2022 (5) TMI 706 - HC - VAT and Sales Tax

Validity of assessment order - production of sufficient documents or not - HELD THAT - After the remand order passed by this Court, two times opportunity was given to the petitioner and twice notices were given and both times the responses have been given by the petitioner dealer - First time, the documents sought for by the Revenue had been given. When further time was sought for especially to substantiate the movement of goods from seller to buyer, those transport documents were sought for and the same were not filed by the petitioner by stating the reason that, both buyer and seller are located in the same campus ie., sister concern and hence there was no separate movement or transportation and no separate charges had been incurred by the seller dealer or by the petitioner in transporting the goods - Only based on this stand taken by the petitioner dealer, the Revenue after having considered the said documents filed by them, has come to the conclusion, of course rightly, that this kind of goods movement between two sister concerns which are located in the same campus is nothing but a bill trading. The Revenue has come to a further conclusion that, this type of purchases / sales between group companies / related persons situated within the same premises without actual movement of goods is the typical model for bill trading activities, where there would be no bank statements, proper entries in Annexures to Form I returns and ledger accounts, the quantum of goods purchase would be sold as such in the same vehicle with a meager value addition less than 1% but there would not be actual involvement of goods at all and these type of activities enable the parties involved to circulate undue ITC among themselves and other groups - the reasoning found out, based on the records, which were produced by the petitioner dealer, in the considered opinion of this Court, cannot be said to be a conclusion arrived at without any documents. This Court has no hesitation to hold that the impugned order is fully justifiable and sustainable and there is no reason, whatsoever available before this Court to show its indulgence for interfering with the said impugned order - Petition dismissed.

Summary

Issues:
Challenge to assessment order under TNVAT Act, 2006 for AY 2016-17 - Reversal of input tax credit and penalty imposition by Revenue - Compliance with remand order - Justifiability of impugned order.

Analysis:
1. Challenge to Assessment Order: The petitioner, a dealer under the TNVAT Act, challenged the assessment order for AY 2016-17 following a surprise inspection. A previous court order set aside the assessment order, remanding the matter for reconsideration with an opportunity for the petitioner to be heard.

2. Compliance with Remand Order: The Revenue issued notices to the petitioner for various documents, including purchase invoices, bank statements, and ledger accounts. The petitioner's responses indicated a lack of movement of goods between related entities at the same premises, leading the Revenue to reverse input tax credit and impose penalties.

3. Reversal of Input Tax Credit and Penalty Imposition: The Revenue concluded that the petitioner's transactions constituted bill trading activities without actual movement of goods, circulating undue input tax credit. This led to the reversal of a significant amount of input tax credit and the imposition of penalties under relevant sections of the Act.

4. Justifiability of Impugned Order: The petitioner contended that the impugned order was vitiated as new reasons for reversing input tax credit were introduced without prior notice. However, the Court found that the petitioner had two opportunities to respond to the Revenue's requests for documents, and the reasoning behind the Revenue's decision was supported by the records provided by the petitioner.

5. Court's Decision: The Court upheld the impugned order, finding it justifiable and sustainable based on the evidence and responses provided by the petitioner. The Court emphasized that the transactions between related entities without actual movement of goods constituted bill trading, justifying the reversal of input tax credit and penalties imposed by the Revenue.

6. Conclusion: The Court dismissed the writ petition, stating that there was no reason to interfere with the impugned order. The petitioner's failure to file an appeal against the order and the merit-based arguments presented further supported the Court's decision to uphold the Revenue's actions.