In a recent ruling, the Madras High Court dismissed the petition challenging the assessment order’s limitation period, stating that deemed assessment under section 22(4) of Tamil Nadu Value Added Tax Act ( TNVAT), 2006 can be issued if no VAT returns were filed and it should be considered the first assessment order.
Indira, proprietrix of M/s Bala Enterprises, the petitioner challenged notices dated 08.05.2019 and 29.05.2019 and the assessment orders dated 23.12.2019, for the assessment year between 2009-2010 and 2014-2015. The petitioner submitted that a search was conducted on the petitioner’s business premises on 21.07.2014. After five years, notices and assessment orders were passed confirming tax liabilities. Thus, the notices and assessment orders were issued beyond the statutory time limit set under the Tamil Nadu Value Added Tax (TNVAT) Act, 2006.
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On the contrary, the respondent’s counsel representative Amirtha Poonkodi Dinakaran argued that the petitioner failed to pay taxes and no proper documentation was provided by the petitioner during the search. The counsel further argued that the Writ Petition was time-barred and should be dismissed.
Justice C. Saravanan observed that the petitioner admitted to engaging in business activities and receiving payments, but did not furnish the necessary documents or tax returns as required. Despite admitting their activities, the petitioner did not provide complete returns or other financial documents requested by the authorities.
The court noted that the petitioner did not file returns on time under Rule 7 of the TNVAT Rules, 2007, or submit complete returns for the assessment years in this case. Therefore, the deemed assessment passed on 23.12.2019 under Section 22(4) of the TNVAT Act should be considered as the first assessment.
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Since no valid returns were filed, the court held that the first assessment was made in 2019. The limitation for reopening assessments under Section 27 of the TNVAT Act was not applicable until six years after the assessment, meaning the petitioner’s challenge to the orders had no merit. Hence, the writ petition of the petitioner was dismissed at no cost.
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