2011 (2) TMI 1326 - HC - VAT and Sales Tax

Whether the petitioner is entitled for an order of rectification on the basis of a subsequent order permitting him to pay tax under section 7C of the TNGST Act? Held that - The issue regarding the payment of tax under section 7C of the TNGST Act was considered by the assessing authority as well as by the appellate authority. The claim made by the petitioner was rejected on merits. The order is now sought to be rectified on the basis of a subsequent order permitting payment of tax under section 7C of the TNGST Act. The permission granted to pay tax under section 7C(1) for the assessment year 2002-03 was made only on account of the exercise of option during the said year. Therefore the permission granted for the year 2002-03 would not help the petitioner to rectify the assessment order passed for the year 2001-02. Therefore I am of the view that the first respondent has rightly rejected the application submitted by the petitioner for rectification. I do not find any error or illegality in the said order warranting interference by this court by exercising the power of judicial review. W.P. dismissed.

Summary

Issues:
- Rectification under section 55 of the Tamil Nadu General Sales Tax Act, 1959 based on subsequent order permitting payment under section 7C of the TNGST Act.

Analysis:
The judgment pertains to a writ petition challenging the rejection of an application for rectification under section 55 of the Tamil Nadu General Sales Tax Act, 1959. The petitioner, a registered dealer, was appointed as a sub-contractor and opted for payment of tax under section 7C of the TNGST Act. The assessing authority initially rejected this option for the assessment year 2001-02, levying tax under section 3B instead. Subsequently, for the year 2002-03, the assessing authority accepted the payment under section 7C for the same contract. The petitioner sought rectification for the earlier year based on this subsequent acceptance.

The primary issue revolves around the interpretation and application of section 7C(2) of the TNGST Act, which requires the assessee to exercise the option to pay tax under section 7C(1) along with the first monthly return for the financial year. In this case, for the assessment year 2001-02, the petitioner failed to file the first monthly return within the prescribed time, thereby not exercising the option for payment under section 7C. Consequently, the assessing authority rightly rejected the petitioner's claim for payment under section 7C for that year, a decision upheld in appeal.

While the petitioner's subsequent payment under section 7C for the year 2002-03 was accepted, the court emphasized that the option must be exercised timely for each financial year. The petitioner's attempt to rectify the assessment order for 2001-02 based on the subsequent year's acceptance was deemed impermissible. The court highlighted that the term "year" in the statute is crucial, requiring the option to be exercised within the relevant assessment year to avail of the payment scheme under section 7C.

Ultimately, the court found no error in the assessing authority's decision to reject the rectification application. The subsequent acceptance for the following year did not validate rectification for the earlier year, as the option must be exercised annually. Consequently, the writ petition was dismissed, upholding the rejection of the rectification application.