2018 (4) TMI 282 - HC - VAT and Sales Tax

Court overturns tax credit reversal, citing lack of natural justice and due process.

The High Court allowed the writ petition, setting aside the impugned order that reversed input tax credit for purchases from dealers with canceled ... Reversal of input tax credit - purchases from registration canceled dealers - Held that: - This Court has been repeatedly holding that the Assessing Officer, being an independent Statutory Authority, should not be solely guided by the report of the officials of the Enforcement Wing, but shall decide the matter on the basis of the objections filed by the assessee. The matter is remitted back to the respondent for a fresh consideration - petition allowed by way of remand. Issues:1. Reversal of input tax credit availed by the petitioner due to purchases from dealers with canceled registration.2. Allegations of violation of natural justice and lack of application of mind in the impugned assessment order.3. Sole reliance by the respondent on the report of officials from the Enforcement Wing, neglecting objections filed by the assessee.Analysis:1. The petitioner, a registered dealer under the Tamil Nadu Value Added Tax Act, faced a notice proposing to reverse input tax credit due to purchases from dealers with canceled registration during the assessment year. The petitioner responded with objections, citing an oversight in mentioning the wrong tax payer identification number initially but correcting it later. Despite submitting objections, the impugned assessment order inaccurately claimed no objections were filed, indicating a violation of natural justice and lack of due application of mind by the respondent.2. The High Court noted that the respondent based their decision solely on a report from officials of the Enforcement Wing, disregarding the objections filed by the assessee. The Court emphasized the independence of the Assessing Officer as a statutory authority and directed the respondent to consider the objections in line with the decision in the case of Madras Granites (P) Ltd. Vs. CTO, Arisipalayam Circle, Salem. Consequently, the impugned order was deemed liable to be set aside due to the respondent's failure to consider the objections properly.3. In the final judgment, the High Court allowed the writ petition, setting aside the impugned order, and remitted the matter back to the respondent for a fresh consideration. The respondent was instructed to schedule a personal hearing, reevaluate the objections submitted by the petitioner on two occasions, and conduct the assessment in compliance with the law. The judgment concluded by closing the connected Writ Miscellaneous Petitions without imposing any costs.