2022 (11) TMI 398 - HC - VAT and Sales Tax

Validity of assessment order - mismatch between the purchasing and selling dealer - ITC claimed by the purchaser does not match with the output tax due paid/payable by the seller - Mismatch of purchase/ sales transactions resulting in purchase and/or sales suppression - Mismatch of transactions because of a dealer whose registration To anolem certificate has been cancelled - HELD THAT - After referring to the verification to be undertaken by the Assessing Authorities in regard to the materials in his possession, the Assessing Authority is required to issue notice along with all details connected to the assessment and seek objections from the assessee concerned. Thereafter, a personal hearing shall be afforded, either physically or virtually, granting adequate opportunity to the dealer to put forth its objections. The Circular also envisages a request of the assessee for cross examination of the third party dealer and provides for such an opportunity of cross examination to be granted suo motu, if the Assessing Authority believes that it would be so appropriate. The assessment will thereafter be concluded within a period of 180 days from date of issue of show cause notice. Let this procedure be followed in the present matter as well. Show cause notice, as indicated in the Circular will be issued to the petitioner within a period of four (4) weeks from today with all necessary enclosures. The assessments will be completed thereafter within a period of 180 days, in accordance with law, after hearing the petitioner - It is made clear that if the amount volunteered as per affidavit dated 11.10.2022 is not so remitted within the time stipulated as above, then it shall be as though the impugned order has not been interfered with, and the same shall stand confirmed. Writ petition disposed off.

Summary

Issues:
Challenge to assessment order under Tamil Nadu Value Added Tax Act, 2006 for the period 2011-12. Procedure to address mismatch cases under TNVAT Act.

Analysis:
1. Challenge to Assessment Order: The petitioner challenged an assessment order dated 20.07.2021 under the Tamil Nadu Value Added Tax Act, 2006 for the period 2011-12. The petitioner sought to set aside the assessment order and volunteered to pay 15% of the disputed tax. The Government Advocate had no objection to this request. The court granted a period of four weeks for the petitioner to make the payment, and upon receipt, the assessment order would be set aside.

2. Mismatch Cases Procedure: The judgment highlighted the issue of mismatch cases that have troubled assessees and the Commercial Taxes Department. Referring to a Circular No.5/2021 issued on 24.02.2021, the court outlined a detailed procedure to address mismatch cases under the TNVAT Act. The Circular emphasized the need for a mechanism to reconcile mismatches between purchasing and selling dealers, categorizing mismatches and reasons for such discrepancies. It also outlined steps for assessing authorities to follow, including verification, issuing notices, conducting hearings, and completing assessments within 180 days.

3. Verification and Assessment Process: The Circular specified that assessing authorities must verify mismatch transactions, reconcile discrepancies due to clerical errors, and issue notices to dealers for explanations. If discrepancies persist, a conciliatory approach should be taken. The Circular also allowed for cross-examination of third-party dealers if necessary. Assessments were to be concluded within 180 days from the date of issuing show cause notices, ensuring a timely resolution of mismatch cases.

4. Compliance and Consequences: The judgment mandated compliance with the Circular's procedures, directing the assessing authority to issue a show cause notice to the petitioner within four weeks. Failure to remit the volunteered amount within the stipulated time would result in the confirmation of the assessment order. The court emphasized adherence to the Circular's guidelines for a fair and efficient resolution of the petitioner's case.

5. Disposition: The Writ Petition challenging the assessment order was disposed of, with no costs imposed. The judgment underscored the importance of following the prescribed procedures outlined in the Circular to address mismatch cases effectively and ensure a just resolution within a specified timeline.