2020 (7) TMI 313 - HC - VAT and Sales Tax

High Court Quashes Tax Credit Reversal, Emphasizes Due Process

M/s. Calico Industrial Suppliers Versus The Assistant Commissioner (CT)

The High Court set aside the respondent's decision to reverse Input Tax Credit claims for multiple assessment years without proper notice or opportunity. ... Restoration of registration certificate of the petitioner - Reversal of Input Tax Credit - purchases made from registered dealers - assessment years 2010-11, 2011-12, 2012-13, 2013-14 and 2014-15 - HELD THAT:- The respondent has erred in reversing the entire claim of Input Tax Credit for the assessment years 2010-11, 2011- 12, 2012-13, 2013-14 and 2014-15 based on the notice dated 06.08.2014 relating to assessment year 2013-14 which was issued only in respect of reversal of one particular claim of Input Tax Credit and not for the entire claim during the said year. In such view of the matter, the impugned proceedings are set aside and the matter is remitted back to the respondent for passing orders afresh. Petition allowed by way of remand. Issues:Challenge to reversal of Input Tax Credit claims by the respondent for multiple assessment years without proper notice or opportunity.Analysis:The petitioner, a registered dealer under TNVAT and CST Acts, challenged the respondent's decision to reverse Input Tax Credit claims on purchases made from registered dealers for the assessment years 2010-11 to 2014-15. The petitioner contended that the respondent should have restored the registration certificate instead of reversing the claims without notice or opportunity. The petitioner argued that the reversal was based on a notice from 2013-14, which only pertained to one claim and not the entire amount for that year.The High Court acknowledged the petitioner's arguments and found merit in the submission that the reversal of the entire claim for multiple years based on a notice from one year was incorrect. Consequently, the court set aside the impugned proceedings and remitted the matter back to the respondent for fresh consideration. The court directed the respondent to issue a fresh notice to the petitioner for all the assessment years, allow the petitioner to file objections, provide an opportunity for a personal hearing, and then make a decision based on the materials and objections filed. The court mandated that this process be completed within eight weeks from the date of the order.In conclusion, the writ petitions were disposed of with no costs, and the connected miscellaneous petitions were closed. The judgment emphasized the importance of providing proper notice and opportunity to the petitioner before reversing Input Tax Credit claims and instructed the respondent to reevaluate the claims in accordance with the court's directions.