2017 (3) TMI 826 - HC - VAT and Sales Tax

Input Tax Credit - denial on the ground that the information concerning the selling dealers did not match with the information provided by the petitioner - retrospective cancellation of the registration certificate of seller - Held that - neither the pre assessment notices nor the assessment orders advert to the sellers qua whom there is a mismatch in the available information. Clearly, there is an absence of material particulars both in the pre-assessment notices, and, in the assessment orders - the matter requires re-examination. Cancellation of registration certificate of the sellers - Held that - the effective date of cancellation of registration certificate, precedes the date of the invoice, while in other cases, the effective date follows the date of the invoice. If, the effective date of cancellation of registration certificate follows the date of invoice, then, the fact the registration certificate was valid on the date, when, the transaction took place, is an aspect, which attains criticality - The petitioner s/assesse s transaction cannot be impacted by subsequent cancellation of registration. Petition disposed off - The respondent/Assessing Officer will, thereafter, redo the assessment - petition allowed by way of remand.

Issues Involved:
1. Mismatch in information between the Department's website and the petitioner's monthly returns.
2. Cancellation of the registration certificate of sellers.
3. Imposition of penalty under Section 27(3) of the Tamil Nadu Value Added Tax Act, 2006.
4. Lack of personal hearing before passing the impugned orders.
5. Availability of statutory remedy under Section 51 of the 2006 Act.

Detailed Analysis:

Issue 1: Mismatch in Information
The petitioner challenged the reversal of Input Tax Credit (ITC) amounting to ?1,83,36,064 due to a mismatch between the information available on the Department's website and the details in the petitioner's monthly returns. The court noted that both the pre-assessment notices and the assessment orders lacked material particulars regarding the sellers involved in the mismatch. The court emphasized that the respondent/Assessing Officer must provide substantial material to conclude that the transactions were bogus and not genuine. The court referenced several judgments, including Sri Vinayaga Agencies V. Assistant Commissioner (CT) and International Flavours and Fragrances India Pvt. Ltd., which supported the petitioner's claim that ITC could not be disallowed solely based on mismatched information.

Issue 2: Cancellation of Registration Certificate of Sellers
The petitioner argued that the retrospective cancellation of the sellers' registration certificates should not affect the ITC claimed for genuine purchases. The court examined the effective dates of the cancellation and the invoice dates, noting that if the cancellation date followed the invoice date, the transaction should be considered valid. The court highlighted that the petitioner should be able to claim ITC if the transaction occurred before the cancellation order was passed. The court referenced the judgment in Indian Products Ltd. V. The CTO, which supported this view.

Issue 3: Imposition of Penalty under Section 27(3)
The petitioner contended that the penalty was imposed without application of mind and in violation of natural justice principles. The court agreed that penalty under Section 27(3) could only be levied if there was a definitive conclusion of escapement of turnover due to wilful non-disclosure by the petitioner. The court found that the respondent/Assessing Officer had not provided adequate material to justify the penalty, referencing the judgment in Tvl.Sun Powers rep. by its Proprietrix V. The Commercial Tax Officer.

Issue 4: Lack of Personal Hearing
The petitioner argued that the impugned orders were passed without affording a personal hearing. The court noted that the respondent/Assessing Officer had issued notices but did not provide a personal hearing, which was a procedural lapse. The court emphasized the importance of giving the petitioner an opportunity to present relevant material and defend their case.

Issue 5: Availability of Statutory Remedy
The respondent argued that the petitioner had an available statutory remedy under Section 51 of the 2006 Act, and thus, the writ petitions should not be entertained. The court acknowledged this argument but noted that the issues raised were covered by previous judgments in favor of the petitioner, which justified the court's intervention.

Conclusion:
The court set aside the impugned assessment orders, subject to the petitioner depositing ?20,77,924 towards tax within two weeks. The respondent/Assessing Officer was directed to redo the assessment after providing a reasonable opportunity for a personal hearing and supplying relevant material to the petitioner. The entire process was to be completed within eight weeks from the date of receipt of the court's order. The writ petitions were disposed of accordingly, with no order as to costs.

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