2017 (1) TMI 1427 - HC - VAT and Sales Tax

Validity of assessment order - reversal of input tax credit - Held that - similar issue decided in the case of Infiniti Wholesale Limited, (formerly known as Woolworths Wholesale (India) Private Limited) Versus The Assistant Commissioner (CT) 2015 (1) TMI 590 - MADRAS HIGH COURT , where it was held that the ITC availed by the petitioner could not have been proposed to be reversed or reversed on the grounds stated by the respondent, i.e., the selling dealer has not filed returns or not paid taxes or they were unregistered dealers or their registrations were retrospectively cancelled - the impugned assessment orders are set aside. The respondent is directed to redo the assessments - appeal allowed by way of remand.

Summary

Issues:
Challenging assessment orders reversing Input Tax Credit (ITC) due to vendor's non-payment of tax.

Analysis:

1. Assessment Orders Reversing ITC:
The Writ Petitions challenged six assessment orders dated 12.12.2016 reversing Input Tax Credit (ITC) for Assessment Years 2011-12 to 2016-17 due to the vendor's failure to pay the requisite tax. The petitioner contended that evidence of transactions with the vendor was provided to the respondent but was disregarded. The petitioner argued that they should not be held responsible for the vendor's non-compliance with tax obligations.

2. Legal Precedents and Judgments:
The petitioner relied on various judgments, including ALTHAF SHOES (P) LTD. VS. ASSISTANT COMMISSIONER (CT), SRI VINAYAGA AGENCIES VS. ASSISTANT COMMISSIONER (CT), and INFINITI WHOLESALE LIMITED VS. ASSISTANT COMMISSIONER (CT), to support their argument that ITC reversal based on a mere mismatch of information was not justified. The respondent, represented by the Additional Government Pleader, acknowledged that the issue was addressed in the aforementioned judgments of the Court.

3. Court's Decision and Directions:
The Court referred to a previous judgment and a Division Bench decision supporting the petitioner's position and set aside the impugned assessment orders. The respondent was directed to reassess the matter considering the legal precedents mentioned. The Court suggested redoing the assessments, which the respondent agreed to. Consequently, the assessment orders were annulled, and the respondent was instructed to issue a fresh notice to the petitioner for a reevaluation of the transactions. The petitioner was required to provide supporting material, and the respondent was directed to consider both parties' submissions before issuing a fresh order.

4. Disposition of Writ Petitions:
The Writ Petitions were disposed of based on the directions provided, and connected Miscellaneous Petitions were closed without any cost orders. The Court's decision emphasized a fair reassessment process considering the legal principles discussed in the judgment and previous decisions of the Court.

This detailed analysis summarizes the legal judgment, highlighting the issues raised, legal arguments presented, relevant judgments cited, the Court's decision, and the subsequent directions issued for reassessment.