2017 (9) TMI 198 - HC - VAT and Sales Tax

Rejection of returns filed by the petitioner - input tax credit - it is noticed that the petitioner issued invoices from C2H001 to C2H155, and not reported in the Annexure II filed by them - it is also alleged that, on verification of the sales details filed in Annexure II with other dealer purchase details, it is seen that the petitioner has effected sales using the same tax invoice to different buyers, and thereby, maintained two sets of parallel bill books. Therefore, the respondent proposed to reject the returns filed by the petitioner as incorrect - Held that - According to the petitioner, whatever sales effected by them, i.e. substantial portion of the sales, which were in the form of DVDs have been returned to the petitioner, for which, the petitioner has given credit notes. The said credit notes have been placed in the typed-set of papers filed in support of this Writ Petition, to substantiate the case of the petitioner. Therefore, it is the case of the petitioner that the turnover, which was reported in the month of March, 2015, vide their returns, is the turnover, which was determined after giving due credit to the sales returns. The petitioner sought to demonstrate the factual position by referring to a tabulated statement filed in page No.22 of the typed-set of papers. However, even the tabulated statement was not placed before the Assessing Officer, and this fact is even admitted by the petitioner. In any event, since the legal position is in favour of the petitioner, this Court is of the view that, an opportunity can be granted to the petitioner to go before the Assessing Officer and contest the matter on merits by placing all records - petition allowed by way of remand.

Summary

Issues:
Challenge to assessment order under TNVAT Act for AY 2014-15 due to delay. Validity of revised notice based on details from the Official Website. Rejection of returns filed by petitioner. Proposed assessment terms. Reversal of ITC claimed by petitioner. Proposed penalty under Section 22(5) of TNVAT Act. Failure to file objections within permitted time. Legal position based on relevant court decisions. Comparison with similar cases. Conclusion on sustainability of impugned order. Guidelines for assessing officer's verification/enquiry. Liability on selling dealer for unpaid tax. Petitioner's claim of sales returns and credit notes. Opportunity for petitioner to contest assessment on merits.

Analysis:
The petitioner challenged the assessment order under the Tamil Nadu Value Added Tax Act for the assessment year 2014-15, citing delay as a crucial issue. The High Court noted the belated nature of the challenge and the basis of the petitioner's attempt to contest the order. The Court considered the revised notice issued by the respondent, which was based on information obtained from the Official Website, leading to the rejection of the returns filed by the petitioner. The proposed assessment terms included a detailed breakdown of the turnover and taxable amounts, highlighting discrepancies in the petitioner's sales reporting.

Regarding the Input Tax Credit (ITC) claimed by the petitioner, the respondent proposed to reverse certain claims, citing provisions of the TNVAT Act. Additionally, a penalty under Section 22(5) of the Act was suggested. The Court observed that the petitioner failed to file objections within the specified timeframe, leading to conflicting statements regarding their appearance before the Assessing Officer.

The judgment delved into the legal position by referencing relevant court decisions, including cases involving similar issues of tax credit availed by dealers. The Court emphasized the need for proper verification and enquiry by the Assessing Officer, as outlined in specific guidelines from previous judgments. Liability for unpaid tax was discussed, with a focus on fixing responsibility on the selling dealer rather than the purchasing dealer, provided proof of tax payment was shown.

The petitioner's argument regarding sales returns and credit notes was examined, with the Court acknowledging the lack of submission of certain documents before the Assessing Officer. Despite this, the legal stance favored the petitioner, leading to the Court granting an opportunity for the petitioner to contest the assessment on its merits. The judgment directed the petitioner to treat the proceedings as a show cause notice, submit objections within a specified timeframe, and allowed for a personal hearing to present relevant documents for reassessment in accordance with the law. The judgment also addressed the temporary attachment of the petitioner's bank account, ensuring no withdrawal by the respondent during the process.