2020 (9) TMI 169 - HC - VAT and Sales Tax

Extension granted for VAT credit dispute with Southern Railway, citing COVID-19 challenges. Tax officer to review.

M/s ARUN AGRO METALS & CO. Versus THE STATE TAX OFFICER, THE DEPUTY COMMISSIONER, SGST DEPARTMENT, STATE OF KERALA

The Court granted the petitioner an extension to respond to a re-assessment notice challenging the input credit for VAT collected by Southern Railway for ... Best Judgement Assessment - Reassessment of turnover - denial of input credit already allowed for the VAT collected by Southern Railway for the sale effected by the petitioner - Section 25(1) read with Section 25AA of the KVAT Act, 2003 - HELD THAT:- Ext.P2 is only a show cause notice and it is not necessary for this Court to interfere in the assessment proceedings at this stage. However taking into consideration the difficulties faced by the petitioner, it is necessary that the petitioner should be given time to get necessary documents to produce before the first respondent. The writ petition is disposed of permitting the petitioner to submit a reply to show cause with supporting documents within a period of three months from today. If the petitioner submits reply to Ext.P2 within the said period of three months, the first respondent shall consider the contentions of the petitioner and decide the matter after giving an opportunity of personal hearing to the petitioner. Issues:Challenge to re-assessment notice denying input credit for VAT collected by Southern Railway for sales, seeking to quash the notice by Writ of Certiorari, and other consequential reliefs.Analysis:The petitioner challenged a notice, Ext.P2, proposing re-assessment of the turnover for the assessment year 2013-14, aiming to disallow input credit for VAT collected by Southern Railway for the petitioner's sales. The petitioner sought to quash the notice through a Writ of Certiorari, along with other related reliefs. Ext.P2, issued by the State Tax Officer, Ottapalam, invoked Section 25(1) read with Section 25AA of the KVAT Act, 2003, requiring the petitioner to justify the assessment to the best of judgment under the mentioned provisions.The petitioner's counsel argued that the issue involved procurement of goods for Indian Railways, necessitating numerous documents from Southern Railway to effectively respond to the notice. However, due to the COVID-19 pandemic and resultant restrictions, obtaining these documents posed a challenge for the petitioner. It was contended that the Railways were not operating at full capacity due to pandemic restrictions, requiring significant time to provide the relevant documentation.The Court acknowledged that Ext.P2 was merely a show cause notice and deemed it unnecessary to intervene in the assessment proceedings at that stage. Nonetheless, considering the difficulties faced by the petitioner in obtaining necessary documents within the stipulated timeframe, the Court granted the petitioner an extension. The petitioner was permitted to submit a response to Ext.P2, along with supporting documents, within three months from the judgment date. If the petitioner complied within the specified period, the first respondent was directed to evaluate the petitioner's contentions and decide the matter post a personal hearing. Additionally, if the first respondent discovered that the Railway had already remitted the disputed tax amount, they were authorized to consider discontinuing the proceedings, if permissible and in accordance with the law.