2015 (12) TMI 370 - HC - VAT and Sales Tax

Reversal of input tax credit - levy of penalty under Section 27(3) - Held that - Assessing authority has not furnished the invoice wise details, though specifically requested by the petitioner, this Court is of the view that suitable direction has to be issued to the respondent by setting aside the impugned orders. - Impugned order is set aside - respondent is directed to produce all the details relating to all the transactions which are the basis for passing the orders of assessment within a period of two weeks from the date of receipt of a copy of this order and on receipt of those details, the petitioner is permitted to file necessary objections, within a period of two weeks thereafter and after receiving the objections, the respondent is directed to pass appropriate orders on merits and in accordance with law, within a period of six weeks thereafter - Petition disposed of.

Summary

Issues:
Challenging assessment orders for multiple years, reversal of input tax credit, penalty under Section 27(3) of the Act, failure to furnish invoice-wise details, misinterpretation of provisions of the Act, non-compliance with Circular by assessing authority.

Analysis:

Challenging Assessment Orders:
The petitioner, a manufacturer and dealer, challenged assessment orders for the years 2009-10 to 2014-15. The petitioner claimed input tax credit for purchases made and adjusted it against output tax due. However, issues arose during an inspection by Enforcement Wing officers, leading to show cause notices proposing reversal of input tax credit and penalty under Section 27(3) of the Act. The petitioner requested invoice-wise details for verification, highlighting a Circular dated 01.04.2015 by the Principal Secretary and Commissioner of Commercial Taxes.

Misinterpretation of Provisions:
The petitioner argued that the respondent misunderstood the Act's provisions. The petitioner contended that for reversal of input tax credit, penalty should be levied under Section 27(4) of the Act, not Section 27(3) as done by the respondent. The petitioner also claimed that the respondent did not provide invoice-wise details despite specific requests and failed to comply with the Circular's instructions.

Court's Decision:
The Court noted the absence of invoice-wise details provided by the assessing authority despite the petitioner's requests. Consequently, the Court set aside the impugned orders and directed the respondent to produce all transaction details within two weeks. The petitioner was allowed to file objections within two weeks thereafter, and the respondent was instructed to pass appropriate orders within six weeks. Failure by the petitioner to respond promptly would allow the respondent to proceed without further adjournment. The writ petitions were disposed of accordingly, with no costs imposed.

This judgment highlights the importance of adherence to procedural requirements, including providing necessary details to taxpayers and correctly applying statutory provisions. The Court's decision emphasizes the significance of due process and the need for authorities to comply with legal obligations and directives issued by higher authorities.