2025-VIL-117-MAD
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VAT High Court Cases

Tamil Nadu Tax on Entry of Goods into Local Areas Act, 2001 - Delay in Entry Tax assessment, Reasonable period for assessment, Maintenance of books of accounts, Recovery of interest and penalty - Petitioner challenge the impugned assessment orders passed under the Tamil Nadu Entry Tax Act for the assessment years 2003-2004 and 2004-2005. The assessments were completed after a significant delay of over 15 years from the filing of returns by the petitioner - Whether the impugned assessment orders passed with a significant delay are valid in law - HELD - While the Entry Tax Act, 2001 does not prescribe any specific time limit for completing the assessments, the assessments have to be completed within a reasonable period of time. Relying on the principles laid down by the Supreme Court in State of Punjab v. Bhatinda District Co-operative Milk Producers Union Ltd., the High Court held that in the absence of a prescribed time limit, the statutory authority must exercise its jurisdiction within a reasonable period, which would depend on the nature of the statute, rights and liabilities thereunder, and other relevant factors - In the present case, a registered dealer is required to maintain books of accounts only for a period of 5 years under the Tamil Nadu General Sales Tax Act, 1959, which is incorporated by reference in the Entry Tax Act, 2001. Therefore, the assessments should have been completed within a reasonable period, not exceeding 5 years from the filing of returns – Further, it would be unfair to fasten the burden of interest liability on the petitioner given the inordinate delay in finalizing the assessments. The issue of Entry Tax is revenue neutral as the tax paid under the Entry Tax Act can be reduced from the tax payable under the TNGST Act, 1959. Therefore, at best, the petitioner could have been fastened with interest liability if the assessments were completed within a reasonable period, but it would be unfair to levy interest and penalty at this distant point of time - The impugned assessment orders passed after a delay of over 15 years are not valid and set aside – The writ petitions are allowed
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