2019 (1) TMI 161 - HC - VAT and Sales Tax

Reversal of input tax credit - impugned order passed without providing an opportunity of personal hearing to the petitioner - principles of natural justice - mismatch of particulars between Annexure I and Annexure II of seller and buyer end - scope of SCN - Held that - It is not in dispute that the petitioner was served with pre-revision notices dated 25.01.2018, inviting objections and the petitioner has also responded by way of reply dated 12.02.2018. This Court has perused the said pre-revision notices dated 25.01.2018. It is seen that one of the grounds raised in the pre-revision notices, as confirmed in the final impugned orders, is with regard to mismatch of particulars between Annexure I and Annexure II of seller and buyer end. But, it is seen that the show cause notice is bereft of particulars regarding the name and/or trade identification number (TIN) number of the dealer at the other hand. It is stated that cross verification of buyer and seller is made through Web. But, web report was not enclosed. In cases of mismatch, as per the Circular of the Commissioner of Commercial Taxes in Circular No.10 of 2015 dated 01.04.2015, the Assessing Officers are directed to enclose full particulars, invoice-wise, either in printed form or CD or email. It is very unfortunate that neither the Circular issued by the Commissioner of Commercial Taxes nor the procedures, which were elaborately discussed in M/S. JKM GRAPHICS SOLUTIONS PRIVATE LIMITED VERSUS THE COMMERCIAL TAX OFFICER 2017 (3) TMI 536 - MADRAS HIGH COURT , were scrupulously followed by the Assessing Officer in the present case on hand. This Court is of the view that the matter should be remanded for fresh consideration - petition allowed by way of remand.

Summary

Issues:
Challenging revised assessment orders reversing Input Tax Credit based on mismatch between Annexure I and II of seller and buyer end returns, lack of requisite particulars in pre-revision notices, failure to provide an opportunity for personal hearing, and non-compliance with Circular No.10 of 2015 and procedural guidelines.

Analysis:
The writ petitions challenge revised assessment orders by the respondent, which reversed the Input Tax Credit of the petitioner due to discrepancies in Annexure I and II of seller and buyer end returns. The petitioner, a dealer in fabrics and garments, timely filed returns for the assessment years 2011-12 to 2013-14. The respondent issued pre-revision notices on 25.01.2018, alleging mismatches without providing necessary details. The petitioner argued that the notices lacked essential particulars and were issued without a proper opportunity for a personal hearing. Despite the petitioner's detailed representation, the impugned orders were passed without due consideration, prompting the petitioner to seek relief through the writ petitions.

The respondent, represented by the Additional Government Pleader, defended the actions, stating that show cause notices were issued, and the petitioner responded with objections. After considering the petitioner's response, the respondent proceeded to pass the impugned orders on 23.03.2018, leading to the current legal challenge. Both parties presented their arguments before the court, emphasizing the procedural irregularities and lack of proper communication during the assessment process.

Upon examination, the Court noted that the pre-revision notices lacked crucial details, such as the name and TIN number of the dealer at the other end, necessary for reconciliation of mismatches. The Court referenced Circular No.10 of 2015, which mandates the inclusion of invoice-wise data in such notices for clarity and effective communication. Additionally, the Court highlighted a previous judgment outlining the proper procedure for handling mismatch cases, stressing the importance of thorough enquiry and communication between assessing officers.

Consequently, the Court found that the Assessing Officer did not adhere to the prescribed procedures and guidelines, necessitating a remand for fresh consideration. The impugned orders were set aside, and the matter was remitted back for a comprehensive inquiry in consultation with assessing officers of the other end dealer. The Court directed the respondent to issue a detailed show cause notice, including all relevant particulars and invoice-wise details, within eight weeks. The petitioner was to be granted a personal hearing before the respondent passed any further orders, ensuring compliance with legal requirements and procedural fairness.

In conclusion, the writ petitions were disposed of with the above directions, emphasizing the importance of following procedural guidelines and providing a fair opportunity for representation in tax assessment matters.