2019 (7) TMI 1294 - HC - VAT and Sales Tax

Validity of deemed assessment - cancellation of Registration Certificates of dealers - dealers from whom writ petitioner had purchased taxable goods post-assessment year - HELD THAT - Impugned revised assessment order shall now be treated as a 'Show Cause Notice' - Writ petitioner shall send his reply/objections to the aforesaid SCN along with 15% proposed tax payable (excluding penalty) within a fortnight from the date of receipt of a copy of this order. Petition disposed off.

Summary

Issues:
Assessment under Tamil Nadu Value Added Tax Act, 2006 - Revisional notice issued for availing Input Tax Credit on purchases from canceled dealers - Validity of revised assessment order challenged - Impact of cancellation of Registration Certificates with retrospective effect.

Analysis:
The High Court of Madras heard a writ petition under the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act) where the petitioner, a registered dealer, filed monthly returns leading to deemed assessment. The respondent, after reviewing the returns, identified omissions and defects, particularly purchases from dealers with canceled Registration Certificates but with availed Input Tax Credit (ITC). A revisional notice was issued on 15.6.2015, and a revised assessment order was passed on 14.12.2017 as the petitioner did not respond. The cancellation of Registration Certificates of the selling dealers was found to be with retrospective effect from 22.2.2011, impacting the assessment year 2011-2012. The Court directed the revised assessment order to be treated as a Show Cause Notice, requiring the petitioner to respond with objections and 15% of the proposed tax payable within a fortnight. Failure to comply would result in the order reverting to a revised assessment without further court reference. If objections are submitted, a fresh revised assessment order will be issued after considering the objections. The Court disposed of the writ petition with these directions, emphasizing no costs to be awarded.

In response to the counter-affidavit and subsequent proceedings, the Court noted the discrepancy in the cancellation dates of the Registration Certificates of the dealers from whom the petitioner made purchases. The cancellation was dated 9.5.2012 but was retrospective to 22.2.2011, predating the assessment year. The Court highlighted the importance of the petitioner replying to the revisional notice to avoid the current situation. Considering the post-assessment cancellation dates, the Court converted the revised assessment order into a Show Cause Notice, requiring the petitioner to respond with objections and partial payment. The Court emphasized the need for the petitioner to comply with the specified payment and objection submission timeline to avoid reverting to the original assessment order status. Additionally, the Court directed the respondent to reevaluate the objections and issue a fresh revised assessment order if the petitioner complies. The decision was made to ensure procedural fairness and compliance with tax regulations under the TNVAT Act.