Court overturns TNVAT Act order due to lack of original invoices in surprise inspection, stresses personal hearing and document verification.

The court set aside the order under the TNVAT Act for Input Tax Credit reversals due to the failure to produce original invoices during a surprise inspection. Emphasizing the importance of a personal hearing and verifying defects with material documents, the court found the order unjustified and unsustainable. The matter was remanded for fresh consideration, with the petitioner instructed to produce the original invoices promptly. The respondent was directed to provide a fair opportunity for a personal hearing, independent of the Enforcement Wing officials' report. The writ petition was allowed without costs, and the related miscellaneous petition was closed.

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Issues:
Challenging an order under TNVAT Act for Input Tax Credit reversals based on surprise inspection findings and failure to produce original invoices.

Analysis:
The petitioner, a registered dealer under the TNVAT Act, challenged an order issued by the respondent based on a surprise inspection conducted by Enforcement Wing officials at the petitioner's business premises. The inspection revealed certain defects, leading to a pre-revision notice being issued on 10.11.2017. The petitioner submitted objections, contending that Input Tax Credit reversals were unjustified as original invoices were not produced during the inspection or enclosed with the objections. The petitioner argued that the statement given during the inspection did not amount to admission, and the payment of tax was not voluntary.

The respondent, represented by the Special Government Pleader, argued that the original invoices should have been produced during the inspection and with the objections. The respondent contended that the failure to produce the invoices indicated tax evasion and wrongful Input Tax Credit claims by the petitioner. The respondent defended the order as lawful and justified, not warranting any interference.

The court considered both parties' submissions and noted that the petitioner had undertaken to produce the original invoices before the respondent. Emphasizing the importance of providing an opportunity for a personal hearing before making a decision, the court highlighted the necessity of verifying defects based on material documents in such cases. The court rejected the notion that the petitioner's sworn statement during the inspection amounted to admission of defects.

The court criticized the assessing authority for relying solely on the Enforcement Wing officials' report without independent verification, deeming the order unfair and unsustainable. Consequently, the court set aside the impugned order and remanded the matter to the respondent for fresh consideration. The petitioner was directed to produce the original invoices promptly, and the respondent was instructed to provide ample opportunity for a personal hearing before passing final orders, ensuring independence from the Enforcement Wing officials' report.

In conclusion, the writ petition was allowed, with no costs imposed, and the connected writ miscellaneous petition was closed.

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