2022 (9) TMI 532

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.... herein namely M/s Johnson Matthey Chemical India Private Ltd. claimed to have purchased the business of Catalyst from the Company ICI now M/s Akzo Nobel India Limited ("Azko Nobel"). It is stated in the writ petition that the land of the said manufacturing unit of 'Akzo Nobel' could not be transferred in the name of the petitioner due to non clearance of the same by the Kanpur Development Authority. Thus, in order to complete the transfer, the petitioner and 'Akzo Nobel' entered into a Toll Conversion Agreement dated 02.12.2002 wherein the processing of raw material was to be done by 'Akzo Nobel' and the materials, additional plant and machinery etc. were to be provided by the petitioner. The copy of the agreement dated 02.12.2012 is enclosed with the writ petition. It is stated that the petitioner had supplied raw material and the capital goods purchased by it to 'Akzo Nobel' for further processing and manufacturing of the finished goods as a job worker. Because of non-transfer of physical possession of land of Azko Nobel, the Central Excise/Service Tax registration is with the Akzo Nobel whereas the petitioner is registered under the Trade Tax/Ent....

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....22 by personally appearing before the respondent No.2 to explain as to why sanction to initiate the proceedings for reassessment under Section 29(7) of the U.P. VAT Act be not granted. A detailed reply dated 08.03.2022 was submitted by the petitioner to the said show cause notice which is appended as Annexure No.'8' to the writ petition. The sanction order dated 08.03.2022 was passed by the respondent No.3 forming a prima facie opinion that the petitioner being not a manufacturer of the goods and sold the goods by getting a job work from the manufacturers, had illegally claimed the input tax credit during the relevant period in contravention of rule of the Rules framed under the UP VAT Act. The input tax credit claimed by the petitioner has to be reversed back and the sanction was, thus, granted for reopening of the assessment and re-determination of tax on the issue of input tax credit. After the sanction order, reassessment notice dated 10.03.2022 was issued to the petitioner granting time till 21.03.2022 directing the petitioner to appear before the respondent No.2 with the books of account and evidence to explain as to why the input tax credit claimed by it for th....

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.... the matter would be decided exparte on consideration of the records before the respondent No.2. The reply dated 08.03.2022 submitted by the petitioner though on record, was not considered while passing the reassessment order. It is, thus, argued that the reassessment proceedings were undertaken against the petitioner by the respondent with a view to fasten liability on the petitioner and the sanction order and reassessment notice dated 10.03.2022 were issued with premeditated mind and the opportunity of hearing granted by the respondent No.2, thus, became an empty formality. The exparte reassessment order dated 30.03.2022 has been placed before us to submit that it does not record reasoning for arriving at the conclusion of wrong claim of input tax credit by the petitioner or the objections of the respondent about the entitlement of the petitioner to claim input tax credit for the financial year 2013-14, allegedly for violation of Rule 14-A of the VAT Act. Sri Ankur Agarwal learned counsel appearing for the revenue namely respondent Nos.2 & 3 vehemently argued that in view of the challenge made by the petitioner, three issues may arise for consideration, namely (i) whether t....

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..... It may further be recorded that the petitioner had participated in the investigation carried out by the SIB for the financial year 2014-15 and the reassessment notice dated 02.03.2022 based on the SIB report for the assessment year 2014-15 was duly replied. The notice which was issued for the first time on 02.03.2022 seeking explanation of the petitioner based on the SIB report dated 17.06.2015 before getting a sanction order, was replied in detail on 08.03.2022, within the time granted by the respondent No.3. The reply submitted by the petitioner though was taken note in the sanction order dated 08.03.2022 passed by respondent No.3 but there is no consideration to the objections raised by the petitioner on merits to the reassessment proceedings in the order impugned dated 30.03.2022. It is evident from the record that the respondent No.2 had concluded the entire matter within the month of March 2022 without granting adequate time to the petitioner to submit its reply to the reassessment notice dated 10.03.2022. Even otherwise, the order which has been passed exparte does not disclose the reason for the rejection of the objections of the petitioner that it is entitled to claim....