2016 (7) TMI 878 - HC - VAT and Sales Tax

Reversal of input tax credit - validity of assessment orders - while completing the assessment, the respondent, with regard to this issue, did not assign any reasons, but only confirmed the proposal to reverse the input tax credit merely by observing that the petitioner has not furnished their purchase invoices - violation of the principles of natural justice - Held that - Since those issues involve disputed questions of fact, the petitioner has to necessarily exhaust the remedies available under the Act either by filing a petition for review under Section 84 of the Act or by filing an appeal before the Appellate Authority. In view of the above, the writ petitions are partly allowed, the impugned orders rendered by the Assessing Officer with regard to issue No.4 as to the reversal of input tax credit on a differential purchase turnover, are set aside and the matters are remitted back to the respondent for fresh consideration. The respondent is directed to furnish all the details sought for by the petitioner with reference to invoice numbers, dates, names of the sellers and sale value, within a period of three weeks from the date of receipt of a copy of this order. - Matter restored before the AO

Summary

Issues:
Revision notices for assessment years 2010-11 to 2014-15, defects pointed out, reversal of input tax credit, violation of principles of natural justice, disputed questions of fact, remedies under the Act.

Analysis:
The petitioner, a company under the Companies Act, was inspected by Enforcement Wing officials, leading to revision notices for five assessment years. The primary issue revolved around the reversal of input tax credit under Section 19(16) of the Act due to alleged excess claims without furnishing purchase invoices. The petitioner requested specific details for a detailed reply, emphasizing the need for documentary evidence. However, the Assessing Officer proceeded without providing the requested details, leading to a potential violation of natural justice principles.

The High Court noted the failure to consider the petitioner's request for necessary details as a breach of natural justice. Consequently, the Court directed the Assessing Officer to reconsider the issue, emphasizing the importance of affording the petitioner an opportunity to present their case effectively. The judgment highlighted the significance of procedural fairness in tax assessments, particularly in cases involving disputed factual matters.

Regarding other issues raised in the assessment, the Court acknowledged the necessity for the petitioner to exhaust available remedies under the Act, such as filing a review petition or appealing to the Appellate Authority. The judgment underscored the importance of following due process and utilizing statutory remedies to address contentious issues arising from tax assessments.

In conclusion, the writ petitions were partly allowed, setting aside the impugned orders related to the reversal of input tax credit. The matters were remitted back to the respondent for fresh consideration, with a directive to provide the requested details promptly. The Court granted the petitioner an opportunity to respond and emphasized the need for a fair hearing before completing the assessment. The judgment highlighted the significance of upholding principles of natural justice and adherence to procedural norms in tax matters, ensuring a balanced and transparent resolution of disputes.