2016 (11) TMI 299 - HC - VAT and Sales Tax

Reversal of ITC on purchases effected by Registration Cancelled Dealers - Reversal of ITC on the sale effected to the dealers who are doing contract in SEZ unit - Tax liability on sale of Pavers and Sale of Asset (Car Sale) - Held that - the petitioner stated that selling dealers might have paid the tax well in advance and merely because there are some differences on the reported turnover of the selling dealers and purchases reported by the petitioner, it cannot be construed that the selling dealers have not paid tax to the Department - The respondent ought to have considered the petitioner s objections and examined as to whether the case as projected by the petitioner was correct, what would be the effect of the break up details furnished by the petitioner along with their letter on 27.01.2013, which were in fact called for by the respondent in the notice dated 12.03.2015 - Petition allowed by way remand.

Summary

Issues:
Challenging assessment orders under TNVAT Act and CST Act for multiple years.

Analysis:
The petitioner, a registered dealer under TNVAT Act and CST Act, challenged assessment orders from 2006-07 to 2014-15. The respondent issued notices based on an inspection report by the Enforcement Wing highlighting defects in Annexure-I and Annexure-II of invoices. The petitioner was asked to produce break-up details and objections within fifteen days. The objections referenced a court decision stating that differences in turnover do not imply tax evasion by selling dealers. The petitioner argued that if selling dealers did not remit tax, liability lies with them, not the petitioner. The respondent then proposed penalties under section 27(4) after receiving the petitioner's detailed submissions.

The impugned orders lacked discussion on the petitioner's objections. Instead, the respondent cited decisions from other High Courts and passed the orders without considering the petitioner's contentions. The High Court found the assessment orders to be untenable as the respondent failed to address the objections and misdirected himself. The court directed the respondent to consider the petitioner's objections, court decisions referenced, purchase registers, and detailed breakdowns provided by the petitioner. The respondent was instructed to conduct the assessment independently, affording a personal hearing to the petitioner without being influenced by the Enforcement Wing's report.

In conclusion, the High Court allowed the writ petitions, quashed the impugned orders, and directed the respondent to conduct a fresh assessment considering all aspects and the petitioner's submissions. The court emphasized the respondent's duty as an independent Assessing Officer to apply his mind and act accordingly, warning against abdicating statutory powers. No costs were awarded, and connected Miscellaneous Petitions were closed.