M/S. Shree Lakshmi Polymers vs. The Commerical Tax Officer

Held

The Court held that the revenue's submission that the reference to Section 27 was inadvertent and that the proceedings should be treated as original assessments under Section 70(2)(c) was liable to be rejected. The Court found that Section 70 deals with the issuance of transit passes and the consequences of violation, which can only be felt in an assessment made under Section 22 or Section 27. The Court rejected the revenue's contention that Section 70 is a machinery provision for framing assessments. The Court elaborated on the assessment scheme under Sections 22, 25, and 27. It noted that no assessment under Section 22(2) or 22(4) or provisional assessment under Section 25 had been framed. The Court found that the notices issued by the Assessing Authority were premature, as they were issued before the completion of the assessment year. The Court concluded that the provisions of Section 27 require an original assessment to have been framed for the Assessing Authority to legitimately conclude that tax has escaped assessment. Since no original assessment was framed, the conclusion of escaped assessment lacked support. Citing Kanchi Bakers & Sweets Vs. Assistant Commissioner (CT), the Court held that the impugned orders were jurisdictionally vitiated. The Court allowed the writ petitions, quashing the impugned orders.

Facts

The petitioner, M/s. Shree Lakshmi Polymers, filed two writ petitions challenging assessment orders dated 15.04.2014 and 23.04.2014, pertaining to the tax period 2013-2014. The orders were passed by the Commercial Tax Officer, Kulithalai Assessment Circle. The dispute arose from the petitioner's failure to surrender transit passes for five transactions involving the transport of raw materials from Tamil Nadu to other States. Consequently, the value of these transactions was brought to tax as deemed sales within the State. The petitioner contended that the assessment orders were invalid as they were purportedly passed under Section 27 of the Act (revision of assessment) instead of the proper procedure under Section 22 of the Act. The revenue argued that the reference to Section 27 was inadvertent and the proceedings should be treated as original assessments under Section 70(2)(c).

Key Issues

1. Whether the impugned assessment orders, referencing Section 27 of the Act, are valid when the petitioner argues that the proper procedure under Section 22 of the Act was not followed, and the revenue contends the reference to Section 27 was inadvertent and the orders should be treated as original assessments under Section 70(2)(c)? Petitioner's arguments: The petitioner argued that the Assessing Authority failed to follow the proper procedure as set out in Section 22 of the Act. They contended that the impugned orders were passed under Section 27, which deals with revision of assessment, whereas the assessments should have been original assessments under Section 22. The petitioner asserted that Section 70, dealing with transit passes, is not a machinery provision for framing assessments but relates to the consequences of violation, which should be addressed in assessments under Section 22 or 27. Revenue's arguments: The revenue contended that the reference to Sections 27(1)(a) and 27(3)(c) in the assessment orders was inadvertent and incorrect. They argued that the impugned proceedings should be considered as original assessments made in terms of Section 70(2)(c) of the Act.