2016 (12) TMI 756 - HC - VAT and Sales Tax

Reversal of Input tax credit - stock transfers - The petitioner s case is that they never undertook a stock transfer of goods so purchased inside the State of Tamil Nadu. As a result, there was no occasion for the petitioner to reverse the Input Tax Credit under section 19(4) of the VAT Act. - Held that - In terms of the provision under sub-section (1) of Section 63A, every registered dealer whose total turnover including zero-rate sale and sale in the course of inter-state trade or commerce as specified in section 3 of the Central Sales Tax Act, 1956, in a year, exceeds one crore rupees, shall get his accounts in respect of that year, audited by an Accountant and submit a report of such audit in the prescribed Form, duly signed and verified by the Accountant, to the Assessing authority, within such period as may be fixed. Thus, the petitioner s turnover having exceeded Rupees One Crore, they are required to file the Audit Report and they have got time to file the Audit Report i.e. within nine months from the end of the financial year and the end of the financial year was 31.03.2016. Therefore, the respondent/assessing officer has to necessarily await the Audit Report, as the statute provides time limit for the petitioner to submit the same. The impugned order is set aside and the respondent is entitled to pass final assessment order after the petitioner files the Audit Report in terms of Section 63-A of the TNVAT Act, within the time prescribed under Rule 16(1) of the TNVAT Rules and in the event the respondent for any valid reason does not accept the report, then the respondent is directed to issue show cause notice to the petitioner and proceed in accordance with law - petition allowed.

Summary

Issues:
1. Validity of the assessment order for part of the assessment year 2015-16.
2. Requirement for filing an Audit Report under section 63A of the TNVAT Act for dealers with turnover exceeding Rupees One Crore.

Issue 1: Validity of the assessment order for part of the assessment year 2015-16:
The petitioner, a registered dealer under the TNVAT Act and CST Act, challenged an assessment order for part of the year 2015-16, arguing that the year had ended on 31.03.2016. Citing precedents like M/s Jothi Melters (India) Pvt.Ltd., the Court held that provisional assessment orders after the end of the assessment year are not valid. The Court emphasized the need for final assessment orders after the assessment year has concluded. The petitioner's turnover exceeding Rupees One Crore further highlighted the necessity for a final assessment order.

Issue 2: Requirement for filing an Audit Report under section 63A of the TNVAT Act:
Section 63A of the TNVAT Act mandates registered dealers with turnover exceeding Rupees One Crore to file an Audit Report. The petitioner's turnover exceeding the threshold necessitated the submission of the Audit Report within nine months from the end of the financial year, which was 31.03.2016. Rule 16-A of the TNVAT Rules specifies the procedure for filing the Audit Report, emphasizing the statutory requirement for dealers to comply with the submission timeline.

In conclusion, the Court set aside the impugned assessment order, directing the respondent to await the filing of the Audit Report by the petitioner in accordance with section 63A of the TNVAT Act and Rule 16-A of the TNVAT Rules. The respondent was instructed to issue a show cause notice if the Audit Report is not accepted, ensuring compliance with the statutory provisions. The Writ Petition was allowed with no costs, emphasizing the importance of adherence to legal requirements in tax assessments.