2022 (10) TMI 90 - HC - VAT and Sales Tax

Validity of assessment order - filing of return of income indicating the total taxable turnover and paid output tax after adjusting the Input Tax Credit - HELD THAT - The appellant appeared before the respondent and submitted a detailed reply along with documentary evidence. Without properly considering the same, the respondent passed the fresh assessment order dated 25.01.2022, on a different footing that the business carried by the assessee is a typical example of bill trading activity where there is no actual movement of goods at all proved by way of payment of transportation charges and loading/ unloading charges. The said order of assessment was questioned by the appellant by filing WP.No.9659 of 2022. Though the appellant / assessee raised very many grounds assailing the orders impugned in this writ appeal as well as in the writ petition, the learned counsel for the appellant submitted that in order to show their bona fide , the appellant, without prejudice to their right, has paid a sum of Rs.40 lakhs by way of demand draft dated 25.08.2022 bearing No. 370531 drawn on Yes Bank Limited, Mumbai, in favour of the Assistant Commissioner (ST) (FAC), Thiruvottiyur Assessment Circle, which was also received and acknowledged by the respondent - Conceding the payment of Rs.40,00,000/- made by the appellant / assessee, the learned Government Advocate (Taxes) appearing for the respondent submitted that the respondent is now inclined to grant one more opportunity to the appellant to produce the available documentary evidence to substantiate their claim and thereafter, pass orders, on merits. This court, without going into the merits of the orders impugned herein as well as in the writ petition, sets aside the same and remands the matter to the respondent for fresh consideration. The appellant is directed to produce all the required documents to the respondent / assessing officer within a period of four weeks from the date of receipt of a copy of this judgment - On receipt of the documents, the respondent shall consider the same and pass appropriate orders, on merits and in accordance with law, after affording an opportunity of being heard to the appellant, as expeditiously as possible. Appeal disposed off.

Summary

Issues involved:
1. Validity of the assessment order under the TNVAT Act and CST Act for the assessment year 2016-2017.
2. Consideration of documentary evidence and submissions by the appellant in response to the assessment.
3. Allegations of bill trading activity and lack of actual movement of goods between related parties.
4. Dismissal of the writ petition by the learned Judge and appeal against the same.
5. Payment of Rs.40 lakhs by the appellant and the decision of the respondent to grant another opportunity for producing documentary evidence.

Detailed Analysis:
1. The appellant, a registered dealer under the TNVAT Act and CST Act engaged in the manufacture of iron and steel, challenged the assessment order for the assessment year 2016-2017. The initial assessment was set aside, and upon fresh consideration, a new assessment order was passed based on allegations of bill trading activity due to perceived lack of actual movement of goods, specifically between related parties located in the same premises. The appellant contested this assessment through a writ petition (WP.No.9659 of 2022).

2. The learned Judge dismissed the writ petition, citing the appellant's failure to provide transport documents to substantiate goods movement between the related parties. The Judge noted that the majority of purchases were from a sister concern located in the same premises, leading to the conclusion of bill trading activity. The Judge found the assessment order justifiable based on the documents produced by the appellant, emphasizing the lack of actual goods movement and the circulation of undue Input Tax Credit (ITC) among related parties.

3. The appellant then filed a writ appeal challenging the dismissal of the writ petition. During the appeal, the appellant, without prejudice to their rights, paid Rs.40 lakhs and requested an opportunity to produce additional relevant materials to support their claim. The respondent agreed to grant the appellant another chance to submit documentary evidence for fresh consideration.

4. Consequently, the High Court set aside the previous orders and remanded the matter to the respondent for reevaluation. The appellant was directed to provide all necessary documents within four weeks. Failure to comply within the stipulated time would result in the restoration of the previous assessment order. The Court emphasized that no adjournments would be permitted for document submission and instructed the respondent to pass appropriate orders promptly after reviewing the evidence.

5. The writ appeal was disposed of with no costs, and the connected miscellaneous petitions were closed. The judgment focused on the need for the appellant to present comprehensive documentary evidence to address the concerns raised in the assessment, ensuring a fair and thorough reconsideration of the matter by the respondent.