2018 (2) TMI 1165 - HC - VAT and Sales Tax

Reversal of input tax credit - TNVAT Act - CST Act - petitioner s case is that without even issuing show cause notice where a proposal has been made to reverse the input tax credit availed apart from demanding 50% penalty - Held that - The petitioner was given 15 days time to produce those records. This notice dated 13.09.2013 was issued after the writ petition was filed and an order of stay was granted on 16.08.2013. Therefore, the petitioner appears to have not acted in furtherance to the amended notice dated 13.09.2013. Since the respondent has himself realized the mistake and issued a modified notice, the impugned notices cannot be enforced - petition allowed.

Summary

Issues:
Challenge to impugned notices denying input tax credit and demanding penalty without proper show cause notice.

Analysis:
The petitioner, a registered dealer under TNVAT Act and CST Act, challenged notices dated 28.06.2013 from the respondent denying input tax credit for assessment years 2008-2009 to 2013-2014. The petitioner argued that no show cause notice was issued before proposing to reverse the input tax credit and demanding a 50% penalty.

The petitioner relied on a previous court decision to support their claim that as long as the purchasing dealer complies with Rule 10(2) requirements, the claim for input tax credit cannot be denied by the Department.

The Government Advocate presented written instructions showing that a notice was issued to the petitioner to produce original bills and proof of tax payment. However, the petitioner claimed not to have received such notice.

Further examination revealed that a modified notice dated 13.09.2013 was issued to the petitioner, requesting production of original invoices and proof of payment to enable further action against the seller. The petitioner was given 15 days to comply, but did not act on this notice after a stay order was granted on 16.08.2013. The Court noted that since the respondent corrected the mistake and issued a modified notice, the impugned notices could not be enforced.

Consequently, the writ petitions were allowed, impugned orders set aside, and the respondent was directed to re-issue the notice dated 13.09.2013, allowing the petitioner adequate time to produce records and objections for consideration in accordance with the law, with an opportunity for a personal hearing. No costs were awarded, and connected Miscellaneous Petitions were closed.