2022 (8) TMI 59 - HC - VAT and Sales Tax

Revision of assessment regarding to stock variation - reversal of ITC - Levy of tax and penalty - Suppression of facts or not - HELD THAT - Considering the submission and perusal of the materials, it is seen that the Department Enforcement Wing conducted VAT audit on 19.01.2015 and at that time found various violations, collected documents, pre-revision notice issued on 14.12.2016. Thereafter, reply received from the petitioner on several days. In the meanwhile, revision notice issued on 01.12.2019 and thereafter reply received and personal hearing given to the petitioner on 13.12.2019. After issuance of revision notice, the petitioner's objections considered. Thereafter, proposal to reverse ITC dropped, as regards stock variations since no records produced. The second respondent passed the impugned order. This Court does not express any opinion on the merits of the case, if the petitioner intends to approach the appellate authority to file an appeal under Section 51 of TNVAT Act. Appeal to be filed within a period of 30 days from the day of receipt of copy of this order - Petition dismissed.

Summary

Issues:
Impugned assessment order regarding stock variation and tax imposition, sustainability of the order, adherence to circulars, delay in filing writ petition, applicability of judgments, proper procedure followed by the respondent, availability of records, petitioner's right to appeal.

Analysis:

1. The petitioner, a Director of a company, challenged an assessment order by the second respondent imposing tax and penalty for the year 2014-2015 based on stock variation. The petitioner contended that returns were filed on time, and the original assessment order accepted the returns. However, a VAT audit revealed discrepancies, leading to a pre-revision notice and the impugned order. The petitioner argued that the order was non-speaking and unsustainable.

2. The petitioner raised objections with documentary evidence, disputing the allegations, especially regarding input tax credit (ITC) and export of goods. The successor officer issued the impugned order, confirming the tax levy on alleged stock difference and penalty, despite the petitioner's objections. The petitioner also highlighted a circular stating that predecessor proposals cannot be confirmed without fresh notice.

3. The petitioner cited various judgments emphasizing fairness in decision-making and the need for proper verification before levying taxes based on stock variation. The Government Advocate argued that proper procedures were followed, objections were considered, and ineligible ITC was dropped. The respondent noted the petitioner's failure to provide stock registers despite multiple representations.

4. The Court observed the timeline of events, including VAT audit, notices, replies, and personal hearing. It noted that while ITC reversal proposal was dropped due to objections, the lack of records led to the confirmation of tax on stock variation. The Court directed the petitioner to appeal under Section 51 of the TNVAT Act within 30 days, as approaching the Court had caused a delay.

5. The Court clarified that the cited judgments were not directly applicable to the case's facts. It dismissed the writ petition but directed the appellate authority to consider the petitioner's appeal despite the delay caused by approaching the Court. The Court emphasized the importance of following proper procedures and timelines in tax assessment matters.

This detailed analysis covers the issues raised in the judgment, including the assessment process, adherence to circulars, availability of records, and the petitioner's right to appeal, providing a comprehensive understanding of the legal proceedings and the Court's decision.