Assessment Order shall not be issued beyond 3-year Deadline under TN Entry Tax Act: Madras HC upholds Single Bench Decision to quash Order [Read Order]
The HC rightly invalidated an assessment order for the AY 2010-11, issued beyond the timeframe stipulated by S.8(5) of the Entry Tax Act
Madras High Court – Assessment Order – TN Entry Tax Act – Madras HC upholds Single Bench Decision – Tax news – Taxscan
Madras High Court – Assessment Order – TN Entry Tax Act – Madras HC upholds Single Bench Decision – Tax news – Taxscan
In a recent ruling, the Madras High Court ruled that Assessment Order shall not be Issued Beyond 3-Year Deadline under TN Entry Tax Act. The court upheld the decision of the Single bench of the same court to quash the impugned order.
The writ appeal filed by the The Assistant Commissioner ( CT ) challenging the order of the Single bench of the Madras High Court arises from an order which imposed taxes and penalties on the respondent - Rason Earth Movers for the purchase of a JCB vehicle from JCB India Limited, Pune, without filing returns or paying taxes under the Entry Tax Act.
The respondent challenged the assessment order through a writ petition, arguing that there was no provision for assessing importers who failed to furnish returns under Section 7 of the Entry Tax Act. Citing precedent cases such as Sri Balakrishna Transport vs. CTO and Vishnu Enterprises vs. Commercial Tax Officer, the court held the assessment to be without jurisdiction and set it aside.
Thus, the Revenue filed the writ appeal following grounds viz:
a. The judgment of the Division Bench in Sri Balakrishna and the order in Vishnu Enterprises are inapplicable to the facts of the present case.
b. The respondent is liable for Entry Tax on the import of JCB from Pune and thus, ought to have filed its monthly returns in Form I, however, the monthly returns were not filed in violation of the provisions of the Entry Tax Act.
c. Pre-assessment notices were issued and final orders were passed on the basis of extract received from the interstate Investigation Cell of Commercial Taxes Department as the respondent had not filed any return.
The respondent's counsel argued that the assessment order is an original assessment under Section 8 of the Entry Tax Act, making the limitation prescribed in subsection (5) applicable. Therefore, the assessment order dated 07.07.2016 is deemed void due to being barred by limitation.
The relevant extract of the Section 8(5) of the Entry Tax Act read as follows:
“........ (5) No order of assessment under sub-section (3) or (4) shall be made after the expiry of three years from the last date prescribed for filing of returns of the particular period. If for any reason such order is not made within the period aforesaid then the return so filed shall be deemed to have been accepted as correct and complete for assessing the tax due from such person."
The division bench of Justices R Mahadevan and Mohammed Shafiq stated that according to the provision, assessments must be conducted within three years from the last date for filing returns. As per Rule 3(2) of the Tamil Nadu Tax on Entry of Goods into Local Areas Rules, 2001, importers file returns either monthly or quarterly.
Further, the assessment in question pertained to the Assessment Year 2010-11, necessitating completion by June 30, 2014. However, the assessment notice was issued on September 29, 2015, and the order was made on July 7, 2016, surpassing the timeframe for original assessment under Section 8(5) of the Entry Tax Act, rendering it void. Therefore, the single bench of the Madras High court rightly invalidated the assessment order and upheld the respondent's writ petition.
Thus, considering the facts, circumstances and provisions, the division bench hesitated to interfere in the decision of the single bench in the writ petition. Accordingly, the writ appeals were dismissed.
To Read the full text of the Order CLICK HERE
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