2017 (2) TMI 705 - HC - VAT and Sales Tax

Natural justice - valuation - no physical verification of the stock was done, and therefore, no reconciliation was carried out, as between what was reflected in the books of accounts - Held that - The respondent is directed to re-hear the petitioner on this aspect of the matter, but before he does that, he would furnish the material/information available with him, which forms the basis for the enhancement - matter on remand.

Summary

Issues Involved:
Challenge to assessment order for Assessment Year 2010-2011, discrepancy in stock valuation, reversal of Input Tax Credit on Hiring Charges, lack of notice of enhancement in stock variation values.

Analysis:

Issue 1: Challenge to Assessment Order
The petitioner challenged the assessment order dated 26.10.2016 for the Assessment Year 2010-2011. The petitioner's business premises were inspected on multiple dates leading to the generation of an inspection report. The respondent issued a notice for revising the assessment based on the inspection report. The petitioner filed objections to the notice, explaining the stock discrepancy. However, the respondent confirmed the revision proposal, leading to the petitioner challenging the order in a writ petition.

Issue 2: Lack of Opportunity
The High Court noted that in the previous round of litigation, the order confirming the revision proposal was set aside as the petitioner was not given an opportunity to represent its case. The matter was remitted to the respondent with directions to allow the petitioner to explain its stand and submit additional documents. Despite the petitioner filing objections and relevant documents, the respondent once again confirmed the revision proposal.

Issue 3: Reversal of Input Tax Credit
The respondent reversed the Input Tax Credit on Hiring Charges amounting to ?1,00,811 based on the rejection of the petitioner's appeal before the Deputy Commissioner. This reversal was a point of contention in the writ petition filed by the petitioner.

Issue 4: Lack of Notice of Enhancement
The petitioner specifically challenged the enhancement of stock variation values from ?4,29,39,009 to ?7,35,54,579 without any notice of enhancement being provided. The High Court questioned the validity of such enhancement without prior notice to the petitioner. The respondent admitted that enhancing stock variation values without notice was not tenable.

In conclusion, the High Court set aside the impugned order to the extent that it enhanced the stock variation values. The respondent was directed to re-hear the petitioner, provide the material forming the basis for enhancement, allow the petitioner to file objections, and conduct a personal hearing before passing a fresh order. The writ petition was disposed of accordingly, with pending applications closed and no order as to costs.