2019 (6) TMI 1501 - HC - VAT and Sales Tax

Deemed Assessment - ITC Claims - mismatch of purchases - Section 22(2) of TNVAT Act - HELD THAT - It follows as an inevitable sequitur that the writ petitioner is entitled to have the impugned orders set aside on the ground that it is in violation of M/S. JKM GRAPHICS SOLUTIONS PRIVATE LIMITED VERSUS THE COMMERCIAL TAX OFFICER 2017 (3) TMI 536 - MADRAS HIGH COURT , where it was held that 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. Impugned orders set aside - petition allowed.

Summary

Issues Involved:
Violation of JKM Graphics principle in assessment orders under TNVAT Act for five successive assessment years from 2011-2012 to 2015-2016.

Analysis:
The judgment by the Madras High Court pertains to the disposal of five writ petitions involving the same petitioner and respondent under the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act). The core issue in all these petitions revolves around discrepancies noticed during an inspection by the Enforcement Wing officers, particularly related to Input Tax Credit (ITC) claims and mismatched purchases. The respondent issued revised assessment notices based on these discrepancies, leading to the filing of writ petitions alleging violation of the JKM Graphics principle established in a previous case. The court acknowledged the similarity in factual matrix across the petitions and highlighted the importance of adhering to the JKM Graphics principle in conducting assessments.

In the detailed analysis, the court emphasized the need for a centralized mechanism to handle discrepancies effectively, as outlined in the JKM Graphics case. It noted that the Revenue had not appealed the JKM Graphics principle and indicated their intention to submit a new procedure in line with the court's recommendations. The court referenced paragraph 56 of the JKM Graphics case, stressing the importance of a centralized mechanism to avoid multiplicity of proceedings and ensure a holistic approach to addressing discrepancies. Based on the undisputed position regarding the JKM Graphics principle, the court concluded that the impugned orders must be set aside for violating this principle.

Consequently, the court ordered the setting aside of the impugned assessment orders for all five assessment years. It directed the respondent to submit a new methodology for assessment, which would be reviewed by the court before fresh assessments are conducted. The court emphasized the need for expeditious redone assessments in compliance with the JKM Graphics principles. The judgment concluded by disposing of all five writ petitions with the specified directions, without imposing any costs on either party.