2017 (3) TMI 582 - HC - VAT and Sales Tax

Reversal of ITC u/s 19(16) of the TNVAT Act, 2006 - verification of web report of buyer and seller as per Annexure-I revealed that the Assessee had claimed certain amount as ITC, but the other end dealers have not paid VAT as per Annexure-II of the sellers - Held that - power has been vested in the department under Section 19(16) of the TNVAT Act, 2006, whereby reversal of ITC can be made by the department. Therefore, this Court cannot find fault with the proposal by way of notice for reversal issued by the department on 23.05.2016, where 15 days time was given to the petitioner and personal hearing date was also given - the impugned orders though have been passed after giving an opportunity of two weeks time to the petitioner, can be interfered with by this Court, because, the item-wise details between Annexures I and II for the alleged discrepancy since has not been submitted or furnished by the department and the petitioner is now able to collect all the details to give a suitable defence or reply to the department to satisfy themselves that there is no discrepancy between Annexures I and II, which is the very basis for reversal of ITC under Section 19(16), this Court is inclined to interfere with the impugned orders - impugned order quashed - matter remitted for reconsideration - appeal allowed by way of remand.

Summary

Issues Involved:
Writ of Certiorarified Mandamus sought for to quash reversal of ITC orders for assessment years 2011-12 to 2014-15.

Analysis:
1. Assessment and Reversal of ITC: The petitioner, an Assessee, filed writ petitions challenging the reversal of Input Tax Credit (ITC) for assessment years 2011-12 to 2014-15. The respondent issued notices for reversal of ITC, providing an opportunity for the petitioner to respond and attend a personal hearing. The petitioner, however, did not respond within the stipulated time, seeking additional time later. The impugned orders confirming the proposal were passed by the respondent after the petitioner's delayed response.

2. Contentions and Defenses: The petitioner argued that the notices for reversal lacked specific details of discrepancies between Annexures I and II, essential for the Assessee to provide a satisfactory response. The petitioner requested time to collect necessary details to rebut the proposed reversal, emphasizing the need for item-wise discrepancies to be furnished by the department. The petitioner cited a previous court decision to support the argument that a vague proposal for reversal without detailed discrepancies is insufficient for defense.

3. Legal Provisions and Authorities' Powers: The respondent justified the reversal of ITC under Section 19(16) of the TN VAT Act, 2006, empowering authorities to revoke ITC if deemed incorrect. The respondent contended that despite granting opportunities, the petitioner failed to utilize them effectively, justifying the impugned orders based on the powers conferred under the Act.

4. Judicial Review and Remand: The Court considered the arguments and materials presented. While acknowledging the authority's power to reverse ITC, the Court found fault in the lack of detailed item-wise discrepancies provided to the petitioner. The Court opined that the impugned orders could be interfered with due to the absence of crucial details necessary for the Assessee to respond adequately.

5. Court's Decision and Directions: Consequently, the Court quashed the impugned orders and remitted the matter back to the respondent for reconsideration. The Court directed the petitioner to furnish collected details within a specified period for re-assessment. A personal hearing was mandated for verifying discrepancies with department officials' assistance before passing final orders. The Court imposed a condition for payment of 15% of the tax covered under the impugned orders before initiating the re-assessment process, emphasizing proper utilization of opportunities granted.

6. Conclusion: The Court disposed of all Writ Petitions, emphasizing the importance of providing detailed discrepancies to the Assessee for a fair defense and directing a re-assessment process with specific conditions to ensure a thorough review of the matter.