2017 (10) TMI 607 - HC - VAT and Sales Tax

Reversal of ITC - stock transfer of goods covered by Form F - TNVAT Act - Held that - The Court took into consideration the amendment to the TNAVT Act, 2006 by notification in G.O.(Ms)No.18, Commercial Taxes and Registration (B1) Department, dated 29.01.2016 whereby a separate column was given in Annexure 12 for Stock Transfer/Consignment sales without Form F Section 19(2). This having not been brought to the Assessing Officer, the Court sets aside the reversal of Input Tax Credit reversal for Stock Transfer covered by Form F and remanded the matter to the respondent for fresh consideration. With regard to the levy of penalty is concerned, it is seen that the entire turnover has been culled out from the books of accounts and the petitioner has been called upon to furnish the details which the petitioner has promptly complied with - it has to be seen as to whether it is a case where penalty could have been imposed under Section 27(4) of the Act. There is no allegation that the petitioner has wilfully failed to disclose the assessable turnover or the conduct of the dealer was contemporaneous with an intent to develop the revenue or to somehow avoid payment of tax. Unless these ingredients are established, the question of levy of penalty does not arise. Therefore, to that extent, this Court is fully convinced that the levy of penalty under Section 27(4) is not conferred. The matter is remanded to the respondent for fresh consideration with a direction to call upon the petitioner to appear in person and explain the incongruity of the transaction and after obtaining the explanation, the respondent is directed to redo the assessment in accordance with law - appeal allowed by way of remand.

Summary

Issues:
Challenging assessment orders under Tamil Nadu Value Added Tax Act, 2006 for years 2010-2011 to 2013-2014, reversal of Input Tax Credit for stock transfer covered by Form F, remand for fresh consideration, imposition of penalty, assessment for year 2014-2015, and levy of penalty under Section 27(4) of the Act.

Analysis:
The petitioner, a registered dealer under the Tamil Nadu Value Added Tax Act, challenged assessment orders for 2010-2011 to 2013-2014. The Assistant Commissioner accepted the petitioner's stand on stock transfer of goods for 2013-2014 but not for other years. The Court previously set aside the reversal of Input Tax Credit for stock transfer and remanded the matter due to a notification amendment not being considered by the Assessing Officer.

The respondent conducted a fact-finding exercise after remand, requesting details and statements from the petitioner. Despite efforts made by the respondent to guide the petitioner in providing correct details, the assessment orders were passed stating the petitioner failed to establish claims beyond doubt. The Court noted the respondent could have called for clarifications in person to avoid issues in assessment.

An order from a subsequent year, 2014-2015, where the Assistant Commissioner accepted the petitioner's stand on Input Tax Credit reversal, was highlighted. The Court emphasized the need for the respondent to consider this while re-evaluating the petitioner's case.

Regarding the levy of penalty, the turnover was derived from the books of accounts, and the petitioner complied with requests for details. The Court reiterated that after a previous order setting aside the penalty, there was no proposal for penalty imposition. It was emphasized that for penalty under Section 27(4) to apply, specific criteria such as willful non-disclosure of assessable turnover must be met, which was not the case here. Thus, the Court concluded that the penalty levy was not justified.

In conclusion, the Court allowed the writ petitions, setting aside the impugned orders and remanding the matter for fresh consideration. The respondent was directed to call the petitioner for explanations and redo the assessment. The penalty levy was fully set aside, and no fresh penalty proceedings could be initiated on remand.