2017 (3) TMI 536 - MADRAS HIGH COURT

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, when either the purchaser or the seller fails to report the transaction in their annexure I or II returns respectively. Therefore, the first aspect to be looked into is, how this process of verification could be done by the Assessing Officer - The revenue objects to the maintainability of the Writ Petitions on the ground that the Act provides for an effective and efficacious alternate remedy and they seek for a direction upon the dealers to avail the alternate remedy and dismiss the Writ Petitions as not maintainable.

Held that: - The Commissioner took note of the fact that mismatch reports have been generated by the Business Intelligent Unit, Interstate Investigation Cell, Enforcement Division and also by the Assessing Officers in the circles as a part of returns scrutiny or revision of assessment and that while such mismatch reports have been communicated in the form of notice to the dealer, the dealer wise mismatch projections alone are being enclosed and no detailed information provided. It was further observed that unless invoice wise data of mismatches are provided for each dealer, the dealer under analysis will not be able to come to a conclusion as to specific transactions for which, the tax is being demanded. Not providing invoice wise data of mismatch would tantamount to violation of principles of natural justice rendering the notices to be struck down by Appellate Forums and the High Courts.

The problems on account of the mismatch is a Pan India problem and to my mind, the procedure adopted under the Delhi VAT Act regime and the circulars issued under the said Act, appear to be a more transparent system and assessee friendly. This can be borne in mind by the Revenue for necessary follow up action.

In the instant case, there is no challenge to the statutory provisions and the complaint of all the dealer is largely on the procedure adopted by the respective Assessing Officers. The Principal Secretary and Commissioner of Commercial Taxes was conscious of the problems faced by the dealers as complaints were received which had lead to issuance of a circular as early as on 01.04.2015. The directions contained in the said circular are very pointed direction, but it is sad to note that the circular remains only on paper and seldom Assessing Officers follow the circular resulting in several assessments being set aside by the Court and remanded for denova consideration. Thus, 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.

Matters are remanded to the respective Assessing Officers, to undertake a fresh exercise by conducting a thorough enquiry in consultation with the Assessing Officers of the other end dealer - petition allowed by way of remand.