Tvl.Arcot Electricals vs. The State Tax Officer

Held

The Court held that the impugned assessment order dated 06.03.2020 passed by the respondent was not in accordance with the judgment dated 20.12.2018 in W.P.(MD).No.3744 of 2015. The Court noted that the respondent had accepted the verdict of the earlier judgment and was now assessing returns retrospectively. The issue in the present case was identical to the one decided previously. Therefore, the Court quashed the impugned assessment order. The matter was remanded back to the respondent for fresh consideration. The respondent was directed to pass final orders on merits and in accordance with law, after affording a sufficient opportunity to the petitioner, including granting them the right of personal hearing, in light of the decision in Tvl.Shanmugamari Timbers. The bank attachment made in the petitioner's account was also ordered to be released. The Court did not expressly leave any issue undecided.

Facts

The petitioner, Tvl.Arcot Electricals, challenged an assessment order dated 06.03.2020 passed by the respondent, the State Tax Officer. The order interpreted that a dealer availing the composition scheme under Section 3(4) of the TNVAT Act, 2006, who crosses the ceiling limit of Rs.50,00,000/-, must pay tax under Section 3(2) on their entire sales turnover. The petitioner argued that the respondent failed to consider the amended provision of Section 3(4)(b) of the TNVAT Act, 2006, notified by G.O.Ms.No.135 dated 31.10.2011, and a prior judgment of the High Court in Tvl.Shanmugamari Timbers Vs. The Commercial Tax Officer. The assessment pertains to the financial year 2007-08.

Key Issues

1. Whether the respondent erred in interpreting Section 3(4) of the TNVAT Act, 2006, by failing to apply the amended provision of Section 3(4)(b) notified on 31.10.2011, thereby incorrectly demanding tax on the entire turnover of the petitioner? (Question of law). Petitioner's arguments: The petitioner contended that the respondent's interpretation was illegal and arbitrary. They argued that the respondent failed to apply the amended Section 3(4)(b) of the TNVAT Act, 2006, which was notified by G.O.Ms.No.135 dated 31.10.2011. Furthermore, the petitioner relied on the ratio laid down in the High Court's judgment in Tvl.Shanmugamari Timbers Vs. The Commercial Tax Officer, which dealt with the retrospective application of the amendment. Respondent's arguments: The respondent, through the Special Government Pleader, submitted that they have accepted the verdict in the earlier judgment (Tvl.Shanmugamari Timbers) and are now assessing returns retrospectively under Section 3(4)(b) of the TNVAT Act, 2006. They acknowledged that the issue in the present case is identical to the one decided in the prior writ petition.