SSPDL Interserve (P) Ltd. Vs State Tax Officer (Madras High Court)
Summary: The Madras High Court allowed four writ petitions filed by M/s SSPDL Interserve (P) Ltd., now known as M/s SSPDL Infractech Private Limited, and set aside reassessment orders for assessment years 2011-12 to 2014-15 as barred by limitation. The petitioner, a registered works contractor, executed original works and sub-contract works for its group company. It stated that third-party principals deducted tax at source, while payments for group-company sub-contract works were covered by Form S certificates and therefore suffered no TDS. It claimed to have filed monthly returns and paid the appropriate tax after adjusting available input tax credit and TDS. Its assessments stood deemed completed under Section 22(2) of the TNVAT Act on 31.10.2012, 31.10.2013, 31.10.2014 and 31.10.2015 respectively. A letter dated 01.03.2022 seeking assessment copies, connected with the group company’s WCT refund claim, prompted scrutiny of the records and subsequent reassessment proceedings. The petitioner challenged the March 2022 notices and consequential orders as exceeding the six-year limitation under Section 27.
The Revenue alleged discrepancies in the returns and non-production of supporting purchase particulars, ledger accounts and invoices. It relied on R. Vijayalakshmi v. The Assistant Commissioner (ST), which addressed the conditions necessary for a deemed assessment. The Court found that, in the present case, filing of returns with the prescribed documents and proof of tax payment was undisputed; the Revenue’s counter-affidavit also acknowledged the deemed assessments. Consequently, reopening under Section 27 remained subject to the statutory limitation. The petitioner’s request for assessment records could neither extend nor revive that period, and the Assessing Authority’s jurisdiction could not be enlarged by consent, correspondence or the dealer’s conduct. Holding that the proceedings were initiated beyond the prescribed period and that the respondent lacked jurisdiction, the Court set aside the orders dated 23.06.2022, 24.06.2022 and 20.07.2022, allowed the writ petitions without costs and closed the connected miscellaneous petitions.
Cases Discussed
- R. Vijayalakshmi v. The Assistant Commissioner (ST), W.P.Nos.17289, 17291, 17295 and 17297 of 2021, dated 19.02.2024 (Madras High Court). The Revenue cited this decision concerning the prerequisites for deemed assessment under Section 22(2) and the applicability of Section 27 limitation. The Court found that those prerequisites were satisfied in the present case and that the statutory limitation therefore governed reopening.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The present writ petitions have been filed challenging the orders passed by the respondent in his proceedings dated 20.07.2022, 24.06.2022 and 23.06.2022.
2. The brief facts of the case are as follows:
2.1. The petitioner is a works contractor and is a registered dealer under the Tamil Nadu Value Added Tax Act, 2006 (hereinafter referred to as “the TNVAT Act”) on the file of the respondent. According to the petitioner, it had executed works contracts in the State of Tamil Nadu as well as in other States. During the assessment years 2011-12 to 2014-15, apart from executing original works, the petitioner had also executed sub-contract works for its group company, namely, M/s.SSPDL Infrastructure Developers Private Limited, which was also a registered dealer under the TNVAT Act on the file of the State Tax Officer, Pondy Bazaar Assessment Circle.
2.2. According to the petitioner, tax was liable to be deducted at source (TDS) from the payments made towards the execution of works contracts at the rate of 2% or 4%, depending upon the nature of the works contract. The petitioner further states that an application could be made under Section 13(1)(c) of the TNVAT Act seeking exemption from deduction of tax at source and that no deduction was required to be made where the dealer produced a certificate in Form S issued by the Assessing Authority, certifying that there was no liability to pay tax or that the tax payable under Section 5 of the TNVAT Act had already been paid.
2.3. It is further stated that, where tax is deducted at source, the amount so deducted is required to be remitted to the jurisdictional Assessing Authority in Form R and a certificate in Form T evidencing such deduction is required to be issued to the contractor, as contemplated under Section 13(2) of the TNVAT Act.
2.4. According to the petitioner, upon furnishing the certificate in Form T, as contemplated under Section 13(4) of the TNVAT Act, the amount of tax deducted at source and remitted to the Government is liable to be adjusted towards the tax liability of the dealer.
2.5. In respect of payments received for works contracts executed for third parties, tax was deducted at source by the respective principals. However, in respect of payments received from its group company towards the execution of sub-contract works, the petitioner had obtained and produced certificates in Form S and, consequently, no TDS was deducted for the assessment years 2011-12 to 2014-15. The petitioner claims to have filed its monthly returns and remitted the appropriate tax after adjusting the available input tax credit and the TDS amounts, wherever applicable.
2.6. It is the further case of the petitioner that, upon filing the returns in the prescribed manner, together with the requisite documents and proof of payment of tax, the assessments stood deemed to have been completed in terms of Section 22(2) of the TNVAT Act. Accordingly, the petitioner claims that, the assessments for the assessment years 2011-12, 2012-13, 2013-14 and 2014-15 stood deemed to have been completed on 31.10.2012, 31.10.2013, 31.10.2014 and 31.10.2015 respectively. The petitioner further states that the said returns were accepted and the relevant records were maintained by the Assessing Authority. The petitioner had also filed audit reports in Form WW for the assessment years 2012-13 and 2014-15.
2.7. Subsequently, the respondent initiated proceedings under Section 27 of the TNVAT Act, and passed the impugned assessment orders dated 23.06.2022 for the assessment years 2013-14 and 2014-15, the order dated 24.06.2022 for the assessment year 2012-13 and the order dated 20.07.2022 for the assessment year 2011-12.
3. Mr.P.V.Sudakar, learned counsel appearing for the petitioner in all the writ petitions, submitted that the respondent could initiate proceedings under Section 27(1) of the TNVAT Act only in respect of escaped turnover or wrong availment of input tax credit and that such proceedings were required to be initiated within the period of six years prescribed under the said provision. According to the learned counsel, any proceedings initiated beyond the said period would be barred by limitation.
3.1. Learned counsel further submitted that the assessments for the assessment years 2011-12 to 2014-15 stood deemed to have been completed on 31.10.2012, 31.10.2013, 31.10.2014 and 31.10.2015 respectively. He submitted that the notices issued by the respondent on 09.03.2022 and 25.03.2022 and the consequential impugned assessment orders were beyond the period of six years prescribed under Section 27(1) of the TNVAT Act and, therefore, the impugned orders were liable to be set aside on the ground of limitation.
4. Per contra, the learned Government Advocate (Tax) appearing for the respondent in all the writ petitions submitted that certain discrepancies had been noticed in the returns filed by the petitioner and, therefore, a notice dated 25.03.2022 was issued calling upon the petitioner to submit its objections. According to the learned Government Advocate, the impugned orders were passed after considering the materials available on record and the objections submitted by the petitioner.
4.1. Learned Government Advocate further pointed out that, insofar as the claim of input tax credit was concerned, the petitioner had not furnished the requisite supporting documents, including purchase particulars containing the names of the dealers, PIN details, purchase ledger accounts and purchase invoices. It is further submitted that the petitioner had addressed a letter dated 01.03.2022 to the respondent seeking copies of the assessment orders for the assessment years 2011-12 to 2014-15. Upon examining the records pursuant to the said request, the respondent noticed certain discrepancies in the returns filed by the petitioner for the respective assessment years. Consequently, notices were issued to the petitioner and, thereafter, the impugned assessment orders came to be passed.
4.2. The respondent has also filed a counter-affidavit. In the counter-affidavit filed by the respondent, the averments contained in paragraph 4 thereof are extracted hereunder:
“4.It is submitted that the Petitioner TVL SSPDL Interserve (P) Limited now renamed as TvI. SSPDL Infra Tech Private Limited at No.11, Sir Thyagaraya Road, Chennai -17 are works contractors on the file of this office.
For the assessment years from 2011-12 to 2014-15, they were deemed to have been assessed under Section 22 (2) of the TNVAT Act 2006 based on the monthly returns filed by them on 31-10-2012, 31-10-2013, 31-10-2014 and 31-10-2015 respectively
In their letter dated 01-03-2022, the dealers had stated that their contractor TvI.SSPDL Infrastructure Developer Private Limited who is also a registered dealer in Pondy Bazaar Assessment Circle with TIN/33931582620 has applied for refund of WCT deducted by their client. In order to refund the WCT, the Assessing Officer of the Pondy Bazaar Assessment Circle directed us to obtain the sub-contractor i.e., SSPDL Infra Tech Private Limited assessment order for the period from 2011-12 to 2014-15.
The dealers have therefore now furnished the details of turnover and tax paid and requested for copies of the assessment orders for all the year from 2011-12 to 2014-15.
The turnover details now furnished by the dealers have been verified with respect to Balance sheet of the respective years which revealed certain omission and commission. After issuing notices to the dealers, revised orders were passed
Aggrieved by the above revised orders, the dealer filed Writ Petitions before the Hon’ble High Court of Madras for all the years from 2011-12 to 2014-15.”
4.3. It is contended by the learned Government Advocate appearing for the respondent that the petitioner had failed to furnish the particulars sought by the respondent in respect of the turnover and tax paid. Instead, the petitioner had sought copies of the assessment orders for the respective assessment years from 2011-12 to 2014-15. It is therefore contended that, in the absence of the requisite particulars, the respondent proceeded to pass the impugned orders on the basis of the materials available on record.
4.4. The learned Government Advocate appearing for the respondent placed reliance on the order of this Court in R. Vijayalakshmi v. The Assistant Commissioner (ST) in W.P.Nos.17289, 17291, 17295 and 17297 of 2021, dated 19.02.2024. In the said decision, the learned Single Judge considered the applicability of the limitation prescribed under Section 27 of the TNVAT Act in the context of deemed assessment under Section 22(2) of the TNVAT Act. In paragraph 23 of the said order, the learned Single Judge held as follows:
“23. If the returns filed by the dealer under Section 21 of the Tamil Nadu Value Added Tax Act, 2006 read with rule 7 of the Tamil Nadu Value Added Tax Act, 2007 were either incorrect or incomplete without the prescribed documents and proof of payment of tax, question of the assessment being treated as deemed to have been completed in terms of the amendment to Section 22 of the Tamil Nadu Value Added Tax Act, 2006 vide Tamil Nadu Act 23 of 2012 with effect from 19.6.2012 on the date specified in sub-section 2 to section 22 of the Tamil Nadu Value Added Tax Act, 2006 on 31.10.2018 and on 13.6.2012 for the assessment years 2006-7 to 2010-11 rule 8 (9) and rule 8 (10) would not arise read with Rule 8(10) of the Tamil Nadu Value Added Tax Rules, 2007. Only where an assessee has filed the return in the prescribed form which were accompanied with prescribed documents and proof of payment of tax, assessment can be deemed to be completed. As per rule 8 (9) of Tamil Nadu Value Added Tax Rules, 2007, only where a registered dealer is deemed to have been assessed under the Act, 2006, assessing authority is not required to issue any assessment order or intimation to the dealer.”
4.5. In the aforesaid decision, the learned Single Judge has also drawn a comparative distinction between Sections 22 and 25 of the TNVAT Act. The legal position that emerges from the said decision is that the limitation prescribed under Section 27 of the TNVAT Act would apply where the assessment is deemed to have been completed in accordance with Section 22(2) of the TNVAT Act. In the present case, it is not in dispute that the petitioner had filed the returns in the prescribed manner, along with the requisite documents and proof of payment of tax. Therefore, the assessment stood deemed to have been completed in terms of Section 22(2) of the TNVAT Act. It is only pursuant to the letter dated 01.03.2022 submitted by the petitioner, that the respondent appears to have examined the records and issued the notice dated 25.03.2022 alleging certain discrepancies. However, the mere fact that the petitioner had submitted the said letter on 01.03.2022 cannot have the effect of extending, enlarging or reviving the statutory period of limitation prescribed under Section 27 of the TNVAT Act. Once the assessment stood deemed to have been completed under Section 22(2), any proceedings for assessment of escaped turnover or wrong availment of input tax credit under Section 27 were required to be initiated within the period prescribed therein.
5. The only question that arises for consideration in these writ petitions is whether the proceedings initiated by the respondent under Section 27 of the TNVAT Act are barred by limitation. It is not in dispute that the petitioner had filed the returns accompanied by the prescribed documents and proof of payment of tax and, consequently, the assessments were deemed to have been completed in terms of Section 22(2) of the TNVAT Act. In such circumstances, the power of the respondent to reopen the assessment under Section 27 of the TNVAT Act is subject to the period of limitation prescribed therein. Admittedly, the impugned assessment orders dated 23.06.2022, 24.06.2022 and 20.07.2022 relating to the said assessment years which were beyond the period of six years prescribed under Section 27 of the TNVAT Act. Therefore, the impugned proceedings are liable to be held as barred by limitation.
6. The learned Government Advocate appearing for the respondent would contend that the proceedings were initiated pursuant to the petitioner’s letter dated 01.03.2022, whereby the petitioner had sought copies of the assessment orders relating to the assessment years 2011-12 to 2014-15. However, the said contention cannot be accepted. The letter dated 01.03.2022 was only a communication submitted by the petitioner seeking the relevant assessment records. Such communication cannot operate as an extension of the statutory period of limitation prescribed under Section 27 of the TNVAT Act. The jurisdiction conferred upon the Assessing Authority under Section 27 of the TNVAT Act must be exercised within the period prescribed by the statute and cannot be enlarged by consent, correspondence or conduct of the dealer. Therefore, merely because the petitioner had addressed the letter dated 01.03.2022, the respondent could not have initiated proceedings under Section 27 of the TNVAT Act after the expiry of the prescribed period of limitation.
7. In view of the foregoing discussion, this Court is of the considered view that the impugned proceedings initiated by the respondent under Section 27 of the TNVAT Act were beyond the period of limitation prescribed under the statute. Consequently, the respondent lacked jurisdiction to pass the impugned assessment orders.
8. Accordingly, the impugned orders dated 23.06.2022, 24.06.2022 and 20.07.2022 are hereby set aside. The writ petitions are allowed. There shall be no order as to costs. Consequently, connected Writ Miscellaneous Petitions are closed.
