2017 (7) TMI 3 - HC - VAT and Sales Tax

Maintainability of appeal - penalty - Form-C - Held that - the Assessee, at least, in respect of these aspects should not have been relegated to an alternative remedy. This is apart from the larger issue,which the Assessee had raised in the writ petition, which is,as to whether a proposal could have been made by the CTO, to levy tax/or seek reversal of ITC solely based on the discrepancies pointed out by the Enforcement Wing, while conducting an audit - since, the Assessee has indicated to us that it would be filing an appeal with respect to the aspects referred to against Serial Nos.2 and 7 - appeal allowed - decided partly in favor of appellant.

Summary

Issues:
1. Appeal against order dismissing Writ Petition due to availability of alternative remedy.
2. Discrepancies noticed by Enforcement Wing in Assessee's tax returns under TNVAT Act.
3. Assessee's challenge on breach of natural justice and lack of independent assessment by CTO.
4. Assessee's reliance on specific judgments related to ITC claims.
5. Calculation of tax/ITC reversal and penalties under TNVAT Act.
6. Assessee's decision not to challenge certain tax demands and ITC reversals.
7. Scope of appeal limited to specific aspects of tax assessment.
8. Legal precedents on ITC claims and tax levies in similar cases.
9. Ruling on the Assessee's appeal and setting aside penalties.

Analysis:
1. The appeal was filed against the order dismissing the Writ Petition on the grounds of the availability of an alternative remedy through an appeal process. The Assessee challenged the order dated 22.04.2015, which was passed by a single Judge, arguing that the CTO had not independently assessed the discrepancies in the tax returns filed under the TNVAT Act.

2. The Enforcement Wing identified several discrepancies in the Assessee's tax returns for the Assessment Year 2013-14, leading to a notice proposing tax levies based on various issues such as wrong ITC claims, suppression of purchases, VAT tax on other income, and more. The Assessee responded to the notice with a detailed reply.

3. The CTO confirmed the demand and penalties raised in the notice dated 04.12.2014, leading the Assessee to file a Writ Petition under Article 226 of the Constitution, alleging a breach of natural justice and lack of independent assessment by the CTO. The Assessee also cited specific judgments related to ITC claims to support their case.

4. The Court analyzed the calculations made by the CTO regarding tax/ITC reversal and penalties under different heads, including wrong ITC claims and suppression of taxable turnover. The Assessee decided not to challenge certain tax demands and ITC reversals but limited the scope of the appeal to specific aspects of the assessment.

5. Legal precedents, including judgments by Division Benches and Single Judges, were cited to support the Assessee's arguments regarding ITC claims and tax levies in similar cases. The Court noted that these aspects were no longer open to interpretation based on established legal principles.

6. The Court partially allowed the Writ Appeal, setting aside penalties related to specific aspects of the assessment. The Assessment Order dated 27.02.2015 was modified, allowing the Assessee to challenge the remaining parts through a statutory remedy. The connected Miscellaneous Petition was closed without costs.