2016 (9) TMI 564 - HC - VAT and Sales Tax

Rejection of input tax credit claim - imposition of penalty - section 27(4)(ii) of the Act - dealer in general goods - opportunity of being heard - Held that - so long as the vendor was not found to be a registered dealer on the files of the Department, the claim of the dealer for refund could not be rejected not delayed. The issue decided in the case ALTHAF SHOES (P) LTD., v. ASSISTANT COMMISSIONER (CT), VALLUVARKOTTAM ASSESSMENT CIRCLE, CHENNAI-6 2011 (10) TMI 567 - Madras High Court . It is admitted that the petitioner s vendors were all registered dealers on the files of the Department and that petitioner had also given the TIN number of these vendors. When such particulars were available, it was for the Department to take necessary action against the vendors, who had not remitted tax collected by them to the State. Without taking recourse to that, the Department could not deny the claim of the petitioner - matter remanded for fresh consideration - petition disposed off - decided in favor of petitioner.

Summary

Issues involved:
1. Dispute over Input Tax Credit claimed by the petitioner for the assessment year 2012-13.
2. Allegations by the respondent of non-reporting of purchases by the seller leading to proposed reversal of Input Tax Credit and penalty imposition.
3. Lack of opportunity for personal hearing to the petitioner during the assessment process.
4. Assessment procedure followed by the Assessing Officer, including rejection of objections raised by the petitioner.
5. Interpretation of relevant legal provisions and precedents regarding the denial of Input Tax Credit.
6. Impact of subsequent legal amendments on the assessment order in question.

Analysis:

1. The petitioner, a dealer in general goods, filed returns for the assessment year 2012-13, claiming Input Tax Credit of ?3,15,32,012. The respondent alleged discrepancies in the claimed amount, leading to a proposed reversal of the credit and penalty imposition.

2. The respondent's notice highlighted that purchases were not reported by the seller, prompting the proposal to reverse the Input Tax Credit. The petitioner submitted objections, emphasizing compliance with input tax credit claims based on their purchases, supported by bill details.

3. The petitioner's plea for a personal hearing was disregarded, and the assessment proceeded without granting this opportunity. The Assessing Officer rejected the objections, citing incorrect invoice copies and non-specification of TIN numbers, leading to the confirmation of the proposed revision and penalty imposition.

4. The High Court criticized the summary procedure adopted by the Assessing Officer, emphasizing the importance of dialogue and discussion in the assessment process. The Court noted the failure to direct the petitioner to produce original invoices and account details before finalizing the assessment.

5. Referring to legal precedents, the Court highlighted the importance of complying with the requirements for claiming Input Tax Credit. It emphasized that the burden lies on the Department to take action against vendors who do not remit tax collected, rather than denying the claim of the purchasing dealer.

6. The Court acknowledged the subsequent legal amendment affecting the proviso under section 19(1) but emphasized that the Assessing Officer cannot rely on the substituted proviso retroactively. Consequently, the Court allowed the Writ Petition, quashed the impugned order, and remanded the matter for fresh consideration, directing the respondent to redo the assessment in compliance with the law.