2019 (9) TMI 421 - HC - VAT and Sales Tax

Principles of Natural Justice - reversal of Input Credit - TNVAT Act, 2006 - the main ground argued is that the detailed objections filed by the petitioner on 17.11.2014 and 21.01.2015, both filed along with voluminous annexures, have not been considered by the Assessing Officer - HELD THAT - In the present case, there is no dispute with the position that the primary details in support of the petitioners' claim of ITC as required under Rule 10(2) of the Rules, have been produced by the petitioner and are part of the record. In such a situation, there is no justification for the Assessing Authority, to have arbitrarily reversed the claim of ITC. No doubt, the Assessing Officer is empowered to reverse a claim of ITC, but only if he is in a position to establish that the claim was incorrect. In the present case, the reversal of the claim of ITC is based on materials allegedly collected from the departmental website that have, admitted nor been supplied to the petitioner despite its requests. It has thus been denied an opportunity to peruse or rebut the same - In such circumstances, the addition made on this score is set aside - the issue is remitted to the file of the Assessing Officer to be redone afresh after providing all material sought to be relied upon to the petitioner, and affording it an opportunity of personal hearing. Alleged difference between the purchase turnover in the monthly returns filed by the petitioner and its profit and loss accounts - HELD THAT - The petitioner has placed, for the perusal of the Assessing Authority, the details of such freight charges as well as discounts at pages 15 to 24 of the compilation of papers. Though the proposal on this account has been confirmed, there is nothing in the operative portion of the order of Assessment to indicate that the material supplied by the assessee has been perused or analysed in proper perspective - issue remitted to the file of the Assessing Officer for consideration in the light of the materials already available on record. Certain incomes received by the assessee in relation to its operations with AMWAY - HELD THAT - There are no findings whatsoever in relation to this issue in the context of the material filed by the assessee or its submissions, that find place in the impugned order - this matter also remitted for reconsideration. Addition of estimated turnover towards deletion of assets as condemned articles - HELD THAT - This position has also not been taken into consideration by the Assessing Authority, who simply estimates the turnover on the assumption that the assets have been sold in the relevant periods, despite specific assertions of the petitioner to the contrary - This issue is also set aside and remitted to the file of the Assessing Officer. Penalty - HELD THAT - A perusal of the impugned order indicates patently that the Assessing Authority has not applied his mind to the materials furnished by the petitioner and as such, the orders of Assessment are vitiated by lack of application of mind and lack of consideration of relevant particulars that form part of records of the Assessing Officer. Thus, all orders of assessment are set aside - penalties also set aside. Petition disposed off by way of remand.

Summary

Issues:
1. Assailment of four assessment orders under the Tamil Nadu Value Added Tax Act, 2006.
2. Reversal of Income Tax Credit (ITC) without considering detailed objections.
3. Alleged difference in purchase turnover and profit and loss accounts.
4. Taxability of income received from operations with AMWAY.
5. Addition of estimated turnover towards deletion of condemned assets.

Issue 1:
The judgment concerns the challenge to four assessment orders under the Tamil Nadu Value Added Tax Act, 2006. The petitioner contested the assessments primarily on the grounds that the detailed objections submitted were not adequately considered by the Assessing Officer. The court noted that the objections and annexures formed part of the assessment records, confirming their existence. The Assessing Officer's failure to consider these objections led to the assessments being questioned.

Issue 2:
The first common issue addressed in the assessments was the reversal of Income Tax Credit (ITC) based on alleged mismatches in the petitioner's returns and data from the commercial taxes department website. Despite the petitioner providing supporting details such as purchase bills and ledger accounts, the Assessing Officer proceeded with the reversal without furnishing the requested information. Citing a previous case, the court emphasized that the reversal of ITC without proper justification or supplying relevant materials for rebuttal was incorrect. The court highlighted the necessity for the Assessing Officer to provide supporting materials to the assessee for response and remitted the issue back for reconsideration.

Issue 3:
Another issue involved a difference in the purchase turnover reported in the petitioner's monthly returns and profit and loss accounts, attributed to freight charges and discounts. Although the petitioner submitted details supporting these claims, the Assessing Officer's order did not reflect a thorough analysis of the materials provided. Consequently, the court directed a reconsideration of this issue by the Assessing Officer based on the existing record.

Issue 4:
Regarding the taxability of income received from operations with AMWAY, the petitioner argued that such income should not be considered turnover under the Act due to an agreement with AMWAY. However, the Assessing Officer's order lacked findings on this issue, prompting the court to remit it for further consideration along with additional evidence presented.

Issue 5:
The final issue pertained to the addition of estimated turnover towards deleting condemned assets. The petitioner contended that the assets, though written off, were reflected in the balance sheet as idle stock until sold in 2015. The Assessing Officer's estimation of turnover without considering the petitioner's assertions led to the court setting aside this issue for reassessment based on specific criteria.

Overall, the judgment highlighted the Assessing Officer's failure to consider the materials provided by the petitioner, leading to a lack of application of mind in the assessment orders. Consequently, all orders of assessment were set aside, along with the penalty levied. The petitioner was directed to appear before the Assessing Authority with supporting materials for a fresh assessment within a specified timeframe.