2022 (12) TMI 45 - HC - VAT and Sales Tax

Input tax credit - cancellation of license of three dealers - Registration / license of supplier dealers have been cancelled - HELD THAT - There was a dispute about the cancellation of the license of only 3 dealers, but all the transactions made by the petitioner with 17 dealers have been cancelled. No inquiry has been conducted as to whether those dealers had paid tax or not for which the petitioner claimed the input tax rebate. It is also important to note that so far as the purchase made from M/s. Abhishek Sales Industries is concerned, his license was cancelled on 27.8.2008 whereas the petitioner purchased the item on 18.5.2008 and 17.5.2008 i.e. much before purchases. So far as purchases from M/s. Bhawani Trading Co. is concerned, his licence was cancelled on 29.2.2008 and the petitioner purchased the coriander on 30.6.2008. No inquiry has been conducted as to whether the petitioner had any knowledge about the cancellation of their license at the time of purchase. All the sales were made within the Mandi premises. The license of M/s. Abhishek Sales Industries and M/s. Santosh Brothers were cancelled after the purchase was made by the petitioner. Due to the cancellation of the license of these 3 dealers, the respondents disbelieved all the 17 transactions and disallowed the benefit of input tax rebate to the petitioner. Therefore, the manner in which the impugned order dated 23.6.2011 has been passed, no stamp of approval can be given in these wit petitions. The orders dated 23.6.2011 and 29.11.2012 are liable to be quashed and the matter is liable to be remanded back to the Assessing Authority to pass a fresh order after conducting a detailed inquiry - Petition allowed by way of remand.

Summary

Issues involved:
Challenge to orders rejecting input tax rebate under M.P. VAT Act, imposition of penalty, alternative remedy of second appeal, cancellation of dealers' registration affecting rebate claim, validity of assessment orders under Central Sales Tax Act and M.P. Entry Tax Act.

Analysis:
1. The petitioner, a registered dealer under the M.P. VAT Act, claimed input tax rebate on purchases of Coriander made from various dealers. The Assessing Authority rejected the rebate, leading to an appeal dismissed by the appellate authority with penalties imposed. The petitioner challenged these orders.

2. The respondents contended that the dealers' registrations were canceled before purchases, rendering rebate claims invalid. The authority disallowed the rebate due to unverified payments. Similar actions were taken under the Central Sales Tax Act and M.P. Entry Tax Act, resulting in dismissed appeals.

3. The High Court noted discrepancies in the assessment orders, highlighting the cursory nature of the decisions. Lack of inquiry into dealers' tax payments and timing of license cancellations in relation to purchases raised doubts. The court emphasized the need for detailed investigations before disallowing rebate claims.

4. Specifically, the court pointed out instances where the petitioner's purchases preceded the cancellation of dealers' licenses, questioning the authority's blanket disapproval of all transactions. It was deemed unfair to penalize the petitioner without establishing knowledge of license cancellations at the time of purchase.

5. Consequently, the court allowed the writ petitions, quashing the impugned orders and remanding the matter for a fresh assessment after a thorough inquiry. The decision aimed to ensure a fair evaluation of the rebate claims and address the procedural shortcomings in the initial orders.

This detailed analysis of the judgment provides a comprehensive understanding of the issues raised, the arguments presented by both parties, and the court's reasoning leading to the final decision in favor of the petitioner.