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IN THE HIGH COURT OF JUDICATURE AT MADRAS
C. Saravanan, J.
EID Parry India Limited - Petitioner
Versus
The Deputy Commissioner (S.T.)-I, Large Taxpayers Unit and ors. - Respondents
W.P.Nos.16696 and 16702 of 2021 and W.M.P.Nos.17679 and 17681 of 2021
Decided On : 24-01-2025
| Table of Content |
|---|
| 1. initial assessment and procedural foundation. (Para 1) |
| 2. challenge to assessment orders. (Para 2 , 3 , 4) |
| 3. observations on penalties and incorrect returns. (Para 5 , 6 , 7) |
| 4. arguments on the delay in issuing assessment orders. (Para 8 , 15 , 16) |
| 5. legal meaning of reasonable period for assessments. (Para 12 , 22 , 75) |
| 6. conclusion allowing the writ petitions. (Para 76) |
ORDER :
C. Saravanan, J.
By this Common Order, the respective Writ Petitions are being disposed of.
2. In these Writ Petitions, the petitioner has challenged the Impugned Assessment Orders dated 14.07.2021 passed by the first respondent. The Assessment Orders have been passed for the Assessment Years 2003-2004 and 2004-2005 whereby demand under Entry Tax under the provisions of the Tamil Nadu Tax on Entry of Goods into Local Areas Act, 2001 [in short “Entry Tax Act, 2001”] has been confirmed.
3. The Impugned Assessment Order dated 14.07.2021 passed for the Assessment Year 2004-2005 has assessed the petitioner to entry for the first time based on the first Notice dated 10.09.2020 and the second Notice dated 05.01.2021 in exercise of Rule 4 of the Tamil Nadu Tax on Entry of Goods into Local Area Rules, 2001 [in short “Entry Tax Rules, 2001”] which deals with assessment under the Entry Tax Act, 2001.
4. The details of the Impugned Assessment Orders dated 14.07.2021 and the tax imposed and the penalty levied are as under and Details of Demand confirmed by the respondents for the respective Assessment Years read as under:-
| W.P.No. | Date of Notice | Date of Assessment Order | Total Demand (in INR) | Assessment Year | |
| Tax | Penalty | ||||
| 16696 of 2021 | 10.09.2020 | 14.07.2021 | 8,28,151 | 6,21,113 | 2003-2004 |
| 16702 of 2021 | 10.09.2020 | 14.07.2021 | 35,47,490 | 44,34,362 | 2004-2005 |
| 43,75,641 | 50,55,475 | ||||
| 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 or incomplete, then Rule 4 of the Entry Tax- Goods, with the same procedures as laid down under the parent Act TNGST, ibid, is the provision to complete the assessment of the dealers. Section 10 of the Entry Tax-Goods Act clearly stipulates mutatis-mutandis concept. 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 had not paid entry tax for certain goods imported from up countries, proper assessment proceedings have been initiated under Rule 4 of the said Act. The dealers themselves accepted that Rule 4 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-Goods Act. Therefore, the proceedings initiated against the dealers are perfectly valid in law.”
6. The penalty was justified with the following observations:-
Since the balance is 57% of the
Statutory authorities must complete tax assessments within a reasonable time to ensure compliance with principles of natural justice, even if no specific period is explicitly defined in the law.
No time limitation exists under Section 22(4) of the Tamil Nadu Value Added Tax Act for issuing assessment orders when conditions are met; penalties under Section 22(5) are valid for up to six years.
Point of law: It is trite that if no period of limitation has been prescribed, statutory authority must exercise its jurisdiction within a reasonable period. What, however, shall be the reasonable pe....
The main legal point established in the judgment is that interest under Section 24(3) of the TNGST Act can be imposed only if an assessment has been framed, determining the additional turnover and ra....
The main legal point established in the judgment is that re-assessment proceedings must be initiated within the prescribed limitation period, and the assessing officer's determination of suppressed c....
Assessments beyond five years are invalid without proper notice, and best judgment assessments require rejection of returns, which was not adhered to in this case.
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