2019 (3) TMI 342 - HC - VAT and Sales Tax

Principles of natural justice - revision of earlier deemed assessment without considering the objections raised by the petitioner in accordance with law - purchases effected by the petitioner were duly reported to the respondent - case of petitioner is that the respondent is to initiate action against the other end seller for not reporting the sales effected by them to the respondent. Held that - It is not in dispute that the petitioner who is the purchaser of the goods has reported to the respondent the details of the purchases from the seller, who has not reported the sale to the respondent. Copies of invoices relating to the purchase made by the petitioner were also submitted to the respondent The decision relied upon by the learned counsel for the petitioner, in the case of Assistant Commissioner (CT), Presently Thiruverkadu Assessment Circle, Kolathur, Chennai Vs. Infiniti Wholesale Limited 2016 (9) TMI 1431 - MADRAS HIGH COURT is squarely applicable to the facts of the instant case. In the said judgment it has been held that if the sales effected through the writ petitioner from dealer are not disclosed by the other end seller either in the form of return filed monthly or the tax collected from the writ petitioner/dealer is not made over to the department by such seller, action lies only against such a defaulting seller but not against the purchaser. In the instant case also the error, is not attributable to the petitioner who is the purchaser who has claimed Input Tax Credit (I.T.C.) based upon the invoice generated by seller. The genuineness of the purchase is also not disputed by the respondent. The matter is remanded back to the respondent for fresh consideration and the respondent is directed to afford sufficient opportunity to the petitioner including the right of personal hearing - petition allowed by way of remand.

Summary

Issues:
Challenge to order revising assessment under Section 27 of TNVAT Act, 2006 without considering objections raised by petitioner.

Analysis:
The petitioner challenged an order passed by the respondent revising the deemed assessment under Section 27 of the TNVAT Act, 2006 without considering objections raised. The petitioner contended that purchases were duly reported to the respondent, and although copies of invoices from the seller were provided, the assessment was revised. The petitioner argued that the respondent should take action against the seller for not reporting sales. A detailed reply with records was submitted to the respondent, but it was allegedly not considered in the impugned order. The petitioner sought to quash the order based on these grounds.

The petitioner's counsel highlighted that objections raised were not considered by the respondent in the impugned order. Reference was made to a Division Bench judgment which emphasized that action should be taken against defaulting sellers, not purchasers, in cases where sales are not disclosed. The petitioner maintained that being a purchaser, providing seller invoices, they were not at fault, and any action should be against the seller. The respondent argued that the petitioner should have pursued an appellate remedy under Section 51 of the TNVAT Act before approaching the court under Article 226 of the Constitution of India.

The court noted that the petitioner reported purchases to the respondent, and invoices were submitted, but the seller did not report the sales. Citing the Division Bench judgment, the court held that action should be against the defaulting seller, not the purchaser claiming Input Tax Credit. The court found the petitioner not liable for the seller's non-reporting of sales and quashed the impugned assessment order. The matter was remanded back to the respondent for fresh consideration, with directions to provide the petitioner an opportunity for a personal hearing and pass a final order within four weeks.

In conclusion, the court quashed the impugned order and remanded the matter for fresh consideration, emphasizing the purchaser's non-liability for the seller's actions. The court directed the respondent to reevaluate the matter in accordance with the law and provide the petitioner with a fair opportunity for a hearing.