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TMI Blog2025 (2) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of the Tamil Nadu General Sales Tax (TNGST) Act, 1959 have to be made coterminously as the basic documents required for assessment are one and the same. These documents have to be maintained for a period of five years though separate returns have been filed under these enactments. A reading of Rule 4(1) of the Entry Tax Rules, 2001, also makes it clear that, after the close of the year, for which the returns referred to in Sub- Rule (1) of Rule 3 of the Entry Tax Rules, 2001 have been filed or where an importer has discontinued the business the course of the year, the Assessing Authority has to finally assess the tax payable in a single order on the basis of the return for the year to which the return relates - Such assessment has to be completed after scrutiny of the accounts and making such enquiry as may be considered necessary to complete and finalize the assessment on the basis of a single order. Thus, the scheme of the Entry Tax Act is to finalize the assessment as expeditiously as possible although no time limit is prescribed. Since no time limit has been prescribed for completing the assessment under Rule 3(4), Rule 4(3) of the Entry Tax Rules, 2001, assessment has t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 55,475 W.P.No. 16696 of 2021 W.P.No. 16702 of 2021 Total Assessment Year 2003-2004 Assessment Year 2004-2005 Tax due reported as per returns Rs. 40,85,476/- Rs. 61,80,239/- Taxable Turnover brought into assessment due to incorrect returns and omission of payment of tax Rs. 69,01,259/- Rs. 2,95,62,419/- Tax Due (including the Actual Suppression) Rs. 49,13,627/- Rs. 97,27,729/- Tax paid as per returns Rs. 40,85,476/- Rs. 61,80,239/- Balance as as per the Assessment order (Tax A) Rs. 8,28,151/- Rs. 35,47,490/- Rs.4,375,641.00 Penalty as per the Assessment order (Tax B) Rs.621,113.00 Rs.4,434,362.00 Rs.5,055,475.00 The Impugned Assessment Orders preceded two notices dated 10.09.2020. 5. Both the Impugned Assessment Orders almost read identically. Discussion in the Impugned Assessment Orders reads as under:- "Discussion and Findings. 1. With reference to the reply-objections as stated in (A) above, it is to be stated that the procedures for filing returns and for the payment of tax have been laid down under Rule 3 of the Tamil Nadu Tax on Entry of Goods into Local Areas Act, 2001. Further, when the returns filed by the dealers are found to be incorrect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1948 after the assessment was completed. 10. Section 11(3), Section 11(6) and Section 21 of the Punjab General Sales Tax Act, 1948 reads as under:- Section 11(3) On the day specified in the notice or as soon as afterwards as may be, the Assessing Authority shall, after hearing such evidence as the dealer may produce, and such other evidence as the Assessing Authority may require on specified points, [pass an order of assessment within a period of three years from the last date prescribed for furnishing the last return in respect of any period Section 11(6) If upon information which has come into his possession, the Assessing Authority is satisfied that any dealer has been liable to pay tax under this Act in respect of any period but has failed to apply for registration, the Assessing Authority shall, within five years after the expiry of such period, after giving the dealer a reasonable opportunity of being heard, proceed to assess to the best of his judgment, the amount of tax, if any, due from the dealer in respect of such period and all subsequent periods and in case where such dealer has willfully failed to apply for registration, the Assessing Authority may direct that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture of the statute, rights and liabilities thereunder and other relevant factors. 18. Revisional jurisdiction, in our opinion, should ordinarily be exercised within a period of three years having regard to the purport in terms of the said Act. In any event, the same should not exceed the period of five years. The view of the High Court, thus, cannot be said to be unreasonable. Reasonable period, keeping in view the discussions made hereinbefore, must be found out from the statutory scheme. As indicated hereinbefore, maximum period of limitation provided for in sub-section (6) of Section 11 of the Act is five years. 22. The question as to what would be the reasonable period did not fall for consideration therein. The binding precedent of this Court, some of which had been referred to us hereto before, had not been considered. The counsel appearing for the parties were remiss in bringing the same to the notice of this Court. Furthermore, from a perusal of the impugned notice dated 4-9-2006, it is apparent that the Revisional Authority did not assign any reason as to why such a notice was being issued after a lapse of 5 ½ years." 13. Thus, orders have been passed within a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 11(3) or 28(3) of the respective Acts. The assessee has made returns for all the quarters and must have paid its admitted tax. Now that the assessing authority intends to complete assessments under section 11(3) of the Act, we see no prejudice to the assessee if the assessing authority is permitted to complete the assessment now. On the other hand, if no assessment is made an anamolous situation might arise and even though the assessee has collected the sales tax on its sale turnover, it might raise a claim for refund of it in the absence of an assessment. We do not propose to create such a situation. It would suffice to say that in the situation which has arisen in the matter before us, it would be appropriate to call upon the assessing authority to complete all these pending assessments within a total period of four months from today on the basis of available material in the record before him and such other material as the authority may obtain. We, however, make it clear that such assessment has to be only under Section 11(3) of the Act. 15. Before we part with this case, we would like to indicate that assessment of tax should be completed with expedition. It involv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts may be taken as a safeguarding factor to limit the power of reassessment under Section 42 of the Kerala Value Added Tax Act, 2003. Based on the aforesaid decision, it is submitted that the Impugned Assessment Orders suffers from lack of jurisdiction. 16. It is submitted that, the objection that the Impugned Assessment Orders have been passed beyond reasonable period was raised before the first respondent. However, the Impugned Assessment Orders grossly disregards the submissions without any reason or justification. Further, the Impugned Assessment Orders also fails to appreciate the binding precedents laid down by the Hon'ble Supreme Court. Thus, it is submitted that the Impugned Assessment Orders ought to be quashed for pre-judging the issue in support of the revenue. 17. It is submitted that the Impugned Assessment Orders seek to justify assessment on the premise that the instant proceeding is one of original assessment and not that of reassessment. Further, it proceeds on the premise that no outer time limit has been prescribed for conducting original assessment under Rule 4 of the Entry Tax Rules, 2001. In this regard, it is submitted that the petitioner only st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Government Pleader for the respondents submitted that based upon the materials gathered during the course of inspection of the place of business of the dealers and on the finding of the fact that the dealer has not paid entry tax for certain goods imported from countries, proper assessment proceedings have been initiated under Rule 4 of the Entry Tax Rules, 2001. The dealers themselves accepted that Rule 4 of the Entry Tax Rules, 2001, has not prescribed any time-limit for doing the assessment based on returns filed. Hence, there is no necessity to discuss about any reasonable period for completing the assessment based on the returns filed which are found to be incorrect by not declaring certain imported goods within the tax net under the Entry Tax Act, 2001. Therefore, the proceedings initiated against the dealers are perfectly valid in law. 22. It is submitted that the petitioner/dealer had been informed that nowhere in the notices issued to the dealers for the assessment proceedings under the Entry Tax Act, 2001, it was stated that it is the re-assessment after the original assessment has already been made. It was again reiterated that it is the proceedings for the original a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inless Limited and another Vs. State of Haryana and others, 2016 (11) TMI 545 SC (LB), they had not produced any documents or order from this Court to stay or otherwise stall assessment proceedings. 26. It is respectfully submitted that the petitioner/dealer had imported sanitary wares such as triangles dual flush, ivory, basin, clean pedestal white, etc., from China during the years 2003-2004 and 2004-2005 but not paid entry tax as per the provisions of the Entry Tax Act, 2001. Hence, notices were issued to the petitioner/dealer on 10.09.2020 and 05.01.2021 for above said years proposing entry tax on the import of goods from other countries and penalty was also proposed as per Section 4 of the Entry Tax Act, 2001 read with Section 12(3) of the Tamil Nadu General Sales Tax (TNGST) Act, 1959, for which, the petitioner/dealer had filed their objections vide their letters dated 06.11.2020 and 22.03.2021. Objections filed by the dealers were examined and overruled and accordingly, the proposal for levy of tax and penalty has been confirmed by the first respondent vide impugned proceedings dated 14.07.2021. Hence, the order passed by the first respondent is as per the law. 27. It is r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udicial Forums, the original assessment, based upon the returns filed under the Entry Tax Act, 2001, in respect of the petitioner/dealer for the above said years have been kept pending. Barring the period that the Act was in scrutiny in the High Courts and Supreme Court, it is only three years from the judgment, the initiation of assessment was done, which is within the reasonable period for maintenance of records by the petitioner/dealer. 31. I have considered the arguments advanced by the learned counsel for the petitioner and the learned Additional Government Pleader for the respondents. I have also perused the Impugned Assessment Orders passed by the first respondent. 32. The Impugned Assessment Orders have been passed for the first time based on the first Notice dated 10.09.2020 and the second Notice dated 05.01.2021 for the Assessment Years 2003-2004 & 2004-2005. These notices were issued in the exercise of Rule 4 of the Entry Tax Rules, 2001. 33. The Impugned Assessment Orders dated 14.07.2021 proceed to finalize the assessments, under Rule 4 of the Entry Tax Rules, 2001 framed under the provisions of the Entry Tax Act, 2001 after more than 15 years of filing of returns b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , such business, transfer of liability of any firm or Hindu undivided family to pay tax in the event of the dissolution of such form or partition of such family, recovery of tax from third parties, reviews, references, refunds, rebates, penalties, charging or payment of interest, inspection of the premises of transporters, goods / vehicles, business premises, search of the residential accommodation, seizure and confiscation of unaccounted for scheduled goods, seizure of documents, compounding of offences and treatment of documents furnished by a dealer as confidential, shall apply accordingly. 2. All the provisions relating to offences, interest and penalties including provisions relating to penalties in lieu of prosecution for an offence or in addition to the penalties or punishment for an offence of the General Sales Tax Act shall, with necessary modifications, apply in relation to the assessment, re-assessment determination of the value or the fair market price of goods, collection and enforcement of payment of any tax required to be collected under this Act, or in relation to any process connected with such assessment, re-assessment, collection or enforcement of payment as if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Entry Tax Act, 2001, also ought to have been completed within reasonable period of time. Certainly, there is no justification in finalizing the assessment after a lapse of considerable period of time. 44. Further, a dealer who is also a dealer under the provisions of the Tamil Nadu General Sales Tax (TNGST) Act, 1959, is entitled to set-off tax the paid under the provisions of the Entry Tax Act, 2021 towards the tax liability under the provisions of the Tamil Nadu General Sales Tax (TNGST) Act, 1959. 45. In this connection, it will be also useful to refer to Section 4 of the Entry Tax Act, 2001. Section 4 of the Entry Tax Act, 2001 reads as under:- 4.Reduction in tax liability:- (1) Where an importer of any scheduled goods liable to pay tax under this Act, being a dealer in scheduled goods becomes liable to pay tax under the General Sales Tax Act and additional sales tax under the Tamil Nadu Additional Sales Tax Act, 1970 (Tamil Nadu Act No.14 of 1970), by virtue of the sale of such scheduled goods, then his liability under those Acts shall be reduced to the extent of tax paid under this Act. (2) Where an importer who, not being a dealer in scheduled goods, had purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng more than one place of business in the local areas, all returns prescribed by these rules shall be submitted by the principal place of business and such returns shall show the total value of the scheduled goods of all the places of his business in all the local areas. 3) The returns so filed shall provisionally be accepted subject to the provisions of sub-rules (4) and (5). 4) Where the importer referred to in sub-rule (1) fails to submit the return on or before the date specified in the said subrule (1) or if the return submitted appears to be incorrect or incomplete, the assessing authority shall, after following the procedure prescribed in the General Sales Tax Rules, determine the value of the scheduled goods to the best of the judgment and provisionally assess the tax payable for the month and shall serve upon the importer a notice in Form II and the importer shall pay the sum demanded within the time and in the manner specified in the notice. 5) Where the importer referred to in sub-rule (1) submits a return without receipt from the Government Treasury or crossed demand draft for the whole of the amount of the tax payable, the assessing authority shall serve upon the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified in sub-rule (1) of Rule 3 or if any return or returns submitted by him appears to be incorrect or incomplete the assessing authority shall after giving the importer an opportunity, determine the value of the scheduled goods to the best of his judgment and finally assess in a single order, the tax payable thereon. 3) If on final assessment under sub-rule (1) or subrule (2), any tax is found to be due from the importer after deducting the tax or taxes paid by him towards the provisional assessment made under sub-rule (4) of rule 3, the assessing authority shall serve on the importer a notice in Form VI and the importer shall pay the sum demanded in the notice therein. If any refund of tax is found to be due to the importer the assessing authority shall serve on him a notice in Form VII. 51. These provisions are inspired from the provisions of the Tamil Nadu General Sales Tax (TNGST) Act, 1959. Rule 3(4) of the Entry Tax Rules, 2001 is pari materia with Section 12(2) of the Tamil Nadu General Sales Tax (TNGST) Act, 1959. They read as under:- Rule 3(4) of the Tamil Nadu Tax on Entry of Goods into Local Area Rules, 2001 Section 12(2) of the Tamil Nadu General Sales Tax (T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mstances namely:- i. Return submitted by an importer referred to in sub-rule (1) of Rule 3; or ii. where importer had discontinued business in the course of the year. Latter applies to the following two circumstances namely:- i. when filed returns are either incorrect and/or incomplete; or ii. when no monthly returns are filed by an importer. 57. Under Rule 4(2) of the Entry Tax Rules, 2001, the assessment has to be made on Best Judgment Method. Thus, in case of incorrect or incomplete returns, a provisional assessment has to be made in terms of Rule 3(4) of the Entry Tax Rules, 2001 under Best Judgment Method and thereafter a Final Assessment under Sub-Rule (2) to Rule 4 of the Entry Tax Rules, 2001. This procedure has been given a go by in the impugned proceeding. 58. A reading of Rule 4(1) of the Entry Tax Rules, 2001, also makes it clear that, after the close of the year, for which the returns referred to in Sub- Rule (1) of Rule 3 of the Entry Tax Rules, 2001 have been filed or where an importer has discontinued the business the course of the year, the Assessing Authority has to finally assess the tax payable in a single order on the basis of the return for the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of a dealer has escaped assessment to tax, the assessing authority may, subject to the provisions of sub-section (2), at any time within a period of five years from the *[date of order of the final assessment by the assessing authority], determine to the best of its judgement the turnover which has escaped assessment and assess the tax payable on such turnover after making such enquiry as it may consider necessary and after giving the dealer a reasonable opportunity to show cause against such assessment. (1)(b) Where, for any reason, the whole or any part of the turnover of business of a dealer has been assessed at a rate lower than the rate at which it is assessable, the assessing authority may, at any time within a period of five years from the *[date of order of the final assessment by the assessing authority], reassess the tax due after making such enquiry as it may consider necessary and after giving the dealer a reasonable opportunity to show cause against such re-assessment." 66. Thus, it would imply that, since no time limit has been prescribed for completing the assessment under Rule 3(4), Rule 4(3) of the Entry Tax Rules, 2001, assessment has to be completed within ..... X X X X Extracts X X X X X X X X Extracts X X X X
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