2022 (9) TMI 733 - HC - VAT and Sales Tax

Validity of assessment order - reversal of Input Tax Credit (ITC) - Allegation is that annexures-I II accompanying the returns filed by the selling dealers do not correspond to the e-return filed by the petitioner for the month of April, 2015 - HELD THAT - The impugned order of assessment insofar, as it relates to reversal of ITC of an amount of Rs.43,755/- alone, is set aside to be re-done in light of the procedure stipulated under Circular No.5/2021, dated 24.02.2021. The petitioner shall be called upon for a hearing, the details culled by the Department shall be furnished to the petitioner, their reply/response solicited and an order of assessment de novo on this issue passed within a period of four (4) weeks from date of issue of this order - Petition disposed off.

Summary

Issues:
Challenge to assessment order under Tamil Nadu Value Added Taxes Act, 2006 focusing on reversal of Input Tax Credit (ITC).

Analysis:
The judgment concerns an assessment order under the Tamil Nadu Value Added Taxes Act, 2006, specifically addressing the reversal of Input Tax Credit (ITC). The petitioner contested the order, emphasizing the issue of ITC reversal. Despite the petitioner providing copies of Form-I returns from selling dealers, the ITC reversal was upheld due to discrepancies between the annexures accompanying the returns and the petitioner's e-return for April 2015. Importantly, the petitioner was not provided with details of the mismatch nor given an opportunity to be heard.

Regarding the mismatch issue, Circular No.5/2021 dated 24.02.2021 issued by the Principal Secretary/Commissioner of Commercial Taxes outlines a procedure for resolving such discrepancies. The Circular mandates the Original Assessing Authority to list pending mismatch cases, verify data on the department intranet website, and issue notices to dealers to reconcile discrepancies. If the mismatch persists, the Original Assessing Authority can request details from the Other End Assessing Authority. The Circular emphasizes granting the dealer a fair hearing and completing the process within 180 days.

Consequently, the High Court set aside the assessment order concerning the ITC reversal of Rs.43,755, directing a re-assessment following the Circular's procedure. The petitioner is to be given a hearing, provided with department findings, allowed to respond, and a new assessment order on the ITC issue must be issued within four weeks. The Writ Petition was disposed of with no costs, and the connected Miscellaneous Petition was closed.