Madras High Court
The Appellate Assistant Commissioner … vs M/S.Supreme Coaters & Fabricators on 1 October, 2024
Author: C.Saravanan
Bench: R.Suresh Kumar, C.Saravanan
T.C.Nos.41 to 43 of 2016
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved On 13.09.2024
Pronounced On 01.10.2024
CORAM:
THE HONOURABLE MR.JUSTICE R.SURESH KUMAR
and
THE HONOURABLE MR.JUSTICE C.SARAVANAN
T.C.(Revision) Nos.41 to 43 of 2016
and
C.M.P.Nos.14217 to 14219 of 2016
The Appellate Assistant Commissioner (CT)
Commercial Taxes Department,
100 Ft. Road, Ellaipillaichavady,
Puducherry 605 005. ... Petitioner in all TCs.
vs.
M/s.Supreme Coaters & Fabricators,
Puducherry, rep.by its Proprietor ... Respondent in all TCs.
Prayer in all TCs.: These petitions have been filed under Section 51(2)
of the PVAT Act, 20076 to revise the order of the Value Added Tax
Appellate Tribunal, Principal District Judge, Puducherry dated
16.11.2021 passed in T.A.Nos.2 to 4 of 2016.
https://www.mhc.tn.gov.in/judis
1/49
T.C.Nos.41 to 43 of 2016
For Petitioner : Mr.J.Kumaran
(in all TCs.) Addl.Govt.Pleader
For Respondent : Mr.M.N.Bharathi
( in all TCs.)
COMMON ORDER
(Judgment of the Court was delivered by C.SARAVANAN,J.)
Heard the learned counsel for the Petitioner–Commercial Tax
Department. There is no re-presentation on behalf of Respondent-
Assessee despite service of notice.
2. These Tax Cases are directed against the orders dated
02.03.2016 passed by the Puducherry Value Added Tax Appellate
Tribunal, Principal District Judge, Puducherry in T.A.Nos.2 to 4 of 2016
for the Assessment Years 2007-08 to 2009-10 respectively.
3. Operative portion of the impugned order read as under :-
In this case, the date of inspection for assessing
the returns of the appellant factory, by the
Assessing Authority on the appellant factory washttps://www.mhc.tn.gov.in/judis
2/49
T.C.Nos.41 to 43 of 2016done on 8.2.2013. The assessment year pertains to
2007-2008. The assessment should have been
made within three years from the end of the year
i.e. 31.3.2008 namely within 31.3.2011 The
assessment order had been passed only on
12.12.2014 and therefore, the assessment order
itself is non-est in law There is no explanation on
the side of the Respondent in this context. It is
seen that the assessment order had been passed
after the period stipulated in Section 24(5) of
PVAT Act, 2007. The proviso does not apply since
it is no the case of the Respondent that the input
tax credit has been availed wrongly or the dealer
had produced false invoice, vouchers, declaration
certificate or any other documents with a view to
support his claim of input tax credit or refund or
the assessing authority had reversed the input tax
credit availed by the dealer/ appellant and
determined tax due as contemplated u/s 24(6) of
the PVAT Act, 2007.
10. In such circumstances, this court holds that
the Assessment Order dated 12.12.2014 is hit by
the provision u/s 24(5) of the PVAT Act, 2007.
Therefore the tax due as assessed by the
Assessment Officer besides imposing 200%
penalty on the tax payable without giving any
sufficient reasons is against law and probabilities
of the case The Appellate Assistant Commissioner,
Puducherry also without going into the merits of
the case had blindly upheld to the decision of the
Assessing Authority without any justifiable reason.
Therefore, I hold that that the Assessment Order
dated 12.12.2014 requires interference and to be
https://www.mhc.tn.gov.in/judis
3/49
T.C.Nos.41 to 43 of 2016
set aside, on the ground of passing the assessment
order after a period of three years from the end of
the year to which the return relates, namely
31.3.2008.
11. In the result, the Order passed by the Appellate
Assistant Commissioner (CT). Commercial Taxes
Department. Puducherry in Proceedings in Appeal
No.52/PVAT/2014-15, dated. 29.6.2015 in
Assessment Order of the Commercial Tax Officer
(IAC), Puducherry dated. 12. 12.2014 is set aside.
No costs.
4. By the impugned Common Order, the Appellate Tribunal has set
aside the order dated 29.06.2015 of the Appellate Assistant
Commissioner (CT) Commercial Taxes Department, Puducherry. By the
said order, the Appellate Assistant Commissioner (CT) Commercial
Taxes Department, Puducherry in Appeal Nos.52 to 54/PVAT/2014-
2015/AAC, had affirmed the Assessment Orders passed by the
Commercial Tax Officer-IAC for the assessment years 2007-2008 to
2009-2010 respectively.
5. For the sake of convenience, the relevant Assessment Years and
their respective Assessment Orders are as follows:-
https://www.mhc.tn.gov.in/judis
4/49
T.C.Nos.41 to 43 of 2016Tax Case Assessment Year Notice Assessment
Revision Order
No.
41 of 2016 2007-08 05.03.2011 12.12.2014
42 of 2016 2008-09 05.03.2011 22.12.2014
43 of 2016 2009-10 05.03.2011 31.12.2014
6. These cases were admitted on 07.09.2016. The following
substantial questions of law were framed by this Court at the time of
admission: –
i) Whether the work of powder coating
undertaken by the Assessee amounts to
execution of works contract or not? And
ii)Whether the powder coating work involves
transfer of property or not?
7. Although, not raised the following substantial questions of law
also arises for consideration : –
Whether the following assessment orders passed by
the Assessing Officer for the Assessment years
2007-2008 to 2009-2010 were passed within the
period of limitation prescribed for completion of
the Assessment under the provisions of Pondicherry
Value Added Tax Act, 2007 (hereinafter referred to
as PVAT)?
https://www.mhc.tn.gov.in/judis
5/49
T.C.Nos.41 to 43 of 2016
8. Earlier, the Respondent-Assessee had suffered adverse
assessment orders for the Assessment Years 2007-2008 to 2009-2010 in
the hands of the Commercial Tax Officer, – IAC as detailed above.
9. The aforesaid Assessment Orders also preceded a Pre-
Assessment Notice dated 25.09.2014 which were replied by the
Respondent-Assessee. In the notice dated 25.09.2014, it was proposed
to reject the Nil returns filed by the Respondent-Assessee for the above
said years and also to levy tax on the sale of goods involved in the
execution of works contract at the rate specified in the schedule for such
goods. The notices also proposed to levy penalty on the Respondent-
Assessee as provided under Section 24(3) of the Puducherry Value Added
Tax Act, 2007.
10. The dispute related to powder coating process on the products
like yokes, links and tubes etc supplied by local industries like Lucas
TVS, Rane Madas and Remi Electricals to the Respondent-Assessee.
https://www.mhc.tn.gov.in/judis
6/49
T.C.Nos.41 to 43 of 2016
11. The Respondent-Assessee had earlier filed Nil (Returns)
stating that the activity carried out by it was only a job work and did not
involve any sale i.e. works contract. The Respondent-Assessee was
procuring materials, both from local dealer as well as from suppliers
located outside the State by making Inter-State purchases for its powder
coating activities on job work. The materials procured include chemical’s
used for pre-cleaning the materials to remove rust and dust, ‘powder’ used
for powder coating, ‘sprays’ for Touch-up purposes etc.
12. The Commercial Tax Department concluded that since the
materials purchased by the Respondent-Assessee both locally and Inter-
State purchases were used in the process for powder coating and resulted
in transfer of these materials in the execution of work, the job work
carried out by the Petitioner is in the nature of Works Contract of powder
coating and was liable to pay tax under Section 15(1) of the Puducherry
Value Added Tax Act, 2007.
13. Thus, the Nil returns filed by the Respondent-Assessee were
https://www.mhc.tn.gov.in/judis
7/49
T.C.Nos.41 to 43 of 2016
proposed to be rejected as incorrect. The notice also proposed to assess
by scrutiny of accounts as provided under proviso to Section 24(2) of the
PVAT Act, 2007.
14. In response to the pre-assessment notices, the Respondent-
Assessee had given a representation dated 07.10.2014 which was rejected
by the Assessing Officer. It is in this background that the Assessment
Orders were passed for the Assessment Years 2007-2008 to 2009-2010
against which, the Respondent-Assessee had preferred appeals before the
Appellate Assistant Commissioner in Appeal Nos.52 to 55 and
61/PVAT/2014/2014-15/AAC.
15. In the appeals filed for these Assessment Years, the Assistant
Commissioner of Appellate Commissioner, Commercial Tax, considered
the following issues :-
(i) Whether the assessment order issued on
12-12-2014 for the years 2007-08,
2008-09, 2009-10 and 2010-11 after a
period of 3 years are time bared or Not?
(ii) Whether the business activity under taken
by the appellant has to be treated as job
work or exempted sale or transfer ofhttps://www.mhc.tn.gov.in/judis
8/49
T.C.Nos.41 to 43 of 2016properly in execution of works contract?
(iii) If it is treated as works contract
(Transfer of Property) penalty is
leviable as per Section 24(3) of the
PVAT Act, 2007.
16. These appeals were also dismissed by Appellate Assistant
Commissioner vide order dated 29.06.2015, along with Appeals filed for
the Assessment Years 2010-11 and 2011-12 on the ground that there was
transfer of property involved in the job works executed by the
Respondent.
17. Thus, the Appellate Assistant Commissioner concluded that
the activity carried by the Respondent–Assessee involved works contract
and thus upheld that the Assessment Orders passed by the Assessing
Officer for the respective Assessment Years. In so far as imposition of
penalty under Section 24(3) of the PVAT Act, 2007, the Appellate
Assistant Commissioner also held that it did not warrant any interference.
18. Aggrieved by the said order dated 29.06.2015 of the Appellate
https://www.mhc.tn.gov.in/judis
9/49
T.C.Nos.41 to 43 of 2016
Assistant Commissioner (CT), the Respondent-Assessee has preferred
Tax Appeal Nos.2 to 4 of 2016 before the Sales Tax Appellate Tribunal,
Puducherry for the Assessment Years 2007-08 to 2009-10. These
Appeals were allowed by the Sales Tax Appellate Tribunal, Puducherry,
vide Impugned Order dated 02.03.2016, on the ground that the
Assessment Order was passed after a period of three years from the end
of the year to which returns relates and therefore the order passed by the
Appellate Assistant Commissioner (CT), Commercial Taxes Department
was set aside.
19. The Appellate Tribunal thus reversed the order of the
Appellate Assistant Commissioner vide Impugned Order dated
02.03.2016 in Tax Appeal Nos.2 to 4 of 2016 and held that the
Assessment Orders passed by the Commercial Taxes Department for the
Assessment Year 2007-2008 were hit by Section 24(5) of the PVAT Act,
2007.
20. The learned counsel for the Petitioner-Commercial Tax
Department submits that the Tribunal had failed to appreciate the fact
that the assessing officer had issued a notice on 05.03.2011 for the
https://www.mhc.tn.gov.in/judis
10/49
T.C.Nos.41 to 43 of 2016
respective Assessment Years viz., 2007-2008 to 2009-2010, directing the
Respondent-Assessee to explain the basis for claiming exemption. It is
submitted that since the department had initiated action within three
years of the close period to which the return relates, Assessment Orders
passed on various dates covered in the appeals, were not time barred
under Section 24(5) of the PVAT Act, 2007.
21. The learned counsel for the Petitioner-Commercial Tax
Department further submits that the Tribunal has failed to consider that
the Respondent-Assessee had wrongly reported ‘Nil’ return by treating
their work as job work and failed to report the taxable turnover for the
respective Assessment Years viz., 2007-2008 to 2009-2010.
22. It is submitted that the Assessing Authority had come to a
correct conclusion that the powder coating job works carried out by the
Respondent-Assessee was taxable, as it involved transfer of property in
the course of execution of the job work and passed the Assessment
Orders. It is submitted that the Commercial Tax Officer-IAC was
empowered to levy penalty under Section 24(3) of the Puducherry Value
Added Tax Act, 2007 on the Assessment Orders.
https://www.mhc.tn.gov.in/judis
11/49
T.C.Nos.41 to 43 of 2016
23. In this case, the dispute pertains to the Assessment years 2007-
08 to 2009-10. The Respondent-Assessee had filed Nil return under the
provisions of Puducherry Value Added Tax Act, 2007 r/w Rule 25(3) of
the PVAT Act, and Rules 2007 and claimed that the works carried out by
the Respondent-Assessee on job work basis was exempted from payment
of tax under the PVAT, Act, 2008. Thus, the Assessment Orders came to
be passed and the assessment was preceded by a notice dated 05.03.2011.
24. It appears that the purchase of materials used in works
contract, were procured at concessional rate and that the Respondent-
Assessee had applied C-Form. Thus, the Respondent-Assessee was called
upon to explain the basis on which, the Respondent-Assessee was
claiming the exemption from payment of tax on powder coating activity.
This was followed by a Pre-Assessment notice dated 25.09.2014 which
also proposed to levy penalty under Section 24(3) of the Puducherry
Value Added Tax Act, 2007.
25. The expression ‘works contract’ has been defined in Section 2
https://www.mhc.tn.gov.in/judis
12/49
T.C.Nos.41 to 43 of 2016
(zp) of the Puducherry Value Added Tax Act, 2007. It is an inclusive
definition. It includes any agreement to carry out for cash, deferred
payment or other valuable consideration, building construction,
manufacture, processing, fabrication, erection, installation, fitting out,
improvement, modification, repair or commissioning, of any movable or
immovable property. Section 2 (zp) of the Puducherry Value Added Tax
Act, 2007 reads as under :-
“ Works Contract “ – “includes any agreement to
carrying out for cash, deferred payment or other
valuable consideration, the building, construction,
manufacture, processing, fabrication, erection,
installation, fitting out, improvement, modification,
repair or commissioning, of any movable or
immovable property”.
26. After the 46th Amendment to the Constitution, the Hon’ble
Supreme Court, had initially, in the case of Rainbow Colour lab and
Another vs. State of M.P. and Others (2000) 2 SCC 385 espoused the
“dominant intention” of the contract, to hold an activity exigible under
the extended definition of “ tax on the sale or purchase of goods” in
clause 29A of the Article 366 of the Constitution of India. Relevant
portion of the decision reads as under :-
https://www.mhc.tn.gov.in/judis
13/49
T.C.Nos.41 to 43 of 2016
11. Prior to the amendment of Article 366, in view
of the judgment of this Court in State of
Madras v. Gannon Dunkerley & Co. (Madras)
Ltd. [(1958) 9 STC 353 : AIR 1958 SC 560] the
States could not levy sales tax on sale of goods
involved in a works contract because the
contract was indivisible. All that has happened
in law after the 46th Amendment and the
judgment of this Court in *Builders’ case
[(1989) 2 SCC 645 : 1989 SCC (Tax) 317 :
(1989) 73 STC 370] is that it is now open to the
States to divide the works contract into two
separate contracts by a legal fiction: (i)
contract for sale of goods involved in the said
works contract, and (ii) for supply of labour
and service. This division of contract under the
amended law can be made only if the works
contract involved a dominant intention to
transfer the property in goods and not in
contracts where the transfer in property takes
place as an incident of contract of service. The
amendment, referred to above, has not
empowered the State to indulge in a
microscopic division of contracts involving the
value of materials used incidentally in such
contracts. What is pertinent to ascertain in this
connection is what was the dominant intention
of the contract. Every contract, be it a service
contract or otherwise, may involve the use of
some material or the other in execution of the
said contract. The State is not empowered byhttps://www.mhc.tn.gov.in/judis
14/49
T.C.Nos.41 to 43 of 2016the amended law to impose sales tax on such
incidental materials used in such contracts.
This is clear from the judgment of this Court in
Hindustan Aeronautics Ltd. v. State of
Karnataka [(1984) 1 SCC 706 : 1984 SCC
(Tax) 90 : (1984) 55 STC 314] (STC at p. 322)
where it was held thus: (SCC pp. 716-17, para
18)
“Mere passing of property in an article or
commodity during the course of performance
of the transaction in question does not render
the transaction to be transaction of sale. Even
in a contract purely of works or service, it is
possible that articles may have to be used by
the person executing the work, and property
in such articles or materials may pass to the
other party. That would not necessarily
convert the contract into one of sale of those
materials. In every case, the court would have
to find out what was the primary object of the
transaction and the intention of the parties
while entering into it.”
15. Thus, it is clear that unless there is sale and
purchase of goods, either in fact or deemed,
and which sale is primarily intended and not
incidental to the contract, the State cannot
impose sales tax on a works contract
simpliciter in the guise of the expanded
definition found in Article 366(29-A)(b) read
with Section 2(n) of the State Act. On facts as
https://www.mhc.tn.gov.in/judis
15/49
T.C.Nos.41 to 43 of 2016
we have noticed that the work done by the
photographer which as held by this Court in
Kame case [(1977) 1 SCC 634 : 1977 SCC
(Tax) 225 : (1977) 39 STC 237] is only in the
nature of a service contract not involving any
sale of goods, we are of the opinion that the
stand taken by the Respondent State cannot
be sustained.
* Builders’ Association of India vs. Union of India,
(1989) 2 SCC 645
27. The ratio laid down in Rainbow Colour lab (supra) was
doubted as running counter to the express provision contained in Article
366(29-A) of the Indian Constitution by the Hon’ble Supreme Court in
the case of Associated Cement Companies Ltd. vs. Commissioner of
Customs (2001) 4 SCC 593. Relevant portion of the decision reads as
under:-
26. In arriving at the aforesaid conclusion the
Court referred to the decision of this Court in
Hindustan Aeronautics Ltd. v. State of
Karnataka [(1984) 1 SCC 706 : 1984 SCC
(Tax) 90] and Everest Copiers [(1996) 5 SCC
390] . But both these cases related to the pre-
Forty-sixth Amendment era where in a works
contract the State had no jurisdiction to
https://www.mhc.tn.gov.in/judis
16/49
T.C.Nos.41 to 43 of 2016
bifurcate the contract and impose sales tax on
the transfer of property in goods involved in
the execution of a works contract. The Forty-
sixth Amendment was made precisely with a
view to empower the State to bifurcate the
contract and to levy sales tax on the value of
the material involved in the execution of the
works contract, notwithstanding that the
value may represent a small percentage of
the amount paid for the execution of the
works contract. Even if the dominant
intention of the contract is the rendering of a
service, which will amount to a works
contract, after the Forty-sixth Amendment
the State would now be empowered to levy
sales tax on the material used in such
contract. The conclusion arrived at in
Rainbow Colour Lab case [(2000) 2 SCC
385] , in our opinion, runs counter to the
express provision contained in Article
366(29-A) as also of the Constitution Bench
decision of this Court in Builders’ Assn. of
India v. Union of India [Builders’ Assn. of
India v. Union of India, (1989) 2 SCC 645 :
1989 SCC (Tax) 317] .
28. After a detailed discussion, the Hon’ble Supreme Court in the
case of Bharat Sanchar Nigam Ltd and Another vs. UOI (2006) 3
SCC, held the ratio laid down in M/S Rainbow Colour lab (supra) as per
https://www.mhc.tn.gov.in/judis
17/49
T.C.Nos.41 to 43 of 2016
incuriam. The relevant portion of the decision reads as under :-
40. Recommendation (c) of the Law Commission
to amend Article 366 by expanding the
definition of sale to include the transactions
negatived by the courts, was accepted by the
Government. The Constitution (Forty-sixth
Amendment) Bill, 1981 which was
subsequently enacted as the Constitution
(Forty-sixth Amendment) Act, 1982 set out the
background in which the amendment to Article
366(29-A) of the Constitution was amended.
Having noted the various decisions of the
Supreme Court as well as of the High Courts
excluding certain transactions from the scope
of sale for the purpose of levy of sales tax, it
was said that the position had resulted in
scope for avoidance of tax in various ways. In
the circumstances, it was considered desirable
to put the matter beyond any doubt. Article
366 was therefore amended by inserting a
definition of “tax on the sale or purchase of
goods” in clause (29-A). The definition reads
as under :-
“366. (29-A) ‘tax on the sale or purchase of
goods’ includes—
(a) a tax on the transfer, otherwise
than in pursuance of a contract,
of property in any goods for
cash, deferred payment or otherhttps://www.mhc.tn.gov.in/judis
18/49
T.C.Nos.41 to 43 of 2016valuable consideration;
(b) a tax on the transfer of property
in goods (whether as goods or in
some other form) involved in
the execution of a works
contract;
(c) a tax on the delivery of goods on
hire-purchase or any system of
payment by instalments;
(d) a tax on the transfer of the right
to use any goods for any
purpose (whether or not for a
specified period) for cash,
deferred payment or other
valuable consideration;
(e) a tax on the supply of goods by
any unincorporated association
or body of persons to a member
thereof for cash, deferred
payment or other valuable
consideration;
(f) a tax on the supply, by way of or
as part of any service or in any
other manner whatsoever, of
goods, being food or any other
article for human consumption
or any drink (whether or not
https://www.mhc.tn.gov.in/judis
19/49
T.C.Nos.41 to 43 of 2016intoxicating), where such supply
or service, is for cash, deferred
payment or other valuable
consideration,and such transfer, delivery or supply of any
goods shall be deemed to be a sale of those
goods by the person making the transfer,
delivery or supply and a purchase of those
goods by the person to whom such transfer,
delivery or supply is made;”
41. Sub-clause (a) covers a situation where the
consensual element is lacking. This normally
takes place in an involuntary sale. Sub-
clause (b) covers cases relating to works
contracts. This was the particular fact
situation which the Court was faced with in
Gannon Dunkerley [State of Madras v.
Gannon Dunkerley & Co. (Madras) Ltd.,
(1958) 9 STC 353 : AIR 1958 SC 560 : 1959
SCR 379] and which the Court had held was
not a sale. The effect in law of a transfer of
property in goods involved in the execution
of the works contract was by this
amendment deemed to be a sale. To that
extent the decision in Gannon Dunkerley
[State of Madras v. Gannon Dunkerley &
Co. (Madras) Ltd., (1958) 9 STC 353 : AIR
1958 SC 560 : 1959 SCR 379] was directly
overcome. Sub-clause (c) deals with hire-
purchase where the title to the goods is not
transferred. Yet by fiction of law, it is treated
https://www.mhc.tn.gov.in/judis
20/49
T.C.Nos.41 to 43 of 2016
as a sale. Similarly the title to the goods
under sub-clause (d) remains with the
transferor who only transfers the right to
use the goods to the purchaser. In other
words, contrary to A.V. Meiyappan decision
[(1967) 20 STC 115 (Mad)] a lease of a
negative print of a picture would be a sale.
Sub-clause (e) covers cases which in law
may not have amounted to sale because the
member of an incorporated association
would have in a sense begun as both the
supplier and the recipient of the supply of
goods. Now such transactions are deemed
sales. Sub-clause (f) pertains to contracts
which had been held not to amount to sale in
State of Punjab v. Associated Hotels of
India Ltd. [(1972) 1 SCC 472 : (1972) 29
STC 474] That decision has by this clause
been effectively legislatively invalidated.
42. All the sub-clauses of Article 366(29-A) serve
to bring transactions where one or more of
the essential ingredients of a sale as defined
in the Sale of Goods Act, 1930 are absent,
within the ambit of purchase and sales for
the purposes of levy of sales tax. To this
extent only is the principle enunciated in
Gannon Dunkerley Ltd. [State of Madras v.
Gannon Dunkerley & Co. (Madras) Ltd.,
(1958) 9 STC 353 : AIR 1958 SC 560 : 1959
SCR 379] (sic modified). The amendment
especially allows specific composite
contracts viz. works contracts [sub-clause
https://www.mhc.tn.gov.in/judis
21/49
T.C.Nos.41 to 43 of 2016
(b)]; hire-purchase contracts [sub-clause
(c)], catering contracts [sub-clause (e)] by
legal fiction to be divisible contracts where
the sale element could be isolated and be
subjected to sales tax.
43.Gannon Dunkerley [State of Madras v.
Gannon Dunkerley & Co. (Madras) Ltd.,
(1958) 9 STC 353 : AIR 1958 SC 560 : 1959
SCR 379] survived the Forty-sixth
Constitutional Amendment in two respects.
First with regard to the definition of “sale”
for the purposes of the Constitution in
general and for the purposes of Entry 54 of
List II in particular except to the extent that
the clauses in Article 366(29-A) operate. By
introducing separate categories of “deemed
sales”, the meaning of the word “goods” was
not altered. Thus the definitions of the
composite elements of a sale such as intention
of the parties, goods, delivery, etc. would
continue to be defined according to known
legal connotations. This does not mean that
the content of the concepts remain static. The
courts must move with the times. [See
Attorney General v. Edison Telephone Co. of
London Ltd., (1880) 6 QBD 244 : 43 LT 697]
But the Forty-sixth Amendment does not
give a licence, for example, to assume that a
transaction is a sale and then to look around
for what could be the goods. The word
“goods” has not been altered by the Forty-
sixth Amendment. That ingredient of a sale
https://www.mhc.tn.gov.in/judis
22/49
T.C.Nos.41 to 43 of 2016
continues to have the same definition. The
second respect in which Gannon Dunkerley
[State of Madras v. Gannon Dunkerley &
Co. (Madras) Ltd., (1958) 9 STC 353 : AIR
1958 SC 560 : 1959 SCR 379] has survived
is with reference to the dominant nature test
to be applied to a composite transaction not
covered by Article 366(29-A). Transactions
which are mutant sales are limited to the
clauses of Article 366(29-A). All other
transactions would have to qualify as sales
within the meaning of the Sale of Goods Act,
1930 for the purpose of levy of sales tax.
48. This conclusion was doubted in Associated
Cement Companies Ltd. v. Commr. of
Customs [(2001) 4 SCC 593] saying: (SCC
p. 609, para 26)
“The conclusion arrived at in Rainbow
Colour Lab case [(2000) 2 SCC 385 (2-
Judge Bench)] , in our opinion, runs
counter to the express provision
contained in Article 366(29-A) as also of
the Constitution Bench decision of this
Court in Builders’ Assn. of India v.
Union of India [ Builders’ Assn. of India
v. Union of India, (1989) 2 SCC 645 :
1989 SCC (Tax) 317 (5-Judge Bench)] .”
49. We agree. After the Forty-sixth Amendment, the
sale element of those contracts which are
covered by the six sub-clauses of clause (29-A)
https://www.mhc.tn.gov.in/judis
23/49
T.C.Nos.41 to 43 of 2016
of Article 366 are separable and may be
subjected to sales tax by the States under Entry
54 of List II and there is no question of the
dominant nature test applying. Therefore when
in 2005 C.K. Jidheesh v. Union of India
[(2005) 13 SCC 37 : (2005) 8 Scale 784 (2-
Judge Bench)] held that the aforesaid
observations in Associated Cement [(2001) 4
SCC 593] were merely obiter and that Rainbow
Colour Lab [(2000) 2 SCC 385 (2-Judge
Bench)] was still good law, it was not correct.
It is necessary to note that Associated Cement
[(2001) 4 SCC 593] did not say that in all
cases of composite transactions the Forty-sixth
Amendment would apply.
29. The legal position regarding levy of sales tax on works
contract was further clarified by the Hon’ble Supreme Court in Larsen
and Toubro Ltd and Another vs State of Karnataka (2014) 1 SCC
708. It held that the term “works contract” in Article 366(29-A)(b) takes
within its fold all genre of works contract and is not restricted to one
specie of contract to provide for labour and services alone and nothing in
Article 366(29-A)(b) limits the term “works contract”, wherein a contract
may involve both a contract of work and labour and a contract for sale, in
such composite contract, the distinction between contract for sale of
https://www.mhc.tn.gov.in/judis
24/49
T.C.Nos.41 to 43 of 2016
goods and contract for work (or service) is virtually diminished. It was
further held that the dominant nature test has no application and the
traditional decisions which have held that the substance of the contract
must be seen have lost their significance where transactions are of the
nature contemplated in Article 366(29-A). Relevant paragraph from the
above decision is reproduced below :-
97. In light of the above discussion, we may
summarise the legal position, as follows:-
97.1. For sustaining the levy of tax on the goods
deemed to have been sold in execution of a
works contract, three conditions must be
fulfilled: (i) there must be a works contract,
(ii) the goods should have been involved in
the execution of a works contract, and (iii)
the property in those goods must be
transferred to a third party either as goods
or in some other form.
97.2. For the purposes of Article 366(29-A)(b), in
a building contract or any contract to do
construction, if the developer has received
or is entitled to receive valuable
consideration, the above three things are
fully met. It is so because in the performance
of a contract for construction of building,
the goods (chattels) like cement, concrete,
steel, bricks, etc. are intended to be
https://www.mhc.tn.gov.in/judis
25/49
T.C.Nos.41 to 43 of 2016
incorporated in the structure and even
though they lost their identity as goods but
this factor does not prevent them from being
goods.
97.3.Where a contract comprises of both a works
contract and a transfer of immovable
property, such contract does not denude it of
its character as works contract. The term
“works contract” in Article 366(29-A)(b)
takes within its fold all genre of works
contract and is not restricted to one specie
of contract to provide for labour and
services alone. Nothing in Article 366(29-
A)(b) limits the term “works contract”.
97.4.Building contracts are a species of the
works contract.
97.5.A contract may involve both a contract of
work and labour and a contract for sale. In
such composite contract, the distinction
between contract for sale of goods and
contract for work (or service) is virtually
diminished.
97.6. The dominant nature test has no application
and the traditional decisions which have
held that the substance of the contract must
be seen have lost their significance where
transactions are of the nature contemplated
in Article 366(29-A). Even if the dominant
https://www.mhc.tn.gov.in/judis
26/49
T.C.Nos.41 to 43 of 2016
intention of the contract is not to transfer the
property in goods and rather it is rendering
of service or the ultimate transaction is
transfer of immovable property, then also it
is open to the States to levy sales tax on the
materials used in such contract if such
contract otherwise has elements of works
contract. The enforceability test is also not
determinative.
97.7. A transfer of property in goods under
clause (29-A)(b) of Article 366 is deemed to
be a sale of the goods involved in the
execution of a works contract by the person
making the transfer and the purchase of
those goods by the person to whom such
transfer is made.
97.8.Even in a single and indivisible works
contract, by virtue of the legal fiction
introduced by Article 366(29-A)(b), there is
a deemed sale of goods which are involved
in the execution of the works contract. Such
a deemed sale has all the incidents of the
sale of goods involved in the execution of a
works contract where the contract is
divisible into one for the sale of goods and
the other for supply of labour and services.
In other words, the single and indivisible
contract, now by the Forty-sixth Amendment
has been brought on a par with a contract
containing two separate agreements and the
States now have power to levy sales tax on
https://www.mhc.tn.gov.in/judis
27/49
T.C.Nos.41 to 43 of 2016
the value of the material in the execution of
works contract.
97.9. The expression “tax on the sale or purchase
of goods” in Schedule VII List II Entry 54
when read with the definition clause (29-A)
of Article 366 includes a tax on the transfer
of property in goods whether as goods or in
the form other than goods involved in the
execution of works contract.
97.10.Article 366(29-A)(b) serves to bring
transactions where essential ingredients of
“sale” defined in the Sale of Goods Act,
1930 are absent within the ambit of sale or
purchase for the purposes of levy of sales
tax. In other words, transfer of movable
property in a works contract is deemed to be
sale even though it may not be sale within
the meaning of the Sale of Goods Act.
97.11.Taxing the sale of goods element in a works
contract under Article 366(29-A)(b) read
with Entry 54 List II is permissible even
after incorporation of goods provided tax is
directed to the value of goods and does not
purport to tax the transfer of immovable
property. The value of the goods which can
constitute the measure for the levy of the tax
has to be the value of the goods at the time
https://www.mhc.tn.gov.in/judis
28/49
T.C.Nos.41 to 43 of 2016
of incorporation of the goods in works even
though property passes as between the
developer and the flat purchaser after
incorporation of goods”.
30. A distinction was made between indivisible and composite
contracts in the case of Imagic Creative (P) Ltd. vs. Commissioner of
Commercial Taxes and Others (2008) 2 SCC 614, wherein the Hon’ble
Supreme Court had held that a mere element of service was insufficient
to attract sales tax for the entire contract. It reads as under :-
28. We have, however, a different problem at hand.
The appellant admittedly is a service provider.
When it provides for service, it is assessable to
a tax known as service tax. Such tax is leviable
by reason of a parliamentary statute. In the
matter of interpretation of a taxing statute, as
also other statutes where the applicability of
Article 246 of the Constitution of India, read
with the Seventh Schedule thereof is in
question, the Court may have to take recourse
to various theories including “aspect theory”,
as was noticed by this Court in Federation of
Hotel & Restaurant Assn. of India v. Union of
India [(1989) 3 SCC 634] .
29. If the submission of Mr Hegde is accepted in
its entirety, whereas on the one hand, the
https://www.mhc.tn.gov.in/judis
29/49
T.C.Nos.41 to 43 of 2016
Central Government would be deprived of
obtaining any tax whatsoever under the
Finance Act, 1994, it is possible to arrive at a
conclusion that no tax at all would be payable
as the tax has been held to be an indivisible
one. A distinction must be borne in mind
between an indivisible contract and a
composite contract. If in a contract, an
element to provide service is contained, the
purport and object for which the Constitution
had to be amended and Clause (29-A) had to
be inserted in Article 366, must be kept in
mind.
32. Payments of service tax as also VAT are
mutually exclusive. Therefore, they should be
held to be applicable having regard to the
respective parameters of service tax and the
sales tax as envisaged in a composite contract
as contradistinguished from an indivisible
contract. It may consist of different elements
providing for attracting different nature of
levy. It is, therefore, difficult to hold that in a
case of this nature, sales tax would be
payable on the value of the entire contract,
irrespective of the element of service
provided. The approach of the assessing
authority, to us, thus, appears to be correct.
33. We may notice that the concept of aspect
theory which had found echoes in State of U.P.
v. Union of India [(2003) 3 SCC 239] has
expressly been overruled by a three-Judge
https://www.mhc.tn.gov.in/judis
30/49
T.C.Nos.41 to 43 of 2016
Bench in BSNL [(2006) 3 SCC 1] stating:
(SCC p. 39, paras 78-79)
“78. But if there are no deliverable goods
in existence as in this case, there is
no transfer of user at all. Providing
access or telephone connection does
not put the subscriber in possession
of the electromagnetic waves any
more than a toll collector puts a
road or bridge into the possession of
the toll payer by lifting a toll gate.
Of course the toll payer will use the
road or bridge in one sense. But the
distinction with a sale of goods is
that the user would be of the thing or
goods delivered. The delivery may
not be simultaneous with the transfer
of the right to use. But the goods
must be in existence and deliverable
when the right is sought to be
transferred.
79. Therefore whether goods are
incorporeal or corporeal, tangible
or intangible, they must be
deliverable. To the extent that the
decision in State of U.P. v. Union of
India [(2003) 3 SCC 239] held
otherwise, it was, in our humble
opinion erroneous.”https://www.mhc.tn.gov.in/judis
31/49
T.C.Nos.41 to 43 of 2016
31. The definition of work-contract in Section 2(zp) is very wide.
It includes any improvement modification, repair or commissioning or
any movable or immovable property. Thus, without doubt the work
undertaken by the Respondent–Assessee for ‘powder coating’ the
products like yokes, links and tubes etc amounts to works contract. Since
the activity of powder coating is in the nature of works contract, it is to
be construed that there is a transfer of property in the execution of works
contract. Therefore, the Respondent-Assessee is liable to pay tax under
Section 15(1) of the PVAT Act, 2007. Therefore, we answer both the
substantial questions of law in favour of the Petitioner-CTO and against
the Respondent-Assessee.
32. As per Section 24(1) of the Puducherry Value Added Tax Act,
2007, the Respondent–Assessee was required to file a tax return within a
period of 15 days after end of the period in such manner as may be
prescribed. A return submitted by the dealer along with tax due is to be
accepted as self-assessed. As per proviso to Section 24(2) of the Act, the
Assessing Authority may select either at discretion or as directed by the
Commissioner any dealer for detailed assessment. Section 24(2) of the
https://www.mhc.tn.gov.in/judis
32/49
T.C.Nos.41 to 43 of 2016
Puducherry Value Added Tax Act, 2007, reads as under :-
2) The returns submitted by the dealer along
with tax due thereon shall be accepted as
self-assessed:
Provided that the assessing authority may
select either at his discretion or as directed
by the Commissioner, any dealer for detailed
assessment [for a tax period or tax periods)
by scrutiny of accounts and may make best
judgement assessment if so required, where-
(a) a person fails to file a return as
required under sub-section (1); or
(b) the assessing authority is not
satisfied with the correctness and
completeness of a return filed by a
person; or
(c) the Commissioner has reasonable
ground to believe that a person will
become liable to pay tax under this
Act but is unlikely to pay the amount
due.”
33. As per Section 24(4), the Assessing Authority has to serve a
notice, on completion of the Assessment and the dealer is required to pay
balance of tax in accordance with terms of that notice. As per sub-section
(5) to Section 24, no Assessment under Section 24 shall be made after a
https://www.mhc.tn.gov.in/judis
33/49
T.C.Nos.41 to 43 of 2016
lapse of three years from the end of the year to which, the returns filed
under the Act relates. Section 24 (5) of the PVAT Act, 2007 reads as
under:-
(5) Subject to sub-section (6) of this section, no
assessment under this section for any year shall
be made after a period of three years from the end
of the year to which the return under this Act
relates.”
34. Sub-section 5 of Section 24, is however, subject to Sub-
section (6) to Section 24 of the Puducherry Value Added Tax Act, 2007.
Section 24(6) of the Puducherry Value Added Tax Act, 2007, reads as
under :-
(6) Where, for any reason, the input tax credit
has been availed wrongly or where any
dealer produces false invoice, vouchers,
declaration certificate or any other
documents with a view to support his
claim of input tax credit or refund, the
assessing authority shall, at any time,
within a period of five years from the end
of the year to which the return relates,
reverse input tax credit availed and
determine the tax due after making suchhttps://www.mhc.tn.gov.in/judis
34/49
T.C.Nos.41 to 43 of 2016an enquiry as it may consider necessary:
Provided that no order shall be passed
under this sub section without giving the
dealer a reasonable opportunity to show
cause against such order.
35. Admittedly, return pertains to the Assessment year 2007-08 to
2009-2010 as mentioned above. An earlier notice was issued on
05.03.2011 calling upon the Respondent-Assessee to show cause as to
the basis on which exemption was claimed for issuance of C-Form for
purchases made under Inter-State purchase and was followed by pre-
Assessment notice dated 25.09.2014.
36. As far as the limitation is concerned, it is sufficient if a notice
is issued for revising the assessment in time. This Court earlier had an
occasion to deal with the case of Tvl.Victus Dyeings, Represented by its
Partner A.Loganathan vs . The Assistnt Commissioner (ST), Rural
Assessment Circle, Tirupur in the context of Section 27 of the TNVAT
Act,2006., wherein the dispute related to the Assessment Years 2007-08
to 2010-2011 respectively.
https://www.mhc.tn.gov.in/judis
35/49
T.C.Nos.41 to 43 of 2016
37. As per proviso to Section 22 of the TNVAT Act, 2006 , the
assessment years were deemed to have been completed on 30.06.2012.
Thus, any proceedings to revise the assessment which is deemed to have
been completed under proviso to Section 22 of the TNVAT Act, 2006 had
to be initiated within six years for the deemed assessment under Section
27 of the TNVAT Act, 2006.
38. In Tvl. Victus Dyeings (supra) the notice itself came to be
issued on 27.09.2018. A revised order of the Assessment was passed on
30.05.2019. Thus, an attempt to make a re-assessment notice on
27.09.2018 followed by an Assessment Order dated 30.09.2018 was held
to be bad in law. The Court held that taking the date of revised notice as a
reckoning date, initiation of re-assessment proceedings was time-barred
after the period of six years had already elapsed. This decision was cited
by the Petitioner in the case of M/s.Orient Fans (Proprietor –
M/s.Orient Paper and Industries Limited ) Represented by its Branch
Commercial Incharge, No.24, Ethiraj Salai, Egmore, Chennai 600 008
vs. The State Tax Officer, (Backyear Assessment), Egmore Assessment
https://www.mhc.tn.gov.in/judis
36/49
T.C.Nos.41 to 43 of 2016
Circle, Chennai which was also rendered in the context of the
Assessment Years 2006-07 to 2010-2011 respectively.
39. In M/S.Orient Fans (Supra), the decision of Tvl. Victus
Dyeings (Supra) was distinguished. It was held that the assessment
proceedings were not barred by limitation, as the notice seeking to revise
the assessment had been issued in time for four Assessment Years except
2010-2011. Since the revision notices were within time, the notice could
not be challenged based on few decisions of the Hon’ble Supreme Court.
We are concurring with a view taken in the said decision and reiterate the
legal position applied in M/s.Orient Fans (supra) respectfully following
decisions of the Hon’ble Supreme Court in the following cases :-
(i) Ghanshyam Das vs. Regional Assistant
Commissioner of Sales Tax, Nagpur, 1963
INSC 171
(ii) The State of Punjab and Others vs. M/s.Tara
Chand Lajpat Rai, (1967 )19 STC 493
(iii)The State of Punjab and Another vs.
Murlidhar Mahabir Parshad , (1968) 21 STC
29https://www.mhc.tn.gov.in/judis
37/49
T.C.Nos.41 to 43 of 2016
(iv) Additional Assistant Commissioer of Sales
Tax, Indore Region, Indore vs. Firm
Jagmohandas Vijay Kumar, (1970) 25 STC
74
40. In Ghanshyam Das vs. Regional Assistant Commissioner of
Sales Tax, Nagpur, Limitation under Section 11 A (1) of the Central
Provinces and Berar Sales Tax Act, 1947 . Section 11-A(1) of the Act,
fell for consideration under Section 11 A (1) of the Central Provinces and
Berar Sales Tax Act, 1947 read as under :-
“Section 11A(1): If in consequence of any information
which has come into his possession, the
Commissioner is satisfied that any
turnover of a dealer during any period
………. has escaped assessment ………
the Commissioner may, at any time
within three calendar years from the
expiry of such period…….. proceed in
such manner as may be prescribed to
….. assess …….. the tax payable on any
such turnover.”
41. The Court held as follows :-
Under Section 11-A of the Act the period of 3 years
has to be calculated from the expiry of the period in
regard whereto any turnover has escaped
assessment. As the unit of assessment is a quarter,
https://www.mhc.tn.gov.in/judis
38/49
T.C.Nos.41 to 43 of 2016the period in s. 11-A can only mean a quarter and it
cannot be further split up into months, weeks and
days. The said period is the fourth quarter and it
expired on October 31, 1951. If so, it follows that
the Commissioner has jurisdiction to assess the
turnover in respect of the entire fourth quarter as
the notice was issued within three years from the
expiry of the said quarter.
42. The Hon’ble Supreme Court in The State of Punjab and
Others vs. M/s.Tara Chand Lajpat Rai supra while answering a similar
issue of Limitation in Section 11(2) of the Punjab General Sales Tax
Act, 1948 followed its views in Ghanshyamadas’ s case supra and held as
under :-
“Reliance, however, was placed on two decisions
of the High Court of Punjab: *M/s. Rameshwar
Lal Sarup Chand v. Excise and Taxation Officer
and # Jagat Ram Om Parkash v. Excise and
Taxation Officer, Assessing Authority, Amritsar.
Neither of these decisions would be of assistance
as the question which was canvassed in
Ghanshyamdas’s case regarding assessment
proceedings having commenced within time
and then remaining pending did not come up
for consideration. Since the said notice dated
January 11, 1957, was served on the
Respondent-firm before the expiry of three
years from the respective dates for furnishing
the returns, the assessment proceedings must be
held to have commenced from that date which
was within time and thus the assessmenthttps://www.mhc.tn.gov.in/judis
39/49
T.C.Nos.41 to 43 of 2016proceedings remained pending until they were
terminated by the assessment order. Though that
order was finalised after the expiry of three years
from the said period, it could not be attacked on
the ground of its being beyond limitation and
therefore without jurisdiction. The order passed
by the High Court allowing the Respondent’s
writ petition has, therefore, to be set aside. The
appeal succeeds and the writ petition is
dismissed. In the circumstances of the case,
however, we do not propose to pass any order as
to costs. Appeal allowed.
*M/s. Rameshwar Lal Sarup Chand v. Excise and
Taxation Officer
#Jagat Ram Om Parkash v. Excise and Taxation
Officer, Assessing Authority, Amritsar
43. In The State of Punjab and Another vs. Murlidhar Mahabir
Parshad, (1968) 21 STC 29, wherein the above case, the Court was
concerned with limitation under Section 11 of the Central Tax Act
which was amended by Section 7 of the East Punjab General Sales Tax
(Amendment) Act, 1952 and later amended in the year 1955, by Section
3 of the East Punjab General Sales Tax (Amendment) Act( No.4 of
1955). Section 11 of the East Punjab General Sales Tax(Amendment)
Act, 1952, reads as under:-
“11. (1) If the Assessing Authority is satisfied without
https://www.mhc.tn.gov.in/judis
40/49
T.C.Nos.41 to 43 of 2016requiring the presence of a registered dealer
or the production by him of any evidence that
the returns furnished in respect of any period
are correct and complete, he shall assess the
amount of tax due from the dealer on the basis
of such returns.
(2) If the Assessing Authority is not satisfied
without requiring the presence of a registered
dealer who furnished the returns or
production of evidence that the returns
furnished in respect of any period are correct
and complete, he shall serve on such dealer a
notice in the prescribed manner requiring him,
on a date and at a place specified therein,
either to attend in person or to produce or to
cause to be produced any evidence on which
such dealer may rely in support of such
returns.
(3) On the day specified in the notice or as soon
afterwards as may be, the Assessing Authority
shall, after hearing such evidence as the
dealer may produce, and such other evidence
as the Assessing Authority may require on
specified points, assess the amount of tax due
from the dealer.
(4) If a registered dealer, having furnished returns
in respect of a period, fails to comply with the
terms of a notice issued under sub- section
(2), the Assessing Authority shall within three
years after the expiry of such period, proceed
to assess to the best of his judgment the
amount of the tax due from the dealer.
(5) If a registered dealer does not furnish returns
in respect of any period by the prescribed
date, the Assessing Authority shall within
three years after the expiry of such period,
after giving the dealer a reasonable
https://www.mhc.tn.gov.in/judis
41/49
T.C.Nos.41 to 43 of 2016opportunity of being heard, proceed to assess
to the best of his judgment, the amount of tax,
if any, due from the dealer.”
44. A reading of the above proviso indicate that a limitation of
three years was prescribed for assessment best Judgment, from the date
of return and where no return was filed, within three years after the
expiry of such period, after giving the dealer, a reasonable opportunity of
being heard. The Hon’ble Supreme Court held if proceedings are taken
within the prescribed time though the assessment is finalised
subsequently even after the expiry of the prescribed period, no question
of limitation would arise. Relevant paragraph of said decision reads as
under :-
“In other words, the assessment proceedings
commence in the case of a registered dealer
either when he furnishes a return or when a
notice is issued to him under section 11(4) or
10(3), and if such proceedings are taken within
the prescribed time though the assessment is
finalised subsequently even after the expiry of
the prescribed period, no question of limitation
would arise.”
45. In Additional Assistant Commissioer of Sales Tax, Indore
Region, Indore vs. Firm Jagmohandas Vijay Kumar, (1970) 25 STC
https://www.mhc.tn.gov.in/judis
42/49
T.C.Nos.41 to 43 of 201674, the Court was concerned with Section 8 ((1)(a) and (b) of the
Mahya Bharat Sales Tax Act, 1950. Section 8(1)(a) and (b) and
Section 10 of the Mahya Bharat Sales Tax Act, 1950.
46. The dispute that arose in the above case was under the
provision of the Madhya Bharat Sales Tax Act, 1950, which later stood
replaced by Madhya Bharat General Sales Tax Act, 1959. There the
Assessing Officer had issued a notice under Section 8(2) of the Madhya
Bharat Sales Tax Act, 1950, to the dealer to assess the turnover which
had escaped assessment.
47. Relevant provisions read as under :-
Section 8
(1)(a)Assessment of taxable (1)(b): Notwithstanding anything
turnover and determination of contained in clause (a), if any
tax due for any year shall be dealer fails to submit a return
made after the returns for all under Section 7(1) for the
the periods of that year have prescribed period within the
become due: prescribed time the Assessing
Provided that in the case of Authority shall, after making
Melas the assessment shall be such enquiry as he considers
made as soon as the return of necessary and after giving the
turnover has been received. dealer a reasonable opportunityhttps://www.mhc.tn.gov.in/judis
43/49
T.C.Nos.41 to 43 of 2016of being heard, determine the
turnover of the dealer for the
said period to the best of his
judgment and assess the tax on
the basis thereof. This
assessment, subject to the
provisions of Section 10 and to
such orders as may be passed in
appeal or revision, shall be final
for the period”.
Section 10 : Assessment of tax and a levy of licence fees, or
registration fees or exemption fees incorrectly assessed.— If
for any reason the whole or any part of the turnover of
business of a dealer has escaped assessment to the tax, or if
the licence fee, registration fee or exemption fee has escaped
levy or has been assessed at too low a rate in any year, the
assessing authority at any time within a period of three years
next succeeding that to which the tax or the licence fee,
registration fee or the exemption fee relates, assess the tax
payable on the turnover which has escaped assessment or
levy the correct amount of licence fee, registration fee or
exemption fee, after issuing a notice to the dealer and after
making such inquiry as he considers necessary.”
48. The above provisions indicates that the limitation of three
years was prescribed. Answering the point on the limitation, the Court
held as under :-
“We are therefore unable to accept the
https://www.mhc.tn.gov.in/judis
44/49
T.C.Nos.41 to 43 of 2016contention of the Respondent that the case in
one of escaped assessment and the period of
limitation contemplated by Section 10 of the Act
is applicable to the case. The reason is that
once the proceedings for assessment are
initiated under Section 8(1)(a) or (b) it cannot
be said that the turnover has escaped
assessment unless the proceedings have come to
a close.”
49. The Court held that if proceedings are taken within the
prescribed time though the assessment is finalised subsequently even
after the expiry of the prescribed period, no question of limitation would
arise and Section 10 was not attracted. The Court further held as under :-
“In other words, the assessment proceedings
commence in the case of a registered dealer either
when he furnishes a return or when a notice is
issued to him under Section 11(4) or Section
10(3), and if such proceedings are taken within
the prescribed time though the assessment is
finalised subsequently even after the expiry of the
prescribed period, no question of limitation would
arise. The view expressed by this court in
Ghanshyam Das v. Regional Assistant
Commissioner of Sales Tax, Nagpur has been
followed by the court in two recent cases —
Regional Assistant Commissioner of Sales Tax,
Indore v. Malwa Vanaspati & Chemical Co. Ltd.
[21 STC 431] and State of Punjab v. Murlidhar
Mahabir Prasad [21 SC 29] in which the
material facts are almost parallel to those in the
present case. In view of the principle laid down by
these decisions we hold that in the present case
https://www.mhc.tn.gov.in/judis
45/49
T.C.Nos.41 to 43 of 2016the proceedings for assessment to sales tax taken
against the Respondent for the year 1955-56 by
the assessing authorities are legally valid and the
Respondent has made out no case for grant of a
writ under Article 226 of the Constitution for
quashing those proceedings or for quashing the
notice issued on March 16, 1963 or the order of
the appellant dated July 18, 1963.”
50. As far as the present case is concerned, a limitation is
prescribed under Section 24(5) of PVAT Act, 2007 for completing
assessment. As per Section 24(5), no assessment shall be made after a
period of three years from the end of the year to which the return under
the Act relates. Applying the ratio of the Hon’ble Supreme Court and that
of this High Court in a catena of decisions discussed above, the test to be
applied is whether the notice for completing the assessment was issued
within limitation i.e., three years to which the returns relates to. If so,
even if the Assessment Order is passed beyond the period of three years,
it will be in time. In the present case, since notices were issued on
05.03.2011 i.e., within three years contemplated under Section 24(5) of
the PVAT Act, 2007, the assessment orders passed on 12.12.2014,
22.12.2014 and 31.12.2014 are held to have been passed in time.
https://www.mhc.tn.gov.in/judis
46/49
T.C.Nos.41 to 43 of 2016
51. In the result, these tax cases are allowed. The substantial
questions of law framed are answered in favour of the Petitioner-
Commercial Tax Department. No costs. Consequently, connected
miscellaneous petitions are closed.
(R.S.K.J.,) (C.S.N.J.,)
01.10.2024
Index : Yes/No
Internet : Yes/No
Speaking : Non-Speaking Order
Neutral Citation : Yes/No
kkd
To
The Value Added Tax Appellate Tribunal,
Principal District Judge, Puducherry
https://www.mhc.tn.gov.in/judis
47/49
T.C.Nos.41 to 43 of 2016
R.SURESH KUMAR, J.
AND
C.SARAVANAN, J.
kkd
Pre-delivery Common Order in
T.C.Nos.41 to 43 of 2016
https://www.mhc.tn.gov.in/judis
48/49