2020 (11) TMI 721 - HC - VAT and Sales Tax

Reversal of ITC - reopening of assessment - Payment of the differential amount of tax due and penalty - HELD THAT - Similar issue decided in the case of M/S. JKM GRAPHICS SOLUTIONS PRIVATE LIMITED VERSUS THE COMMERCIAL TAX OFFICER 2017 (3) TMI 536 - MADRAS HIGH COURT where it was held that In the instant case, there is no challenge to the statutory provisions and the complaint of all the dealer is largely on the procedure adopted by the respective Assessing Officers. The Principal Secretary and Commissioner of Commercial Taxes was conscious of the problems faced by the dealers as complaints were received which had lead to issuance of a circular as early as on 01.04.2015. The concerned assessing officer shall issue fresh show cause notice with all required details in respect of levy of tax for mismatch invoices and the Petitioner shall be entitled to submit its explanation within the prescribed time - impugned order set aside - petition allowed.

Summary

Issues:
Challenge to order on verification of transactions and tax liability, legality of the procedure followed by the tax department, issuance of fresh show cause notice, opportunity to explain mismatch invoices, plea of limitation.

Analysis:
The Writ Petition challenges an order passed by the Respondent regarding the verification of transactions during a specific year and claiming payment of the differential amount of tax due along with penalty. The Petitioner's Counsel referred to a previous judgment by the Court in a similar matter which emphasized the need for a centralized mechanism to deal with discrepancies, avoiding multiplicity of proceedings and ensuring fairness. Following this ruling, the Commissioner of Sales Tax issued detailed instructions to be followed by the authorities under the Act. These instructions cover various scenarios involving mismatch of Input Tax Credit (ITC) and other issues, emphasizing the need for a systematic approach and timely resolution of pending cases.

The Court, considering the legal position and the previous ruling, set aside the impugned order as it could not be sustained. The assessing officer is directed to issue a fresh show cause notice with all necessary details regarding the levy of tax for mismatch invoices. The Petitioner is granted the opportunity to submit an explanation within the prescribed time without the right to raise a plea of limitation. The assessing officer is mandated to follow the prescribed procedure, provide a hearing to the Petitioner, pass reasoned orders addressing all contentions raised, and communicate the decision taken in writing.

In conclusion, the Writ Petition is disposed of based on the terms mentioned above, and the connected miscellaneous petition is closed without any costs. The judgment highlights the importance of a fair and systematic approach in dealing with tax discrepancies, ensuring that taxpayers are given a proper opportunity to explain their positions and that decisions are made in accordance with the law.