2016 (11) TMI 462 - HC - VAT and Sales Tax

Revision of assessments - principles of natural justice - Held that - It is a settled legal position that the Assessing Officer is an independent statutory Authority, who has to consider the dealer s objections, when they respond to the pre-revision notices and cannot be solely guided by the report of the Enforcement Wing Officials and if done so, it would amount to abdication of the statutory duty cast upon the Assessing Officer. In fact, what has been done by the respondent is clearly an abdication of his statutory duties - the entire revision of assessment has to be re-done, after affording reasonable opportunity to the petitioner to produce the necessary records, as they have addressed their suppliers and they are in the process of gathering details - petition allowed - matter remanded.

Summary

Issues: Challenge to assessment orders for multiple years based on inspection findings and procedural irregularities.

Analysis:
1. Inspection Findings and Assessment Reopening: The petitioner, a company manufacturing adhesives, challenged assessment orders for various years following an inspection by Enforcement Wing Officials. The inspection led to proposed reassessment due to issues such as purchases from canceled dealers, unreported purchases, and mismatched input tax credits. The primary ground for reassessment was the mismatch between the petitioner's annexures and the selling dealers' records, with additional concerns regarding CST sales for one specific year.

2. Petitioner's Response and Procedural Deficiencies: Upon receiving pre-revision notices, the petitioner responded by voluntarily reversing input tax credit and seeking time to collect details regarding the alleged mismatches. Despite the petitioner's efforts to address the issues, the Assessing Officer proceeded with the reassessment without waiting for the petitioner to furnish details or providing a personal hearing. This unilateral action by the Assessing Officer was deemed an abdication of statutory duties.

3. Specific Issues in Assessment Year 2014-15: In the assessment year 2014-15, a discrepancy was noted in the input tax credit reported by the petitioner, which was promptly clarified in the objections submitted. However, the Assessing Officer failed to consider this clarification and confirmed the proposed reassessment without disclosing the purchase turnover, unlike in other years. This inconsistency highlighted further procedural irregularities in the assessment process.

4. Court's Decision and Directions: The Court ruled in favor of the petitioner, setting aside the impugned orders and remitting the matters back to the respondent for fresh consideration. The Court emphasized the necessity of affording the petitioner a reasonable opportunity to produce necessary records and address the identified issues. The respondent was instructed to grant 15 days for fresh objections submission, followed by a personal hearing before re-doing the assessments in compliance with the law. No costs were awarded, and the connected Writ Petition Matters were closed as a result of the judgment.