2018 (5) TMI 1652 - HC - VAT and Sales Tax

Revision of assessment - reversal of ITC - suppression of facts - Application of mind by AO - Held that - It is very rare feature that an assessing officer applies the mind to the judicial pronouncements and takes a proper decision, even at the pre-revision stage. This needs to be appreciated. However, in respect of the remaining defects, which were pointed out, the assessing officer has confirmed the proposal. If a little more effective exercise had been done by the assessing officer, there are chances that few of the other proposals could have been modified or deleted. Since the petitioner has relied upon a decision in support of the contention regarding commission received, and with regard to repairs and replacement charges, the petitioner has referred to the service tax remitted, and with regard to difference as per balance sheet and Form WW, the petitioner has furnished certain figures and stated that there is no discrepancies. The assessing officer would state in this regard that, the assessee did not produce corroborating records. If a notice had been issued to the assessee to produce corroborating documents, they could have produce the records or upon failure, adverse inference could have been drawn. Therefore, with regard to these issues, this Court is of the view that the matter can be remitted to the officer for fresh consideration. Writ petitions are disposed of by directing the petitioner to submit their objections to the impugned assessment orders by treating the same as show cause notices under the heads - Commission received; Repairs and replacement charges; and Sales suppression on sales turnover difference as per balance sheet and Form WW. Petition disposed off.

Summary

Issues:
1. Revision of assessment for multiple assessment years based on identified defects.
2. Assessing officer's consideration of objections and judicial pronouncements.
3. Jurisdictional issue regarding inspection authority under the Tamil Nadu Value Added Tax Act.

Issue 1: Revision of assessment for multiple assessment years based on identified defects
The assessing officer issued notices proposing to revise the assessment for the years 2012-13 to 2015-16, pointing out defects like ITC reversal, commission received, repairs and replacement charges, and turnover discrepancies. The petitioner submitted objections supported by records and previous court judgments. The assessing officer considered the objections, deleted some proposals based on judicial pronouncements, but confirmed others. The court noted that more thorough consideration could have led to modifications or deletions of some proposals. However, due to lack of corroborating records, the court decided to remit the matter back to the officer for fresh consideration.

Issue 2: Assessing officer's consideration of objections and judicial pronouncements
The assessing officer, in response to the petitioner's objections, deleted some proposals based on court decisions but confirmed others. The court appreciated the officer's application of judicial pronouncements but found deficiencies in the assessment process. The court noted that the petitioner relied on court decisions and provided explanations for certain discrepancies, suggesting that further examination was necessary. The court opined that the matter should be remitted to the officer for a more effective exercise of assessment.

Issue 3: Jurisdictional issue regarding inspection authority under the Tamil Nadu Value Added Tax Act
The petitioner contended that the revision of assessment lacked jurisdiction as the Joint Commissioner of Commercial Taxes did not have the authority to authorize an inspection. However, the court clarified that the inspection conducted by the Enforcement Wing was not a VAT audit as per the Act. Any officer of the Department, as per Section 65 of the Act, is entitled to call for details from the assessing officer. Therefore, the court rejected the petitioner's contention regarding jurisdiction and directed the petitioner to treat the findings as a show cause notice and respond accordingly.

In conclusion, the court disposed of the writ petitions by directing the petitioner to submit objections to the assessment orders within fifteen days, focusing on specific heads identified in the judgment. The assessing officer was instructed to afford a personal hearing, consider the documents provided by the petitioner, and redo the assessment in accordance with the law. No costs were awarded, and connected miscellaneous petitions were closed.