2017 (9) TMI 1975 - HC - VAT and Sales Tax

Validity of SCN - impugned notice is in consonance with section 46 of WB VAT Act 2003 or not - sufficient material existing before the Commissioner to invoke section 46 of the said Act of 2003 or not - HELD THAT - The notice specify that, for the assessment period from April 01, 2015 to March 31, 2016, the petitioner has taken an excess Input Tax Credit of over ₹ 5.00 lacs and has carried forward to the next financial year. The notice requires explanation from the petitioner for such purpose. In the facts of the present case, therefore, it cannot be said that the Commissioner has acted wholly without jurisdiction in issuing the impugned notice. It is within his purview to take cognizance of a situation emanating under section 46(1)(b) of the said Act of 2003. In the present case he is prima facie satisfied that, the State Government has suffered loss of revenue and that, there are adequate reasons for the purpose of asking for the explanation. The reasons given in the impugned order are sufficient for the assessee to react thereto. The impugned notice not being vitiated any perversity, need not be interfere therewith. The authorities are entitled to look at the returns in accordance with the said Act of 2003, particularly under section 46 of the said Act of 2003 thereof - petition dismissed.

Summary

Issues: Challenge to notice under section 9 of Central Sales Tax Act and section 46 of West Bengal Value Added Tax Act, 2003 for excess Input Tax Credit and loss of revenue.

Analysis:
The petitioner challenges a notice issued under section 9 of the Central Sales Tax Act and section 46 of the West Bengal Value Added Tax Act, 2003. The petitioner argues that the notice does not comply with section 46, which specifies grounds for assessment by the Commissioner. The petitioner contends that the Commissioner must be satisfied that there has been a short payment of net tax, excess claim of input tax credit, loss of revenue, or other reasons recorded in writing. The petitioner asserts that their case falls under section 22(6) of the Act, where excess Input Tax Credit can be carried forward to the next year. The petitioner argues that there was no basis for the Commissioner to invoke section 46 in this case.

The Revenue Authority, represented by the Additional Advocate General, counters the petitioner's claims. They argue that the petitioner does not have an absolute right to have returns accepted in full under the Act. The Commissioner has the authority to assess returns in accordance with the law. In this case, the Commissioner found that the petitioner had carried forward excess Input Tax Credit, prompting the need for an explanation. The Revenue Authority contends that it is the Commissioner's prerogative to consider the explanation provided by the assessee and make a decision accordingly, without intervention from the writ court at this stage.

After considering the arguments from both parties and the available evidence, the court notes that the notice issued under section 46 is being challenged. The notice alleges that the petitioner claimed an excess Input Tax Credit exceeding a specified amount and carried it forward to the next financial year. The court determines that the Commissioner had jurisdiction to issue the notice under section 46(1)(b) based on prima facie satisfaction of revenue loss and valid reasons for seeking an explanation. The court finds the reasons provided in the notice to be adequate for the assessee to respond. Consequently, the court concludes that the notice is not flawed by any perversity and declines to interfere. The authorities are deemed entitled to examine returns under the Act, particularly section 46, without any evident defect in the impugned notice. Therefore, the writ petition is dismissed without costs, and certified copies of the order will be provided to the parties upon request.