2017 (10) TMI 486 - HC - VAT and Sales Tax

Validity of demand notices - case of petitioner is that the amounts mentioned in both the notices are different and the petitioner is at a loss to understand as to how a demand for the same period within 15 days can increase from Rs. 60, 38, 152/- to Rs. 98, 34, 537/- - attachment of Bank Account - Held that - The fact remains that the petitioner is yet to file his return for March 2017 and the learned Additional Government Pleader submitted that unless and until the return is filed the assessment cannot be completed - learned counsel for the petitioner submits that since the order of attachment of the bank account has already been lifted he will instruct his client to file the return upto date within one week from today. After the return is filed by the petitioner upto the current period within the time the respondent shall issue a show cause notice to the petitioner and the authorised representative of the petitioner shall appear before the respondent without seeking for any adjournment - petition dismissed.

Summary

Issues:
Challenge to tax demands based on two notices issued by the respondent under TNVAT Act and Central Sales Tax Act.

Analysis:
The petitioner, a Korean company, challenged two tax notices issued by the respondent demanding payment of different amounts within a short period. The petitioner raised concerns about the lack of reasons for the varying amounts demanded and the potential impact on their business if their bank accounts were attached for non-payment of sales tax. The petitioner's bank accounts were temporarily attached during the proceedings, but the attachments were lifted after certain amounts were remitted by the petitioner.

The Assessing Officer clarified that the increase in the demanded amount was due to a cheque for Rs. 30,00,000 being returned for insufficient funds. The petitioner had no valid explanation for this issue, and the Assessing Officer highlighted the petitioner's history of late tax returns and payment defaults. The court noted the importance of foreign companies like the petitioner complying with Indian laws, especially given the support provided by the State of Tamil Nadu for foreign investments.

The court found that the demands were based on assessments made due to the petitioner's belated compliance, making the challenge to the notices not maintainable. The petitioner was directed to file their pending return and cooperate with the assessment process. The court instructed the petitioner to file returns up to the current period promptly, after which a show cause notice would be issued for assessment. The petitioner was granted the opportunity to explain any queries during the assessment process before the Assessing Officer passed an order.

In conclusion, the court dismissed the writ petition, emphasizing the importance of timely compliance with tax obligations and the need for foreign companies to adhere to Indian laws. The petitioner was directed to file pending returns promptly and cooperate with the assessment process as per the court's directions.