2020 (11) TMI 576 - HC - VAT and Sales Tax

Court Orders Fresh Show Cause Notice, Emphasizes Fair Procedures for Mismatch Cases

The Court set aside the impugned order and directed the assessing officer to issue a fresh show cause notice, emphasizing the importance of fair ... Reversal of ITC - the assessment are sought to be re-opened and the ITC availed by the dealers are directed to be reversed, when a mismatch occurs - Demand of Differential amount alongwith interest and penalty - HELD THAT:- A batch of Writ Petitions filed by similarly placed persons on this aspect of the matter came up for consideration before this Court in M/S. JKM GRAPHICS SOLUTIONS PRIVATE LIMITED VERSUS THE COMMERCIAL TAX OFFICER [2017 (3) TMI 536 - MADRAS HIGH COURT] where it was held that this Court is fully convinced that the procedure adopted by the respondent, Assessing Officers in all these cases are half baked attempts, which have not yielded results and these cases are before this Court or before the Appellate Authorities and all that the Assessing Officers can record is that they have issued show cause notices or passed orders reversing the Input Tax Credit with no appreciable impact on the revenue collection. The concerned assessing officer shall issue fresh show cause notice with all required details in respect of levy of tax for mismatch invoices and the Petitioner shall be entitled to submit its explanation within the prescribed time. It is made clear that the Petitioner shall not be entitled to raise any plea of limitation when the fresh show cause notice is issued - petition allowed. Issues:Challenge to Notice for differential tax amount, Procedure for handling mismatch cases, Legality of impugned order.Analysis:1. Challenge to Notice for Differential Tax Amount: The Writ Petition challenges a notice issued by the Respondent regarding verification of sales transactions in 2009-2010 and claiming payment of differential tax with interest and penalty. The Petitioner's Counsel referred to a previous judgment by the Court in a similar matter, emphasizing the need for a centralized mechanism to handle discrepancies before issuing show cause notices to dealers. The Court highlighted the importance of a fair procedure and opportunity for dealers to explain their position before any adverse actions are taken.2. Procedure for Handling Mismatch Cases: The Court referred to a previous ruling directing the authorities to evolve a centralized mechanism to deal with cases of mismatch in sales transactions. Following this directive, the Commissioner of Sales Tax issued detailed instructions for authorities to follow in cases involving mismatch of Input Tax Credit (ITC) and other issues. The circular outlined procedures for assessing authorities to finalize assessments, seek approvals, maintain lists of cases, and ensure timely resolution of pending proposals.3. Legality of Impugned Order: Considering the legal position established by previous judgments and directives, the Court set aside the impugned order as it did not align with the prescribed procedures. The assessing officer was directed to issue a fresh show cause notice with all necessary details, allowing the Petitioner to submit explanations without invoking any plea of limitation. The Court emphasized the importance of following due process, affording opportunities for hearings, passing reasoned orders, and communicating decisions in writing to ensure procedural fairness and compliance with the law.In conclusion, the Writ Petition was disposed of based on the terms outlined in the judgment, emphasizing adherence to fair procedures and centralized mechanisms for handling mismatch cases to protect the interests of dealers and ensure revenue compliance.