2019 (7) TMI 1756 - HC - VAT / Sales Tax

Liability on short payment of tax - Huge difference between purchases and sales turnover - Annual Scrutiny cross verification of the buyer and seller as per Annexure I Web report - Verification of purchase details from other dealer Annexure II and purchase details from this dealers annexure I - Check post Movement Details - Levy of tax on deletion of assets - Short payment of tax - Other income. Huge difference between purchases and sales turnover - Verification of purchase details from other dealer Annexure II and purchase details from this dealers annexure I - HELD THAT - Difference between purchase and sales turnover pertains to difference between purchases and sales turnover. According to the respondent as articulated in the impugned order from verification of books of accounts it was noticed that the dealers had reported that their purchases during the year is normally low when compared to the sales and on this basis tax was levied after examining the records furnished by the writ petitioner whereas Verification of purchase details from other dealer Annexure II and purchase details from this dealers annexure I pertains to claim of Input Tax Credit ITC . Here the pivotal question is whether the purchases were made from unregistered dealers had to be considered. For examining this the Assessing Authority had to necessarily look at Annexure II of the sellers - though it appears that the heads are not severable on a closer scrutiny it comes out clearly that head nos.2 and 4 are clearly severable and therefore the submission made by learned Senior counsel that the Assessing officer cannot dissect the heads does not carry the writ petitioner any further in this case. In other words this submission is negatived by this Court for the reasons that have been set out thus far. Short payment of tax - HELD THAT - With regard to this head which is the other head under which tax has been levied that pertains to short payment of tax and it is nobody s case that it is dovetailed with any of the other issues. Therefore this head is a stand apart issue. Another aspect of the matter which has been noticed by this Court is that there is no disputation or disagreement about the obtaining legal position that any number of assessment orders can be passed by an Assessing officer in exercise of revisional powers under Section 27 of TNVAT Act. When this is the obtaining legal position this Court finds no infirmity or illegality in the respondent severing 2 out of 8 heads deferring the same levying tax on two other heads and dropping four other heads in favour of the writ petitioner dealer. With regard to alternate remedy rule itself as already mentioned it is clearly a self imposed restraint by Courts exercising writ jurisdiction. In other words alternate remedy rule is not a rule of compulsion but it is a rule of discretion. Though the alternate remedy rule is not an absolute rule Hon ble Supreme Court in UNITED BANK OF INDIA VERSUS SATYAWATI TONDON AND OTHERS 2010 (7) TMI 829 - SUPREME COURT held that in cases pertaining to tax cess etc. alternate remedy rule has to be applied with utmost rigour. Petition dismissed.

Summary

Issues Involved:
1. Liability on short payment of tax
2. Huge difference between purchases and sales turnover
3. Annual scrutiny cross-verification of buyer and seller as per Annexure I Web report
4. Verification of purchase details from other dealers (Annexure II) and purchase details from this dealer (Annexure I)
5. Check post movement details
6. Levy of tax on deletion of assets
7. Short payment of tax
8. Other income

Issue-wise Analysis:

1. Liability on Short Payment of Tax:
The respondent, in their capacity as the Assessing Officer, issued revisional notices to the writ petitioner after an inspection by the Enforcement Wing officials revealed discrepancies. The petitioner sent several objections, and the respondent dropped the revised assessment under this head after considering the objections.

2. Huge Difference Between Purchases and Sales Turnover:
The respondent levied tax on this head, noting that the purchases reported by the dealer were significantly lower compared to the sales. The petitioner argued that the verification of purchase details (head No.4) was deferred, and thus, the assessment under this head should not have proceeded. The court found that head Nos. 2 and 4 are distinct and severable, as head No.2 pertains to the difference between purchases and sales turnover, while head No.4 deals with the verification of purchases from unregistered dealers. Therefore, the court upheld the respondent's decision to levy tax under this head.

3. Annual Scrutiny Cross-Verification of Buyer and Seller as per Annexure I Web Report:
The respondent deferred the revised assessment under this head. The court did not find any issue with this decision, as it was within the respondent's discretion to defer certain heads.

4. Verification of Purchase Details from Other Dealers (Annexure II) and Purchase Details from This Dealer (Annexure I):
Similar to head No.3, the respondent deferred the revised assessment under this head. The court upheld this decision, noting that it was necessary to examine Annexure II of the sellers, which was deferred due to a circular issued following a judgment by the High Court.

5. Check Post Movement Details:
The respondent dropped the revised assessment under this head after considering the objections raised by the petitioner. The court did not find any issue with this decision.

6. Levy of Tax on Deletion of Assets:
The respondent dropped the revised assessment under this head as well. The court upheld this decision.

7. Short Payment of Tax:
The respondent levied tax under this head, and the court found it to be a stand-alone issue not connected to any other heads. Therefore, the court upheld the respondent's decision to levy tax under this head.

8. Other Income:
The respondent dropped the revised assessment under this head. The court upheld this decision.

Alternate Remedy:
The court noted that the impugned orders were made under Section 27 of the TNVAT Act, and a statutory appellate remedy is available under Section 51 of the TNVAT Act. The court emphasized that the writ petitioner could file a statutory appeal against the orders, subject to pre-deposit and delay condonation provisions. The court reiterated the principle that the rule of alternate remedy is a rule of discretion, particularly stringent in fiscal statutes, and found that the instant case did not fall under any exceptions to this rule.

Conclusion:
The court dismissed the writ petitions, preserving the rights of the writ petitioner to prefer a statutory appeal under Section 51 of the TNVAT Act, subject to pre-deposit and delay condonation/exclusion of time, if any. No costs were awarded, and the connected miscellaneous petitions were closed.