9911796707
TMI Blog2025 (2) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessment Year 2004-2005 has assessed the petitioner to entry for the first time based on the first Notice dated 10.09.2020 and the second Notice dated 05.01.2021 in exercise of Rule 4 of the Tamil Nadu Tax on Entry of Goods into Local Area Rules, 2001 [in short "Entry Tax Rules, 2001"] which deals with assessment under the Entry Tax Act, 2001. 4. The details of the Impugned Assessment Orders dated 14.07.2021 and the tax imposed and the penalty levied are as under and Details of Demand confirmed by the respondents for the respective Assessment Years read as under:- W.P.No. Date of Notice Date of Assessment Order Total Demand (in INR) Assessment Year Tax Penalty 16696 of 2021 10.09.2020 14.07.2021 8,28,151 6,21,113 2003-2004 16702 of 2021 10.09.2020 14.07.2021 35,47,490 44,34,362 2004-2005 43,75,641 50,55,475 W.P.No. 16696 of 2021 W.P.No. 16702 of 2021 Total Assessment Year 2003-2004 Assessment Year 2004-2005 Tax due reported as per returns Rs. 40,85,476/- Rs. 61,80,239/- Taxable Turnover brought into assessment due to incorrect retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner has not paid entry tax for certain goods imported from up countries. 8. The challenge to the Impugned Assessment Orders are primarily on the ground that confirmation of demand for the respective Assessment Years viz., 2003-2004 and 2004-2005 are long after the period covered by the Impugned Assessment Orders and was therefore contrary to the relevant precedents in terms of the decision of the Hon'ble Supreme Court in State of Punjab Vs. Bhatinda District Co-operative Milk Producers Union Limited, 2007 (217) E.L.T. 325 (S.C.) / (2007) 11 SCC 363, wherein the Hon'ble Supreme Court held that when no period of limitation is prescribed, the statutory authority must exercise its jurisdiction within a reasonable period. 9. Under Section 11(3) of the Punjab General Sales Tax Act, 1948, the assessment was to be completed within a period of three years. The case dealt with an assessment under Section 11(6) and Section 21 of the Punjab General Sales Tax Act, 1948 after the assessment was completed. 10. Section 11(3), Section 11(6) and Section 21 of the Punjab General Sales Tax Act, 1948 reads as under:- Section 11(3) On the day specified in the notice or as soon as afterward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to apply for registration, the Assessing Authority could proceed to assess the tax to the best of his judgment of the amount of tax, if any, due from the dealer in respect of such period and all subsequent periods after giving the dealer a reasonable opportunity of being heard. 12. In Paragraphs 14 and 15 from Bhatinda District Co-operative Milk Producers Union Limited's case (referred to supra), dealt with a case for revision under Section 21 of the Punjab General Sales Tax Act, 1948. The Hon'ble Supreme Court concluded as follows:- "16. A bare reading of Section 21 of the Act would reveal that although no period of limitation has been prescribed therefor, the same would not mean that the suo moto power can be exercised at any time. 17. It is trite that if no period of limitation has been prescribed, statutory authority must exercise its jurisdiction within a reasonable period. What, however, shall be the reasonable period would depend upon the nature of the statute, rights and liabilities thereunder and other relevant factors. 18. Revisional jurisdiction, in our opinion, should ordinarily be exercised within a period of three years having regard to the purport in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh notices were issued under Section 11(2) of the Punjab Act or Section 28(2) of the Haryana Act within a reasonable period from the filing of returns for the further action has not been taken by the assessing officer to complete the assessments. But as we have said above, in the absence of any prescribed period of limitation, the assessment has to be completed within a reasonable period. What such reasonable period would be, would depend upon facts of each case. One view can be that it should be a period not exceeding five year as the legislature has fixed the limitation of five years for completing assessments in case of escaped turnover. Unless there be an assessment made soon after the period to which such assessment relates, the question of consideration of escapement would indeed become difficult to consider and examine. We are, however, not inclined to extend into a situation like the one before us, a period of limitation for completion of assessments under Section 11(3) or 28(3) of the respective Acts. The assessee has made returns for all the quarters and must have paid its admitted tax. Now that the assessing authority intends to complete assessments under section 11(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pedition and reasonable haste but subject to rules of natural justice." 15. It is submitted without prejudice that Section 10 of the Entry Tax Act, 2001 borrows the machinery provision pertaining to assessment from the Tamil Nadu General Sales Tax (TNGST) Act, 1959. Therefore, the powers of the first respondent to assess the petitioner is restricted in scope by provisions of the Tamil Nadu General Sales Tax (TNGST) Act, 1959. In this light, it is relevant to note that, as per Section 40(2)(b) of the Tamil Nadu General Sales Tax (TNGST) Act, 1959, a registered dealer is statutorily required to maintain books of accounts only for a period of five years. In this regard, reliance is placed on the decision of the Kerala High Court in Merchem India (P) Ltd., Vs. CTO, 2020 (11) TMI 25 wherein the Hon'ble Court held that the period of five years for which Rule 58(20) of the Kerala Value Added Tax Rules casts an obligation on a registered dealer to maintain books of accounts may be taken as a safeguarding factor to limit the power of reassessment under Section 42 of the Kerala Value Added Tax Act, 2003. Based on the aforesaid decision, it is submitted that the Impugned Assessment Order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and others, 2016 (11) TMI 545 SC (LB), the Hon'ble Supreme Court only laid down the principles for determining whether entry tax is discriminatory or not and did not decide validity of any Enactment as such. It was held that the factum of whether or not State Entry Tax enactments are discriminatory has to be examined only by the respective State High Courts. Subsequent to the decision in Jindal Stainless Limited case (referred to supra), the constitutionality of the Entry Tax Act is yet to be determined by this Hon'ble Court in W.P.No.8109 of 2005, and therefore, it is submitted that the Impugned Assessment Orders are ipso facto premature and ought to be quashed. 20. Learned counsel for the petitioner has placed reliance on the decision of the Division Bench of this Court in M/s.J.M.Baxi & Co., Vs. The Government of India, Represented by the Joint Secretary, Ministry of Finance, New Delhi and others, 2016 SCC Online Mad 3176. 21. The learned Additional Government Pleader for the respondents submitted that based upon the materials gathered during the course of inspection of the place of business of the dealers and on the finding of the fact that the dealer has not paid en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST) Act, 1959 and Section 10 of the Entry Tax Act, 2001 and Rule 4 of the Entry Tax Rules 2001, one can understand the legislative intention that such assessment is not time bounded. 24. It is submitted that the proposed levy of penalty under Section 12(3) of the Tamil Nadu General Sales Tax (TNGST) Act, 1959 read with Section 10 of the Entry Tax Act, 2001, it has no time limit when it is taken along with the original assessment proceedings. The time limit has been stipulated in Section 12(3) of the Tamil Nadu General Sales Tax (TNGST) Act, 1959, only when a separate proceeding has been initiated for levy of penalty on the assessment under Section 12(2) of the Tamil Nadu General Sales Tax (TNGST) Act, 1959. 25. It is submitted that the petitioner/dealer in their reply/objections had not filed any materials or documents that the assessments should not be carried out. Even though they accepted that it is settled by the Hon'ble Supreme Court in M/s.Jindal Stainless Limited and another Vs. State of Haryana and others, 2016 (11) TMI 545 SC (LB), they had not produced any documents or order from this Court to stay or otherwise stall assessment proceedings. 26. It is respectfully s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that the levy of Tax on Entry of Goods into Local Areas and the levy of Tax on entry of Motor vehicles into Local Areas were agitated before the High Courts of various States by the dealers in the respective States. In turn, the State Governments also took the cases to appeal to sustain the levy of Entry Tax whenever the High Court decided against the State Revenue on this count. The issue was settled in November 2016 by the Hon'ble Supreme Court in M/s.Jindal Stainless Limited and another Vs. State of Haryana and others, 2016 (11) TMI 545 SC (LB), wherein the Hon'ble Supreme Court has answered several questions pertaining to entry tax legislations of different states including Tamil Nadu and settled various issues related to Entry Tax-Goods. 30. It is submitted that the Act was in scrutiny for long period and the Final Judgment for legality of the Entry Tax Act, 2001 came only in the end of 2017. Since the matter was pending before the Higher Judicial Forums, the original assessment, based upon the returns filed under the Entry Tax Act, 2001, in respect of the petitioner/dealer for the above said years have been kept pending. Barring the period that the Act was in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall apply accordingly. 36. For the sake of clarity, Section 10 of the Entry Tax Act, 2001, is reproduced below:- Section 10: Tax authorities, returns, assessments, payments and recovery.- 1. Subject to the other provisions of this Act and the rules made thereunder, the authorities for the time being empowered to assess, re-assess, inspect, search, seize, confiscate, collect and enforce payment of tax, including any interest or penalty, payable by a dealer, an importer under this Act as if the tax or interest or penalty by such importer this Act is a tax or interest or penalty payable under the General Sales Tax Act, and for this purpose they may exercise all or any of the powers they have under the General Sales Tax Act; and the provisions of the General Sales Tax Act, including provisions relating to returns, provisional assessment, advance payment of tax, imposition of the tax penalty of a person carrying on business on the transferee of, or successor to, such business, transfer of liability of any firm or Hindu undivided family to pay tax in the event of the dissolution of such form or partition of such family, recovery of tax from third parties, reviews, references, refun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 59 reads as under:- Section 40:Maintenance of up-to-date, true and correct accounts and records by dealers.- (1) ..... (2)(a) ...... (2)(b)Every registered dealer shall also ordinarily keep the books of account for the previous five years at such place or places as he may notify to the registering authority. If the registered dealer decides to change the place or places so notified, he shall before effecting such change, notify the same to the registering authority. (3) ....... 41. Thus, a registered dealer is ordinarily not required to maintain records, documents and accounts for a period beyond five years for assessment under the provision of the Tamil Nadu General Sales Tax (TNGST) Act, 1959. 42. By implication, such a dealer will also not be required to keep such books of account and documents for a period beyond five years under the provisions of the Entry Tax Act, 2001. 43. Therefore, assessment under the provisions of the Entry Tax Act, 2001, also ought to have been completed within reasonable period of time. Certainly, there is no justification in finalizing the assessment after a lapse of considerable period of time. 44. Further, a dealer who is also a dealer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Entry Tax Rules, 2001. Rule 3 and Rule 4 of the Entry Tax Rules, 2001 are reproduced below:- Rule 3 : Filing of returns and payment of tax Rule 4 : Assessment of tax 1) An importer being a dealer in scheduled goods, who is liable to pay tax under Section 3 of the Act shall submit to the assessing authority on or before the 20th day of every month, a return in Form I in duplicate showing the total and net value of the scheduled goods for the preceding month, along with the remittance receipt from the Government Treasury or a crossed demand draft drawn in favour of the assessing authority for the whole of the amount of tax payable for the month, to which the return relates. Provided that the method of payment by means of cheque shall not be applicable to the importers referred to in this sub-rule whose cheques got dishonoured for want of funds on more than one occasion. 2) In the case of an importer referred to in sub-rule (1) having more than one place of business in the local areas, all returns prescribed by these rules shall be submitted by the principal place of business and such returns shall show the total value of the scheduled goods of all the places of his business i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... communicated to the importer; (d) If the return filed in Form III does not appear to be correct and complete, the authority concerned shall determine the value of the scheduled goods and the tax payable thereon and serve on the importer a notice in Form V and the importer shall pay the sum demanded within the time and in the manner prescribed in the notice. 1) After the close of the year for which the returns have been submitted by an importer referred to in subrule (1) of Rule 3 or in the course of the year, where such importer had discontinued business, the assessing authority, shall, if he is satisfied, after such scrutiny of the accounts and making such enquiry as he considered necessary that the returns filed are correct and complete finally assess in single order on the basis of the return, the tax payable for the year to which the return relates. 2) Where any such importer fails to submit the return or returns before the date specified in sub-rule (1) of Rule 3 or if any return or returns submitted by him appears to be incorrect or incomplete the assessing authority shall after giving the importer an opportunity, determine the value of the scheduled goods to the best of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 3 of the Entry Tax Rules, 2001, the Assessing Authority has to provisionally assesses the tax payable by a dealer for the month to the best of his or her Judgment, where the importer referred to in Sub-Rule (1) either i. fails to file the returns on or before the due date; or ii. if the return submitted appears to be incorrect and complete. 54. For this purpose, the Assessing Authority has to determine the value of the scheduled goods to the best of the Judgment and shall thereafter serve upon the importer a notice in Form II. 55. The importer has to pay the amount within such time as may be specified in the notice in Form II. For the aforesaid purpose, the Assessing Authority has to follow the procedure prescribed under the General Sales Tax and the Rules made thereunder. 56. Both Rule 4(1) and Rule 4(2) of the Entry Tax Rules, 2001, contemplate final assessment. Former, deals with final assessment under the following two circumstances namely:- i. Return submitted by an importer referred to in sub-rule (1) of Rule 3; or ii. where importer had discontinued business in the course of the year. Latter applies to the following two circumstances namely:- i. when filed re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l assessment but also the final assessment is required to be made by the Assessing Authority where no returns were filed and/or where returns filed were either incorrect or incomplete as per the above Rules. 64. Even if such assessment made Rule 4 of the Entry Tax Rules, 2001 resulted in escaped turnover, the Assessing Authority was empowered to invoke the powers under Section 16 of the Tamil Nadu General Sales Tax (TNGST) Act, 1959 in view of Section 10 of the Entry Tax Act, 2001. 65. Again here also the assessment has to be made to the Best Judgment Method after notice to the dealer. However, this power is available in the hands of the Assessing Authority for a period of 5 years from the date of final assessment. Section 16(1)(a) and (b) of the Tamil Nadu General Sales Tax (TNGST) Act, 1959 reads as under:- "Section 16. Assessment of escaped turnover. - (1)(a) Where, for any reason, the whole or any part of the turnover of business of a dealer has escaped assessment to tax, the assessing authority may, subject to the provisions of sub-section (2), at any time within a period of five years from the *[date of order of the final assessment by the assessing authority], determin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. 71. However, the respondents have not produced any order of the Court which had put an embargo on them from passing Assessments Orders earlier. That apart, the orders of the Hon'ble supreme Court were passed in 2016 and 2017. However, the Impugned Assessment Orders have been passed long after the Hon'ble Supreme Court upheld the validity of the levy of entry tax under various legislations. 72. Thus, there was no justification in passing the Impugned Assessment Orders belated in the year 2021 in respect of the Assessment Year 2003-2004 and the Assessment Year 2004-2005. It has to be assumed that the Department has accepted the returns filed by the petitioner for the respective Assessment Years and the assessment was completed under Rule 4(1) of the Entry Tax Rules, 2001. 73. If at all, the respondents should have invoked the machinery under Section 16 of the Tamil Nadu General Sales Tax (TNGST) Act, 1959 read with Section 10 of the Entry Tax Act, 2001 within a reasonable period prescribed for finalizing the assessment. In other words, the powers could have been invoked within 5 years after deemed assessment under Rule 4(1) of the Entry Tax Rules, 2001 and after the date of ..... 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