HC stays I-T notice to Tasmac over dues ‘to tune of ₹ 7,986 cr'

CHENNAI: A division bench of Madras High Court had granted an interim stay on the notice issued by the Income Tax department to the state-run Tamil Nadu State Marketing Corporation (Tasmac) demanding tax dues of Rs. 7,986.34 crores for the assessment year of 2021-2022.

Heading the bench along with Justice Mohammed Shaffiq, Justice R Mahadevan passed the orders on hearing a writ appeal preferred by Tasmac – a government-owned multi-crore liquor monopoly.

The appellant company prayed for an order to quash the notice issued by I-T on December 26, 2022.

When the same notice was challenged before a single judge, the judge dismissed the writ petition on the grounds that the same kind of matter is pending before a division bench.

When Tasmac made an appeal challenging the IT notice issued for the 2016-2017 assessment year, the bench passed an interim stay on it. As the matter is also pending before the division bench, the single judge directed the appellant company to approach the same bench for challenging the notice for another assessment year (2021-2022).

After recording the submissions of the Tasmac, the bench passed an interim stay against the notice issued by the IT for two weeks. The judges also directed the IT to file its response in two weeks.

The case of the tax department was when it examined Tasmac's income, the government company declared nil income for 2021-2022. And the same declaration made the IT to further scrutinize the income of Tasmac with the Computer Aided Scrutiny System (CASS).

During the scrutiny, it was found that the state government has absorbed the income of Tasmac's revenue in the name of levying Value Added Tax (VAT) fluctuating to 270 percent for the sales of various liquor products. Therefore, IT refused to accept the payment of Rs 18,578.88 crore as the VAT and for deducting the same from income.

The IT cited that to axe the process of appropriating the income by the governments, an amendment was brought in IT Act in 2014-2015.