2023 (8) TMI 1312 - HC - VAT and Sales Tax

Refund of Input Tax Credit - stock transfer of Gold Bullion - invocation of revision under Section 32(2) of the VAT Act - HELD THAT - The reasons for seeking to revise the concluded assessment must be expressly stated in the show cause notice. The revisional authority cannot initiate proceedings with a view to start a fishing and roving enquiry and cannot be permitted to begin fresh litigation because of new views he may entertain on facts or new versions as to what should be the inference or proper inference either on facts disclosed or the weight of the circumstances. Merely because the view expressed by the assessing authority is not acceptable to the revisional authority would not render the assessment order to be prejudicial to the interests of revenue. It is true that a revisional order passed under Section 32(2) of the VAT Act is an appealable one under Section 33(1) of the VAT Act. However, as already noted above, the present writ petition was admitted on 07.09.2021 with an interim order. Having admitted the writ petition, it would not be justified to non suit the petitioner on the ground of availability of alternative remedy at the stage of hearing - the law is well settled that notwithstanding availability of alternative remedy, a petition under Article 226 of the Constitution of India would well be entertainable, provided the aggrieved person makes out a case of violation of the principles of natural justice, when there is a challenge to vires of a statute, when there is violation of fundamental rights or an order is without jurisdiction or in excess of jurisdiction. There was no material before respondent No. 3 to come to the definite conclusion that petitioner had transferred the purchased gold bullion from Hyderabad to its manufacturing unit at Kolkata and thereafter had exported the manufactured gold jewellery from Kolkata on the basis of purchase orders - Since respondent No. 3 had taken the view that petitioner had not furnished details of the manufacturers with their addresses and the quantity of gold sent for manufacturing as per specific designs of the foreign buyers etc., it would be appropriate to remand the matter back to the file of the revisional authority for a fresh decision in accordance with law with liberty to the petitioner to produce evidence to support its contention. Petition allowed by way of remand.

Issues Involved:

1. Legality and validity of the order dated 07.12.2020 passed by the Joint Commissioner (CT), Abids Division, Hyderabad.
2. Legality and validity of the consequential order dated 29.12.2020 passed by respondent No. 4.
3. Justification of revision proceedings under Section 32(2) of the VAT Act.
4. Availability and adequacy of alternative remedy.
5. Interpretation of the petitioner's business operations and eligibility for Input Tax Credit (ITC).

Summary:

Issue 1: Legality and Validity of the Order Dated 07.12.2020

The petitioner, a proprietary concern engaged in the business of gold and gold jewellery, challenged the order dated 07.12.2020 by the Joint Commissioner (CT), Abids Division, Hyderabad. The petitioner claimed that the gold bullion purchased locally in Hyderabad was used to manufacture gold jewellery, which was then exported from Kolkata airport. The Joint Commissioner, however, concluded that the petitioner was operating its business from its branch in Kolkata and rejected the ITC claim, stating that the local purchase of raw gold was a stock transfer to Kolkata, thus revising the assessment order.

Issue 2: Legality and Validity of the Consequential Order Dated 29.12.2020

Following the rejection of ITC by the Joint Commissioner, respondent No. 4 passed an effectual order on 29.12.2020 disallowing the entire ITC amount. The petitioner contested this order as well, arguing that it was based on a misinterpretation of their business operations and lacked substantial evidence.

Issue 3: Justification of Revision Proceedings under Section 32(2) of the VAT Act

The court examined the revision proceedings initiated under Section 32(2) of the VAT Act. It was noted that the Deputy Commissioner had issued a show cause notice based on the interpretation that the petitioner was transferring gold bullion to Kolkata for manufacturing and export, which was considered a stock transfer. However, the court found the statement made by the petitioner on 03.04.2017 to be vague and not necessarily supporting the Deputy Commissioner's inference.

Issue 4: Availability and Adequacy of Alternative Remedy

While the respondents argued that the petitioner had an adequate alternative remedy of appeal under Section 33(1) of the VAT Act, the court decided to entertain the writ petition. The court noted that the writ petition was admitted with an interim order and emphasized that in cases of violation of principles of natural justice or orders without jurisdiction, a writ petition under Article 226 of the Constitution of India is maintainable.

Issue 5: Interpretation of the Petitioner's Business Operations and Eligibility for ITC

The court scrutinized the petitioner's statement and the show cause notice, finding that the Deputy Commissioner's interpretation might not be accurate. The court determined that there was no substantial evidence to conclude that the petitioner transferred gold bullion to Kolkata for manufacturing and export. Consequently, the court set aside the impugned order dated 07.12.2020 and remanded the matter back to the revisional authority for a fresh decision, allowing the petitioner to furnish additional evidence.

Conclusion:

The writ petition was allowed to the extent indicated, with the impugned orders dated 07.12.2020 and 29.12.2020 set aside. The matter was remanded back to the revisional authority for a fresh decision in accordance with law, providing the petitioner an opportunity to present all relevant details and evidence.

← Previous Next →