Assessing Authority Not Bound By Appellate Tribunal's Observations In De Novo Assessment: Madras High Court
The Madras High Court has stated that the assessing authority is not bound by the appellate tribunal's observations in a De Novo assessment. Justices Anita Sumanth and N. Senthilkumar opined that while concluding the assessment de novo, the assessing authority is not bound by the observations made by the first appellate authority. In this case, the Commercial Taxes Department...
The Madras High Court has stated that the assessing authority is not bound by the appellate tribunal's observations in a De Novo assessment.
Justices Anita Sumanth and N. Senthilkumar opined that while concluding the assessment de novo, the assessing authority is not bound by the observations made by the first appellate authority.
In this case, the Commercial Taxes Department has filed the appeal challenging the order of the Tamil Nadu Sales Tax Appellate Tribunal relating to the period 2013-14.
The assessment had been completed, bringing to tax the turnover from the sale of plant and machinery, and other office equipments, along with profit on the sale of aforesaid items and profit on the sale of building and sales turnover on old and used vehicles. Penalty was imposed under Section 27(3) of the Tamil Value Added Tax Act, 2006.
It is the contention of the assessee that the aforesaid assessment was bad in law as the turnover should be reckoned on the basis of a slump sale sold to one S.V.G. Exports Private Limited on 'as is where is basis'.
The matter had travelled in appeal before the first appellate authority, who rightly noted that if at all the sale consideration should be taxed on slump sale basis, the agreement should have been looked into to ascertain the intention of the parties.
The matter was hence remanded to the file of the Assessing Authority. However, certain observations were made while remanding the issue, aggrieved by which, the State went in appeal before the Tribunal. The Tribunal has merely confirmed the order of the first appellate authority.
The department submitted that the State is not only per se aggrieved with the remand, but only by the observations made by the first appellate authority while remanding the matter as that would stand in the way of the Assessing Authority in determining the issue properly and afresh.
The bench stated that “while concluding the assessment de novo, after hearing the assessee, the Assessing Authority shall not be bound by any of the observations made by the first appellate authority and shall proceed with the matter strictly in accordance with law, applying his mind independently to the facts and circumstances.”
In view of the above, the bench confirmed the order of remand.
Case Title: The State of Tamil Nadu v. Tvl. Aro Granite Industries Ltd.
Case Number: Tax Case No.64 of 2025
Counsel for Petitioner/ Department: V. Prashanth Kiran
Counsel for Respondent/ Assessee: Saravana Selvi P.