Court sets aside Notice on sales transactions verification for tax payment, directs fresh show cause notice.

The Court set aside the Notice on sales transactions verification for differential tax payment, directing the assessing officer to issue a fresh show cause notice to the Petitioner with detailed tax levy information. The Petitioner was granted the opportunity to explain without the option to claim limitation. The assessing officer must follow the prescribed procedure, provide a hearing, pass reasoned orders, and communicate the decision in writing. The judgment emphasized the need for a fair mechanism to handle tax discrepancies, ensuring dealers' rights are upheld. The Writ Petition was disposed of accordingly, with no costs imposed.

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Issues:
Challenge to Notice on sales transactions verification for differential tax payment.

Analysis:
The Writ Petition contested a Notice issued by the Respondent regarding the verification of sales transactions and claiming payment of differential tax with interest and penalty for the year 2014-2015. Reference was made to a previous judgment by the Court in J.K.M.Graphics Solution Private Limited -vs- Commercial Tax Officer, Chennai, where it was emphasized that a centralized mechanism should be established to handle cases of mismatch in tax returns. The Court directed the department to evolve a fair procedure to deal with discrepancies, ensuring dealers are given an opportunity to explain their position before any action is taken. Following this ruling, the Commissioner of Sales Tax issued Circular No. 3/2019 providing detailed instructions on how authorities should handle cases involving mismatch of Input Tax Credit (ITC) and other related issues.

The Court, considering the legal position established by the previous judgment and the circular issued by the Commissioner of Sales Tax, set aside the impugned order. The assessing officer was directed to issue a fresh show cause notice to the Petitioner with all necessary details regarding the tax levy for mismatched invoices. The Petitioner was granted the opportunity to submit an explanation within the specified time frame, without the option to claim limitation when the new notice is issued. The assessing officer was mandated to follow the prescribed procedure, provide a hearing to the Petitioner, pass reasoned orders addressing all contentions raised, and communicate the decision in writing.

In conclusion, the Writ Petition was disposed of based on the terms outlined in the judgment. The connected Miscellaneous Petition was closed without any costs imposed. The Court's decision emphasized the importance of a fair and centralized mechanism to handle cases of tax discrepancies, ensuring dealers are given a proper opportunity to present their case and have decisions made in accordance with the law.

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