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2018 (3) TMI 819 - HC - VAT and Sales TaxReversal of input tax credit - assessment of escaped turnover - CST Act, 1956 - Penalty u/s 27(4) of the Act - Held that - when exercise of reassessment, was resorted, under Section 27 of the Tamil Nadu VAT, 2006, the petitioner had already paid the tax and thus, there was no redetermination of tax, after making an enquiry, as contemplated under sub-Section 1 of Section 27 of the Tamil Nadu VAT Act, 2006 - the tax has been paid, even before the reassessment, under Section 27 (2) of the TANVAT Act, 2002. Though the Assistant Commissioner (CT), assessing Officer, has imposed the penalty, under Section 27 (4) of the TANVAT Act, the same has been reversed on appeal, by the Appellate Deputy Commissioner (CT), Chennai. In Lingam and Sons Vs. State of Tamil Nadu 2009 (11) TMI 852 - MADRAS HIGH COURT on identical issue it was held that Since cheque bearing No. 697629 dated January 7, 1998 for ₹ 14,905 was given by the assessee even on January 7, 1998, levy of penalty under section 12(3) of the Act is not justified. Tax Case Revision Petitions are allowed
Issues Involved:
1. Jurisdiction of VAT Audit. 2. Wrong availment of Input Tax Credit (ITC) and its reversal. 3. Imposition of penalty under Section 27(4) of the Tamil Nadu VAT Act, 2006. 4. Legal validity of reassessment notices and orders. 5. Adherence to procedural requirements in assessment proceedings. Detailed Analysis: 1. Jurisdiction of VAT Audit: The petitioner contended that the VAT Audit was without jurisdiction as there was no authorization under Section 64(4) of the Tamil Nadu VAT Act, 2006. The Tribunal, however, upheld the audit, indicating that the audit was conducted by the Enforcement Wing Officials, who detected discrepancies in the ITC claims. The Tribunal found that the audit was valid and necessary for identifying the wrong availment of ITC. 2. Wrong Availment of Input Tax Credit (ITC) and Its Reversal: The petitioner argued that the entire ITC amount was paid at the time of VAT Audit on 28/08/2010, which should negate any claims of wrong availment or escaped turnover. The Tribunal noted that the petitioner had admitted and paid the difference in ITC during the audit, which was ?65,305. The Tribunal found that the reversal of ITC by the Assessing Officer was correct, as the wrong claim of ITC was identified during the VAT audit. 3. Imposition of Penalty under Section 27(4) of the Tamil Nadu VAT Act, 2006: The petitioner argued that the imposition of penalty under Section 27(4) was not justified as the ITC was paid before the finalization of reassessment. The Tribunal, however, upheld the penalty, stating that the wrong availment of ITC was detected during the audit, and the reversal of ITC was correctly followed by the imposition of penalty. The Tribunal emphasized that the penalty was automatic under Section 27(4) for wrong availment of ITC. 4. Legal Validity of Reassessment Notices and Orders: The petitioner challenged the reassessment notices and orders, arguing that they were without jurisdiction and that the reversal of ITC was already completed. The Tribunal found that the reassessment notices were valid and necessary for addressing the discrepancies identified during the audit. The Tribunal upheld the reassessment orders, indicating that the Assessing Officer had the jurisdiction to issue such notices under Section 27 of the Tamil Nadu VAT Act, 2006. 5. Adherence to Procedural Requirements in Assessment Proceedings: The petitioner contended that the procedural requirements were not followed, particularly the refusal to allow written submissions after the hearing. The Tribunal did not find merit in this argument, stating that the procedural requirements were adequately followed, and the petitioner was given a reasonable opportunity to present their case. Conclusion: The High Court, upon reviewing the Tribunal's decision and the arguments presented by both parties, reversed the Tribunal's decision. The Court placed reliance on previous judgments, including the cases of Chennai Textile Chemicals Private Ltd. and Lingam & Sons, which held that payment of tax before the initiation of assessment proceedings reduces the quantum of penalty. The Court concluded that since the petitioner had paid the tax before the reassessment, the imposition of penalty under Section 27(4) was not justified. Consequently, the Tax Case Revision Petitions were allowed, and the orders of the Tribunal were set aside.
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