2017 (10) TMI 1168 - HC - VAT and Sales Tax

Zero rated sales - eligibility for exemption - Section 22 (2) of TNVAT Act - Held that - two errors have been committed by the respondent while making such observation. Firstly, the respondent did not call for any such specific document. Secondly, non furnishing of the documents before the Enforcement Wing Officials is of little avail. When the revision of assessment proceeding has been taken up by the Assessing Officer, the Assessing Officer has to independently apply his mind, and assess the turnover - These two glaring errors are sufficient to hold that the impugned assessment orders are totally unsustainable. Matter requires to be remanded to the respondent for fresh consideration - petition allowed by way of remand.

Summary

Issues:
Assessment under TNVAT Act and CST Act for a Large Tax Payers Unit, VAT Audit, claim for exemption based on zero rated sales, mismatch of details in purchasing and selling dealer records.

Analysis:
The petitioner, a registered dealer under TNVAT Act and CST Act, operating as a Large Tax Payers Unit, underwent a VAT Audit for the years 2008-09 to 2015-16. The audit revealed issues related to exemption claims for zero rated sales to SEZ and discrepancies in details between Annexure I and II of purchasing and selling dealers. The petitioner responded with documentary evidence supporting their claims and highlighted the mismatch in reporting by the selling dealer. They also requested seller invoice details for reconciliation. The respondent's assessment orders were found to be flawed as they failed to consider the furnished details adequately, leading to a violation of natural justice principles.

The respondent's errors included not calling for specific documents and disregarding the petitioner's request for information. The assessment orders were deemed unsustainable due to these lapses. The court emphasized the importance of a thorough assessment process for large tax payers like the petitioner. The matter was remanded to the respondent for fresh consideration, emphasizing the need for a detailed review of all issues, including subsidiary ones.

The court stressed the independence of the Assessing Officer in conducting assessments based on documents provided by the assessee. The assessment process was deemed not a mere formality but a detailed exercise requiring careful consideration. The impugned assessment orders were set aside, and the matters were remanded for a comprehensive reassessment. The respondent was directed to provide necessary details to the petitioner for substantiating their claims and conduct a fair assessment in accordance with the law.