2009 (9) TMI 1071 - HC - VAT and Sales Tax

High Court overturns tax assessment for lack of fair opportunity

ITC Limited Versus The Assistant Commissioner Commercial Taxes

The High Court set aside the assessment order based on alleged excess input tax credit claims under the A.P. VAT Act, 2005 and CST Act, 1956, due to the ... - Issues involved: Assessment under A.P. VAT Act, 2005 and CST Act, 1956 based on alleged excess input tax credit claims, denial of opportunity to respond to Enforcement report.Assessment under A.P. VAT Act, 2005 and CST Act, 1956:The petitioner, a registered dealer under the A.P. VAT Act, 2005 and the CST Act, 1956, received two assessment notices alleging excess input tax credit claims for specific periods. The Enforcement officials' report indicated that the petitioner had claimed more credit than eligible due to improper application of the prescribed formula. The assessment order was made based on this report without providing a fair opportunity to the petitioner to respond or file objections.Denial of opportunity to respond to Enforcement report:The petitioner challenged the assessment order on grounds of lack of fair notice and opportunity to review the Enforcement department's report. The respondent admitted the lack of a reasonable opportunity for the petitioner to address the report's contents. Consequently, the High Court set aside the assessment order dated 26-05-2009, remanding the matter to the respondent for a fresh assessment after providing the petitioner with a copy of the Enforcement officials' report. The petitioner will have the chance to submit objections within a stipulated timeframe before a new assessment order is issued.This judgment highlights the importance of procedural fairness in tax assessments and emphasizes the right of the taxpayer to respond to allegations before a final decision is made.