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TMI Blog2019 (11) TMI 423X X X X Extracts X X X X X X X X Extracts X X X X ..... amil Nadu General Sales Tax Act 1959 (in short 'TNGST Act') bearing in mind the transitional period between the phasing out of the TNGST Act and the coming into force of the Tamil Nadu Value Added Tax Act, 2006 (in short, 'TNVAT Act'). The spirit and intendment of Section 12C appears to be in recognition of the fact that a finality has to be arrived at in regard to assessments for the periods prior to 01.04.2006. (The TNVAT Act came into force from and with effect from 01.01.2007). Thus, an expedited and simplified procedure for assessment was put in place for completion of assessments prior to the aforesaid date, i.e., 01.04.2006 (in short 'effective date'). 3. Section 12C provided that assessments for the periods prior to the effective date shall be completed by the Assessing Authority during the period 01.04.2006 to 31.03.2007 on the basis of the returns filed by the petitioner and upon consideration of certain pre-conditions and compliances that were fastened upon the parties in terms of Section 12C as well as Rule 15(5-E) of the Tamil Nadu General Sales Tax Rules (in short 'Rules'). 4. The provisions of Section 12C and Rule 15(5-E) being critical to the appre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all file his annual return only after it is duly audited and certified by a Chartered Accountant or a Cost Accountant.' 5. The Commissioner, Commercial Taxes issued a Circular setting out very specific criteria for the purposes of assessment and guidelines for completion of the same. The Circular is extracted below: VAT CELL Circular NO:12/2007 Office of the Commissioner of (VAT Cell No.26401/2007) Commercial Taxes, Chepauk, Chennai 600 005. Dated: 23.07.2007 C I R C U L A R SUB: Tamil Nadu General Sales Tax Act, 1959 - Deemed Assessment - Introduction of Section 12-C - Certain guidelines issued - Regarding. REF: Commissioner of Commercial Taxes Circular No.23/2006, dated 27.12.2006 and subsequent circular issued. Inspite of instructions issued in the circular cited, it has been brought to the notice of the Commissioner of Commercial Taxes that some of the assessing officers are insisting the production of accounts relating the finalisation of assessment for the years upto 2005-2006. In this connection, the following instructions are issued: (1) The assessing authorities should pass deemed assessment orders in all the cases where the prescribed returns have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eard Mr.Senniappan, learned counsel for the petitioner and Mr.Haribabu, learned Additional Government Pleader for the respondent. 9. The petitioner is a contractor and a dealer in terms of the provisions of the Tamil Nadu General Sales Tax Act, 1959 on the files of the respondent/Assessing Officer. As far as both assessment years are concerned, the petitioner had availed of the scheme of assessment under Section 12 C. Notice dated 02.03.2007 had been issued though served on the assessee/petitioner on 11.05.2007. The petitioner objected to the preassessment process on 21.05.2007 relying both on the expedited process of assessment set out under Section 12 C and seeking a personal hearing prior to conclusion of assessment proceedings. The orders of assessment had been passed on 28.03.2008 after a period of ten months (approx.) from filing of reply by the petitioner. No personal hearing as sought for was provided. 10. With respect to the assessment relating to the period 2004-05 though the provisions of Section 12 C have been invoked the Assessing Authority has dealt with the request in the following terms: 'Request to complete the assessment under Sec.12-C According to sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of 'clean room equipments' was taken to be a works contract and brought to tax at the rate of 4%, whereas, according to the Department, the transaction comprised of sale of equipment which would be taxable at the rate of 20%. Thus, according to the revenue, there was suppression of more than Rs. 25,000/-, in this case and in the light of the condition in clause (5) of Rule 15 (5-E), that excludes cases where the dealer has suppressed tax liability in excess of Rs. 25,000/-, the petitioner was not entitled to the benefit of the scheme. 14. I am prima facie of the view that the question of suppression does not merely mean a difference in the interpretation of law vis-a-vis the petitioner and the respondent. In the present case, it is a legal dispute as to whether the transaction in question constitutes works contract, taxable at 4% or sale of equipment, taxable at 20%. Though the Assessing Authority, in the present case, has proceeded to assess the transaction as sale of equipment, taxable at the rate of 20%, that by itself cannot lead to an inference of suppression and a bonafide difference of opinion on the interpretation of a taxing statute cannot be ruled out. 15. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircular issued by the Special Commissioner makes it clear that the purpose of Section 12 C and the corresponding Rule is to bring to an end proceedings for assessment as expeditiously as possible, if the officer is prima facie satisfied with the return and the exemptions sought by the assessee, subject to the conditions stipulated in the Rule. 21. Thus I hold that an assessment under Section 12 C must be framed even in respect of periods where there has been exchange of communication by way of pre-assessment notice, objections as well as personal hearing afforded to the petitioner prior to 01.04.2006, such proceedings pending completion as on 01.04.2006. The impugned orders of assessment though dated 27.02.2007 do not refer to the provisions of Section 12 C at all. 22. Admittedly, in these cases the assessee has only invoked the applicability of Section 12C only after completion of assessment, by communication dated 19.03.2007 wherein for the first time Section 12 C is referred to and a request made to the Assessing Officer to cancel the assessment order and to recall the same. This request has been pending with no reply, hence prompting the assessee to approach this Court by way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examining all the facts placed before them, have found that the assessee was maintaining branch offices outside the State, that the goods had been sent to the branch office and that the branch office had delivered the goods to the customers. It has found that the goods viz., electrical lamps were standardised goods, and were not articles manufactured to the specifications of the customer. It has also been found by the Tribunal that the fact that there was high demand for the goods of the assessee was the reason for the coincidence of the quantity moved to the branch office corresponding to the quantity delivered from the branch office to the customers. The Tribunal has also held that the invoices that had been prepared in the assessee's factory were subsequent to the preparation of the invoice at the branch office, and that the sales were in fact effected from the branch office and not from the factory. The Tribunal has concluded that there was no contract pursuant to which the goods had moved to destinations outside the State and that in fact the goods were moved as stock transfers from the assessee's factory to the branch office outside the state. It has also held that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of India V. Chaturbhai M. Patel & Co. ((1976) 1 SCC 747), wherein the Bench holds that in order to establish fraud, whether in civil or criminal proceedings, the authority alleging such fraud should establish the same beyond reasonable doubt. Equally so, for an allegation of suppression. 29. In the light of the observations made above, I am inclined to set aside the impugned orders as well as show cause notice. The respondent is at liberty to pass a deemed assessment in terms of Section 12 C within a period of two (2) weeks from the date of receipt of a copy of this order. It is also made specifically clear that the respondent is at liberty to initiate proceedings for re-assessment in terms of Section 16 of the Act, in accordance with the applicable timelines and in accordance with law. 30. These Writ Petitions are allowed in the aforesaid terms. 31. Consequently, connected Miscellaneous Petitions are closed. No costs. W.P.Nos.12166 and 12167 of 2007 32. Heard Mr.Raveendran, learned counsel for the petitioner and Mr.Haribabu, learned Additional Government Pleader for the respondent. 33. The challenge is to orders of assessment dated 16.01.2007 passed in terms of the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... condition that the mills shall produce proof of exports before the final check of their accounts for the year concerned to the satisfaction of the assessing authority concerned. (G.O. No.2398, Revenue, dated 27.07.1970) (Notn.No.197(a) of 1970), dated 27.07.1970) (Gazette Notn. Dated 28.07.1970)' 36. The Notification supports the claim of exemption and has been applied in the assessments of the petitioner for previous and subsequent years. While this is so, the Assessing Authority refers to a Clarification issued by the Special Commissioner and Commissioner of Commercial Taxes dated 29.11.2006 which, according to him, stipulates that if the cotton yarn purchased is converted into cloth, then the benefit of G.O.No.197 dated 27.07.1990 is not available to such assessees. The conclusion of the Assessing Authority turns on the position that the petitioner has not supplied cotton yarn for export but has, in fact, supplied cloth manufactured from out of the cotton yarn, for export. Learned counsel for the Revenue is unable to produce a copy of the Clarification and instead circulates a copy of the Exemption Notification to which I have already made reference. The fact that the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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