2017 (9) TMI 1537 - HC - VAT and Sales Tax

Levy of tax on sale value on purchase suppression found with regard to check post extract - reversal of Input Tax Credit on purchases from registration cancelled dealers - Held that - not only there is a direction to the petitioner to produce the documents and details but there is a pointed direction to the assessing authority to furnish the purchase list including supplier name, address, invoice number, sales amount, etc., to the petitioner. Further there is a direction to investigate on issuance of Form C also through Departmental Cell. The bank account of the petitioner was directed to be checked to find out payment, if any, to the dealers listed. With regard to the issue relating to reversal of Input Tax Credit, there is a direction to the petitioner to produce the tax invoices and also prove the payments made for those transaction and the assessing officer, on the strength of the invoices, was to conduct an enquiry through departmental source and to prove that on the date of invoices, the supplier was not registered. Unfortunately, the respondent ignored the directions issued and completed the assessment in a summary manner. The matter is remanded back to the respondent for fresh consideration, who shall scrupulously follow the directions issued by the appellate authority - appeal allowed by way of remand.

Summary

Issues:
Challenge to assessment orders under TNVAT Act for 2013-2014 and 2014-2015 - Levy of tax on purchase suppression and reversal of Input Tax Credit.

Analysis:

1. Levy of Tax on Purchase Suppression:
The petitioner, a registered dealer under TNVAT Act, challenged assessment orders for 2013-2014 and 2014-2015, focusing on tax levy on purchase suppression. The appellate authority had remanded the matter, directing the assessing officer to furnish purchase details, investigate Form C issuance, check the petitioner's bank account, and verify payments to suppliers. However, the assessing officer ignored these directives and completed the assessment summarily. The High Court held that the officer must comply with the appellate authority's directions meticulously. As the directions were disregarded, the impugned orders were deemed legally unsustainable. Therefore, the court set aside the orders and remanded the matter for fresh consideration, emphasizing strict adherence to the appellate authority's instructions.

2. Reversal of Input Tax Credit:
The second issue pertained to the reversal of Input Tax Credit. The appellate authority had directed the petitioner to provide tax invoices and evidence of payments to suppliers, while the assessing officer was instructed to verify supplier registration status at the time of invoicing. However, the assessing officer failed to follow these directions, leading to a flawed assessment process. The High Court emphasized the importance of complying with the appellate authority's directives and ruled that the impugned orders were unsustainable in law. Consequently, the court allowed the writ petitions, set aside the orders, and remanded the matter to the respondent for a fresh assessment. The respondent was instructed to meticulously adhere to the appellate authority's directions, provide a chance for a personal hearing, and conduct the assessment in accordance with the law.

In conclusion, the High Court's judgment highlighted the significance of strict compliance with directives issued by appellate authorities in tax assessment matters under the TNVAT Act. Failure to adhere to such directives can render assessment orders legally unsustainable, necessitating a fresh consideration of the matter in line with the prescribed procedures and instructions.