2016 (12) TMI 257 - HC - VAT and Sales Tax

Validity of assessment order - the petitioner did not respond to the pre-revision notice and did not file any objections, assessment order passed by respondent - Held that - As pointed out there were four issues arise for consideration. With regard to the first issue i.e., The Tax Deduction at Source, the respondent can very well verify the statements given by the Corporation of Chennai and take a fresh decision. So far issue No.2, Deemed Sales, the petitioner has given an explanation, which has not been specifically dealt with in the impugned order. With regard to the remaining two issues, i.e., Difference in the purchase turnover and Disallowance of ITC claimed on the purchases made from the unregistered dealers, the respondent has not furnished any particulars to enable the petitioner to submit an effective reply. The invoice details, name of the dealers and name of the registered dealers etc., have to be furnished, since these details have been culled out by the respondent from the official records / website. The impugned orders call for interference. Accordingly, these Writ Petitions are allowed and the impugned orders are set-aside and the matters are remanded to the respondent for fresh consideration - appeal allowed by way of remand.

Summary

Issues:
Assessment revision under TNVAT Act based on VAT Audit - Four main issues raised: TDS not deducted from Sub Contractor, Deemed sales and tax on Actual Gross Profit, Difference in purchase turnover, Disallowance of ITC from unregistered dealers - Penalty proposed - Petitioner's objections not initially filed - Assessment completed by respondent - Appeals partly allowed, matter remanded - Fresh notice issued for objections - Petitioner submitted objections with proof of payment - Personal hearing granted but assessment completed without considering objections - Dispute regarding petitioner's appearance for hearing - Insufficient opportunity for petitioner to present case - Lack of specific details provided by respondent for certain issues - Court intervention sought to set aside orders and remand for fresh consideration.

Analysis:

The judgment concerns a case where a registered dealer was issued notices for revision of assessment under the TNVAT Act based on a VAT Audit, highlighting four key issues: failure to deduct TDS from Sub Contractor, taxation on Actual Gross Profit, discrepancies in purchase turnover, and disallowance of ITC from unregistered dealers, with a penalty proposed. The petitioner did not initially respond to the notice, leading to the completion of assessment by the respondent. Appeals were partially allowed, prompting a remand for fresh consideration. Subsequently, the respondent issued notices for objections, which the petitioner submitted along with proof of payment. Despite a personal hearing being granted, the assessment was finalized without considering the objections, leading to a dispute over the petitioner's appearance during the hearing.

The court noted discrepancies in the respondent's findings, particularly regarding the petitioner's non-appearance for the hearing and the adequacy of evidence provided. The petitioner contended that relevant documents proving tax deductions were submitted, emphasizing the lack of opportunity to present their case effectively. The judgment highlighted the need for the respondent to verify statements from the Corporation of Chennai and provide specific details for the issues raised, such as purchase turnover differences and ITC disallowances from unregistered dealers, which were not adequately addressed in the impugned orders.

Consequently, the court allowed the writ petitions, setting aside the orders and remanding the matters to the respondent for fresh consideration. The respondent was directed to furnish detailed information on the outstanding issues within 15 days, allowing the petitioner to submit objections thereafter. A personal hearing, document review, and reassessment were mandated, emphasizing the importance of providing a fair opportunity for the petitioner to present their case. No costs were awarded, and the connected petitions were closed, ensuring a comprehensive review of the assessment process in line with legal requirements.