2020 (4) TMI 148 - HC - Service Tax

Reversal of input tax credit - implementation of Inspections and VAT audit proposals - circular bearing No.3/209 (Q1/39643/2018) dated 18.01.2019 - HELD THAT - This Court is inclined to set aside the notices impugned herein and are accordingly set aside and these writ petition stand allowed - The matters are remitted back to the respondent, who in turn, shall act strictly in accordance with the aforesaid order passed by this Court as well as the instructions given by the Commissioner of State Tax, vide circular dated 18.01.2019. Petition allowed by way of remand.

Summary

Issues:
Challenging notices proposing reversal of input tax credit and levy of tax and penalty for assessment years 2007-08 and 2008-09.

Analysis:
The petitioner challenged notices issued by the respondent regarding the assessment years 2007-08 and 2008-09, proposing to reverse the input tax credit claimed and levy tax with penalty. During the hearing, both parties referred to a previous decision by the court in JKM Graphics Solutions Private Limited v. Commercial Tax Officer, where the court allowed the writ petitions and remanded the matters for fresh consideration. The court directed the Assessing Officers to conduct a thorough enquiry, consult with other officers, and evolve a centralized mechanism to deal with cases of mismatch. The court also mentioned a circular issued by the Commissioner of State Tax regarding the implementation of inspections and VAT audit proposals, emphasizing the need to keep cases involving mismatch of input tax credit pending until a mechanism is developed.

The court, considering the previous order and the circular, set aside the impugned notices and allowed the writ petitions. The matters were remitted back to the respondent with directions to act in accordance with the court's order and the instructions from the Commissioner of State Tax. The court concluded by closing the connected miscellaneous petitions without imposing any costs.