VAT turnover inclusion and mismatch procedure flaws led to setting aside of the assessment order for fresh reconsideration.

A VAT assessment completed on deemed assessment basis was held unsustainable where part of the assessee's service income had been included in turnover and the mismatch procedure had not been followed. The Court noted that income from maintenance services had been treated as taxable turnover under the TNVAT Act without proper basis, and that reliance on a mismatch issue was improper because the prescribed procedure for such cases was not observed. The assessment order was set aside and the matter was remitted for fresh consideration in accordance with law.

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Issues: Whether the assessment order was liable to be set aside and remitted on the ground that a portion of the petitioner's service income was included in turnover under the TNVAT Act and the mismatch procedure was not followed.

Analysis: The assessment had been completed on deemed assessment basis under Section 22(2) of the Tamil Nadu Value Added Tax Act, 2006. The order under challenge proceeded, at least in part, on the footing that income arising from maintenance services could be brought within the turnover for VAT purposes. The Court also found that the mismatch aspect was relied upon without following the procedure laid down for such cases.

Conclusion: The assessment order was unsustainable and was set aside, with a direction to reconsider the matter afresh in accordance with law.

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