2021 (4) TMI 1132 - HC - VAT and Sales Tax

Validity of assessment order - random selection for detailed scrutiny under Section 22(3) of the Act coupled with an inspection conducted by the Enforcement Wing Officials - inter-State sales being treated as local sales for the reason that in the C Form Declaration produced by the appellant and issued by the purchasing dealer, the seal of the check post was not available - reversal of the input tax credit under Section 19(5)(c) of the Act to the tune of ₹ 54,09,521/- on the ground that though the check post seal was available to prove the movement of goods, no Form C Declaration was produced by the appellant - difference noticed on stock reconciliation during inspection. Stock difference - HELD THAT - Liberty granted to the appellant to file an appeal on the said issue before the Appellate Deputy Commissioner (CT) (North), Chennai-6. Form C Declarations are available, but do not contain the seal of the check post - HELD THAT - If the Assessing Officer is of the opinion that such Form C Declarations are defective, the same can be returned to the appellant. Of-course, the appellant cannot now procure the seal from the check post. But, the appellant can establish the genuineness of the transaction and movement of goods if one opportunity is granted. Where the check post seal is not available - HELD THAT - The Assessing Officer can make a departmental verification, as, at the relevant point of time, they were stated to have been computerized and the Assessing Officer can make due verification and the appellant can be directed to produce other contemporaneous documents to substantiate their plea. However, to avail such an opportunity, this Court is of the view that the appellant should be put on terms. The writ appeal is partly allowed and part matter on remand.

Summary

Issues involved:
1. Whether the writ petition challenging the assessment order under the Tamil Nadu Value Added Tax Act, 2006 can be entertained despite the availability of an alternate remedy.
2. Whether the assessment order dated 26.2.2016 for the year 2014-15 was correct, specifically regarding the treatment of inter-State sales as local sales, reversal of input tax credit, and stock difference issues.

Analysis:
Issue 1:
The High Court considered whether the writ petition challenging the assessment order could be entertained despite the availability of an alternate remedy under the Act. The Court noted exceptions to the general rule that the assessee should exhaust statutory remedies, including cases of jurisdictional errors, violations of natural justice, and perverse findings. The Court emphasized that when a writ petition has been pending for a considerable time, it may be unfair to relegate the assessee to the appellate forum, especially when challenges to assessments have been pending for years. In this case, the Court found that the writ petition had been pending for over 4½ years with an interim stay order and the respondent had contested the matter on merits. Therefore, the Court concluded that exceptional circumstances existed to entertain the writ petition.

Issue 2:
Regarding the assessment order dated 26.2.2016, the Court addressed three main issues raised by the assessee. Firstly, the treatment of inter-State sales as local sales due to missing seal on C Form Declarations. Secondly, the reversal of input tax credit based on the absence of Form C Declarations despite the availability of check post seals. Thirdly, discrepancies in stock reconciliation leading to a tax levy. The Court found the third issue to be factual and granted the appellant time to appeal before the Appellate Deputy Commissioner. For the other two issues, the Court directed the appellant to pay 10% of the disputed tax and approach the Assessing Officer with necessary documents to support their claims. The Court provided specific directions for each issue, allowing the appellant to avail opportunities to rectify the discrepancies and challenge the assessment order effectively.

In conclusion, the High Court partially allowed the writ appeal, granting specific directions for each issue raised in the assessment order, ensuring the appellant's right to appeal and present evidence to support their claims.