2020 (1) TMI 506 - HC - VAT and Sales Tax

Jurisdiction - powers to the authorities under TNVAT to summon documents and witnesses - Misuse of IEC Code - burden of proof - Whether the petitioner had allowed M/s. Saabari Logistics Private Limited to use the IE code or whether the IE code has been misused by M/s. Saabari Logistics Private Limited can be independently investigated by taking assistance of the customs department? HELD THAT - The TANVAT Act gave ample powers to the authorities to summon documents and witnesses and to call for information from the other Departments under Sections 81 and 82 of the Act. Similar provisions are there in the newly enacted GST Acts - The respondents are therefore directed to exercise their power under Section 81 and 82 of the TN VAT Act read with T.N. GST Act, 2017 and Central GST Act, 2017 and investigate and gather information as to whether there was indeed import by the petitioner himself or whether there was impersonation and misuse of IE Code of the petitioner as is being now projected. This exercise can be carried out by the respondents in the exercise of statutory powers vested with them. The case is remitted back for further investigation by the respondents and to pass a fresh order after completing investigation. The respondents shall endeavour to complete the investigation within a period of 12 months from the date of receipt of a copy of this order - After the conclusion of the investigation, the petitioner shall be confronted with the evidence that emanate from the investigations. The petitioner may thereafter file a reply. The respondent shall thereafter pass a speaking order after giving an opportunity of personal hearing to the petitioner within a period of 15 months from the date of receipt of a copy of this order. Appeal allowed by way of remand.

Summary

Issues:
Impugned order demanding tax due from petitioner based on information from Chennai Customs, petitioner's response to notice, VAT audit findings, misuse of IE code, criminal complaint filed, burden of proof on petitioner, arguments of both parties, investigation powers under TNVAT Act and GST Acts.

Analysis:
The High Court judgment addressed the impugned order demanding tax from the petitioner based on information from Chennai Customs regarding an import transaction. The petitioner responded stating no business activities were conducted, and no accounts were maintained. The respondent observed that the petitioner did not discharge the burden of proof regarding tax liability after a VAT audit. The petitioner obtained information under the RTI Act, alleging misuse of their IE code by another entity. A criminal complaint was filed, leading to directions for further inquiry by the police.

The petitioner relied on previous court decisions regarding mismatched information on web portals and suggested guidelines for resolving such issues. The respondent argued that the burden of proof lay on the petitioner to establish IE code misuse, requiring the filing of an FIR. The court considered both arguments and directed an independent investigation into the alleged misuse of the IE code by the customs department. The court highlighted the powers under TNVAT Act and GST Acts for summoning documents and conducting inquiries.

The impugned orders demanding tax were set aside, and the case was remitted for further investigation by the authorities. The respondents were directed to complete the investigation within 12 months and provide the petitioner with an opportunity to respond. After the investigation, a speaking order was to be passed within 15 months. The original order was set aside, and the case was remitted back to the respondent for a fresh decision post-investigation. The writ petition was disposed of with no costs incurred.