2022 (1) TMI 806 - HC - VAT and Sales Tax

Input tax credit - Validity of assessment order - sale of goods without payment of tax on the strength of which the purchasing dealers availed Input Tax Credit under Section 19 of the Tamil Nadu Value Added Tax Act, 2006 - HELD THAT - It is noticed that the Principal Secretary/Commissioner of Commercial Taxes has issued the Circular No.05 of 2021, LW10/12521/2016 dated 24.02.2021. It has spelt out the manner in which the issue has to be addressed and the Input Tax Credit availed has to be reconciled on the strength of the information gathered from the website of the Government. Admittedly, in this case the respondent has not followed the procedure prescribed therein. Considering the same, the impugned Assessment Order is quashed by remitting back the case to the respondent to pass a speaking order in terms of the above-said circular/guidelines of the Principal Secretary/Commissioner of Commercial Taxes - petition allowed by way of remand.

Summary

Issues:
Challenge to Assessment Order for AY 2015-2016, Sale of goods without tax payment causing revenue loss, Sale of exempted goods, Request for copies of bills/invoices, Allegation of fraudulent availment of Input Tax Credit, Alternate remedy before Appellate Commissioner, Guidelines for mismatch in Input Tax Credit, Quashing of Assessment Order, Remitting case for speaking order, Furnishing details of invoices, Timeframe for response.

Analysis:
The petitioner challenged the Assessment Order for the Assessment Year 2015-2016, alleging that the respondent accused them of selling goods without tax payment, leading to Input Tax Credit for purchasing dealers and revenue loss. The petitioner contended that they dealt in exempted goods, Paddy and Rice, as per the TNVAT Act, and thus did not charge or pay tax. They requested copies of bills and invoices to provide a proper reply. Despite this, the Assessment Order was passed without direct evidence of taxable goods sales by the petitioner for Input Tax Credit availment.

The respondent argued that the petitioner had an alternate remedy before the Appellate Commissioner under the TNVAT Act. The petitioner, in response, cited guidelines laid down by the Principal Secretary/Commissioner of Commercial Taxes regarding the mismatch in Input Tax Credit. The Court noted that the Circular issued by the Principal Secretary outlined the procedure for addressing such issues, which was not followed by the respondent in this case.

Upon review, the Court decided to quash the Assessment Order and remit the case back to the respondent for a speaking order in accordance with the Circular's guidelines. The respondent was directed to provide details of the invoices allegedly issued by the petitioner within thirty days for a fresh reply from the petitioner within the same timeframe. The entire process was to be completed within ninety days from the date of the Court's order. The Writ Petition was disposed of with these directions, and no costs were awarded.