2020 (6) TMI 681 - HC - VAT and Sales Tax

Levy of VAT - 4% on the invisible loss at 5% of yarn purchase and on the sales of cutting waste and rejected export garments at 0.5% - HELD THAT - Since the assessment orders are relating to the years 2006-07 and 2007-08, the respondent / Assessing Officer shall decide the issue afresh, after issuing show cause notices to the petitioner clearly setting out the circumstances under which they propose to revise or call upon the petitioner to reverse refund sanctioned and after receiving their objections. Such notices be issued by the respondent within a period of four weeks from the date of receipt of a copy of this order. On receipt of such notices, the petitioner shall submit their objections along with the required documents, if any, within a period of two weeks thereafter. Petition allowed.

Summary

Issues:
Challenge to assessment orders dated 16.05.2012 for the assessment years 2006-07 and 2007-08.

Analysis:
The petitioner challenged the orders passed by the respondent, which rejected the request to drop the proposal levying tax on specific items. The respondent, in response, stated that excess refund was obtained due to defects found during a visit to the petitioner's place of business. The assessment orders were passed based on this, and the respondent argued that they were in line with the relevant provisions of the Act.

During the hearing, the petitioner's counsel cited a previous court decision to support their case. The court held that the Assessing Authorities cannot adopt a uniform percentage for invisible loss and reverse input tax credit without proper justification. The court set aside all notices issued for reopening and reversing input tax credit, granting liberty to the Assessing Officer to issue appropriate show cause notices and proceed in accordance with the law.

The respondent's counsel agreed with the petitioner's submissions, leading to the court setting aside the impugned orders dated 16.05.2012. The court directed the Assessing Officer to decide the issue afresh for the years 2006-07 and 2007-08, after issuing show cause notices, receiving objections, and passing appropriate orders within specified timelines.

In conclusion, both writ petitions were allowed, the impugned orders were set aside, and the Assessing Officer was directed to reconsider the issue after following due process. No costs were awarded, and the connected miscellaneous petitions were closed.