2019 (5) TMI 800 - HC - VAT and Sales Tax

Adjustment of excess ITC lying towards deferred payment instalment - deferment of sales tax - non-completion of assessment due to shortage of documents as liability for the assessment year 2014-15 was not quantified - HELD THAT - While the entitlement for refund has been quantified at a particular amount in 2016, the liability for the assessment year 2014-15 has not been quantified. Unless this is quantified, the amount payable may not be due. Therefore, it is better that the assessment is completed. The writ petition is disposed of directing the petitioner to produce the documents that the department has listed out in their letter dated 23.10.2018. Upon the petitioner producing those documents, and any other document called upon, the assessment shall be completed. Thereafter, the question of refund of payment should be taken up.

Summary

Issues:
Challenge to final arrear notice under Telangana Value Added Tax Act, 2005.

Analysis:
The petitioner challenged a final arrear notice issued by the Assistant Commissioner (State Tax) under the Telangana Value Added Tax Act, 2005. The petitioner was granted deferment of sales tax for 14 years, starting from 20.08.1997 to 19.08.2011. A letter was written by the petitioner claiming an excess amount of &8377; 44,16,405/- as the excess Input Tax Credit (ITC). Subsequently, the petitioner requested adjustment of this amount towards deferred payment instalment. A refund audit was conducted, quantifying the excess ITC for the year 2013-14. The petitioner then requested payment of the refund amount, and proceedings were initiated to quantify the refund amount. However, the assessment for the year 2014-15 was still pending, as the petitioner was asked to produce additional documents which were deemed insufficient by the department. Consequently, the system generated an arrear notice based on the incomplete assessment.

The court noted that while the entitlement for refund had been quantified, the liability for the assessment year 2014-15 had not been determined. The court emphasized that unless the assessment was completed, the amount payable may not be due. Therefore, the court directed the petitioner to produce the documents listed by the department in their letter dated 23.10.2018. Once these documents were provided, and any other documents requested, the assessment would be completed, and the refund payment issue would be addressed. In light of this direction, the court set aside the impugned arrear notice. The judgment also stated that any pending miscellaneous petitions would be closed, with no order as to costs.