Madras HC Quashes Four Tax Reassessments Against Works Contractor As TNVAT Six-Year Limit Expired

The petitioner, a registered works contractor under the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act), filed returns for assessment years 2011–12 to 2014–15. The Court recorded that the returns were accompanied by the prescribed documents and proof of tax payment and that the assessments were therefore deemed completed under Section 22(2).

In March 2022, after the petitioner sought copies of the assessment orders, the respondent examined the records, alleged discrepancies, and issued notices. The respondent then passed reassessment orders dated 23 June 2022, 24 June 2022 and 20 July 2022 under Section 27. The petitioner challenged those orders as time-barred.

Section 22(2) of the TNVAT Act provides for deemed completion of an assessment where the dealer files returns in the prescribed manner with the required documents and proof of tax payment.

Section 27 authorises reassessment for escaped turnover or wrong availment of input tax credit, subject to the limitation period prescribed by that section; the Court applied a six-year period. The Court also relied on R. Vijayalakshmi v. Assistant Commissioner (ST), W.P.Nos. 17289, 17291, 17295 and 17297 of 2021 (19 February 2024), for the proposition that Section 27 limitation applies to assessments deemed completed under Section 22(2).

The Court treated it as undisputed that the petitioner’s returns met the requirements for deemed assessment under Section 22(2). Accordingly, any reassessment under Section 27 had to be initiated within the statutory six-year period. The challenged proceedings and orders in 2022 were beyond that period for the assessment years in question.

The petitioner’s letter of 1 March 2022, which sought copies of assessment orders, could not extend, enlarge or revive the statutory limitation period, nor could the respondent’s jurisdiction be enlarged by the dealer’s correspondence or conduct.

It set aside the assessment orders dated 23 June 2022, 24 June 2022 and 20 July 2022, allowed the writ petitions, made no order as to costs, and closed the connected miscellaneous petitions.