In a significant judgement, the Madras High Court (HC) has held that coercive recovery proceedings under Tamil Nadu Value Added Tax Act, 2006 ( TNVAT Act ) can’t be initiated before a final Assessment Order.
KJK Poly Diamonds International P Ltd., the petitioner has challenged the impugned proceedings dated 30.01.2023 on the ground that even without passing an assessment order for the respective assessment years, the impugned proceedings dated 30.01.2023 has been issued by the first respondent, exercising its power under Section 45 of the TNVAT Act 2006. Section 45 deals with the mode of recovery.
It was evident that without passing the assessment orders concerning some of the assessment years, the first respondent attached the funds, belonging to the petitioner, which are lying in the Bank account, maintained with the second respondent Bank.
A Coram comprising Justice Abdul Quddhose observed that unless and until the assessment orders are passed in respect of all the assessment years, the first respondent cannot exercise its power under Section 45 of the Tamil Nadu Value Added Tax Act, 2006 to enforce the sums alleged to be due and payable by the petitioner towards tax liability.
It was contended by the petitioner that in respect of all the assessment years, for which the impugned proceedings dated 30.01.2023 has been passed, the respondents have not passed any assessment order.
The Court held that only after passing the assessment orders, any coercive recovery proceedings can be initiated by the first respondent against the petitioner. Further, quashed the impugned proceedings dated 30.01.2023, issued by the first respondent and allowed the writ petition.
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