2016 (9) TMI 1424 - HC - VAT and Sales Tax

Court quashes orders reversing Input Tax Credit due to procedural flaw, emphasizes procedural requirements

The court quashed the orders directing the reversal of Input Tax Credit under specific sections of the TNVAT Act, 2006 due to a procedural flaw in the ... Validity of assessment order - reversal of ITC - TNVAT Act - Held that: - The petitioner, on receipt of the notice, produced C Forms and the respondent while considering the explanation offered by the petitioner and the C Forms, verified the same and found it to be correct and allowed concessional rate of tax. However, sought to reverse the Input Tax Credit [ITC] u/s 19[2][v] and 19[5][a] of the TNVAT Act, 2006 - In the absence of any proposal in the show cause notice, this could not have been done by the respondent, even assuming that he has some material to do so. On technical ground, the impugned orders insofar as directing reversal of ITC u/s.19[2][v] and 19[5][a] of the Act, are quashed and in other aspects, the orders of assessment, being in favor of the dealer/petitioner herein, is confirmed. Petition allowed in part. Issues:Challenge to orders of assessment under the Central Sales Tax Act for the Assessment Years 2013-2014 and 2014-2015.Analysis:The petitioner, a registered dealer under the Tamil Nadu Value Added Tax Act, 2006 and the Central Sales Tax Act, 1956, contested the assessment orders under the Central Sales Tax Act for the years 2013-2014 and 2014-2015. The primary issue revolved around the non-availability of C Forms for inter-state sales, leading to a proposal for revising turnover and taxing the transactions. The petitioner responded by producing the C Forms upon receiving pre-revisional notices. The respondent, after verifying the C Forms and the petitioner's explanation, allowed a concessional rate of tax but attempted to reverse the Input Tax Credit [ITC] under specific sections of the TNVAT Act, 2006. However, the court noted that since there was no proposal in the show cause notice regarding the reversal of ITC, the respondent could not have taken such action, even if they had supporting material.Therefore, the court quashed the impugned orders directing the reversal of ITC under the mentioned sections of the Act due to this technical flaw. The court confirmed the orders of assessment in favor of the dealer/petitioner for other aspects. The judgment, delivered by Mr. Justice T.S.SIVAGNANAM, highlighted the importance of adhering to procedural requirements and ensuring that actions taken by authorities are within the scope of the notices issued. The writ petitions were partly allowed with no costs, and the connected miscellaneous petitions were closed as a result of the judgment.