power under Section 81 of the TNVAT Act, 2006, is wide and applicable to the assessee, and the procedures under Section 22 (3) and Rule 10 (11) were duly followed. The petitions were dismissed with no costs, and the connected Miscellaneous Petitions were closed.
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