2017 (9) TMI 7 - HC - VAT and Sales Tax

Court sets aside assessment orders under TNVAT Act for petitioner's challenge on Input Tax Credit claims

M/s. Fams Super Market Versus The Commercial Tax Officer

The court set aside the assessment orders for the petitioner's challenge under the TNVAT Act for the assessment years 2014-15 and 2015-16. The matter was ... Validity of assessment order - sales details have been noticed as mis-match, based on which input tax credit has been taken - Natural Justice - Held that: - The respondent, unfortunately, did not even make an attempt to verify as to which of the dealers are within the same assessment circle. It appears that the Assessing Officer was not at all aware of the same, because while issuing notices, dated 22.08.2016 and 24.08.2016, the respondent has stated that the petitioner should produce the monthly return copies of the sellers with payment and adjustment details in the concerned notices/circulars. If the other end dealers are registered within the same circle, the respondent should be aware of the same and should have made an attempt to verify the facts. When completing the assessments based on mis-match between the details shown in the dealers returns and the details of the dealers at other end, this Court, in the case of J.K.M. Graphics Solutions Private Limited v. Commercial Tax Officer [2017 (3) TMI 536 - MADRAS HIGH COURT] has considered the matter and had given certain broad guidelines as to how the Assessing Officer have to undertake the exercise, by conducting thorough enquiry in consultation with the Assessing Officer of the other end - The Assessing Officer has also not followed the directions issued by this Court in the said decision in J.K.M.Graphics Solutions Private Limited's case. The impugned orders, having been passed without due application of mind and without proper verification, deserve to be set-aside - the matters are remanded back to the respondent for fresh consideration, who shall afford an opportunity of personal hearing to the petitioner - appeal allowed by way of remand. Issues:Challenge of assessment orders under TNVAT Act for assessment years 2014-15 and 2015-16 based on Input Tax Credit (ITC) claims.Analysis:The petitioner, a registered dealer under TNVAT Act, contested assessment orders for 2014-15 and 2015-16 due to alleged mis-match in ITC claims on local purchases from registered dealers. The respondent issued notices highlighting the discrepancies and requested original purchase invoices and evidence for assessment purposes.The petitioner failed to provide satisfactory proof, leading to the proposed disallowance of ITC adjustment and penalty imposition under Section 27 (4) (ii) of the TNVAT Act. Despite appearing before the respondent and sharing transaction details, the petitioner did not submit written objections, resulting in the assessment orders being passed without considering their submissions.Upon receiving the orders, the petitioner submitted a representation emphasizing their compliance with filing returns, claiming ITC, and providing purchase bills. They pointed out that most sellers were within the same assessment circle, leading to discrepancies in Annexure-II details. The petitioner requested a review of the tax and penalty imposed based on the submitted purchase invoices.The respondent's failure to verify the authenticity of submitted invoices and lack of effort in cross-checking sellers within the same assessment circle were highlighted. The court referenced a previous case's guidelines for conducting thorough inquiries in such situations, emphasizing the need for proper verification and due diligence by the Assessing Officer.Consequently, the court set aside the impugned orders, remanding the matters back to the respondent for fresh consideration. The respondent was instructed to conduct a detailed examination, provide a personal hearing to the petitioner, verify details of other end dealers within the same circle, and pass new orders in accordance with the law. The judgment concluded with no costs awarded and the connected WMP closed.