2018 (3) TMI 904 - HC - VAT and Sales Tax

Maintainability of petition - reversal of input tax credit - principles of natural justice - instant writ appeal has been filed on the grounds that the writ court has ignored the settled law that the inter-state and import purchases are not taxable under the Act, which is also not disputed by the respondent - Circular No.7/2014 dated 03.02.2014. Held that - reliance placed in the decision in the case of SRC Projects Private Limited Versus Commissioner of Commercial Taxes, Chennai and another 2008 (9) TMI 914 - MADRAS HIGH COURT , where it was held that The impugned order by way of revision of assessment should not have been passed without giving the assessee an opportunity of personal hearing. But since the same has been denied, the impugned order is hereby quashed. Matter is remitted back to the Assessing Officer, to consider afresh, provide opportunity to the appellant, and pass order in accordance with law - petition allowed by way of remand.

Issues Involved:
1. Maintainability of the writ petition.
2. Alleged sales suppression and addition of gross profit.
3. Reversal of input tax credit and imposition of penalty.
4. Violation of principles of natural justice.
5. Availability and efficacy of alternative appellate remedy.

Issue-wise Detailed Analysis:

1. Maintainability of the Writ Petition:
The writ court dismissed the writ petition as not maintainable, granting liberty to the appellant to file an appeal against the impugned order by a specified date, ensuring the appeal would not be rejected on the ground of limitation. The court emphasized that the appellant should avail the appellate remedy under the Tamil Nadu Value Added Tax Act (TNVAT Act), which is both efficacious and effective, despite the pre-deposit requirement.

2. Alleged Sales Suppression and Addition of Gross Profit:
The appellant contended that the respondent treated the omission to annex details of inter-state and import purchases as sales suppression, adding 15% towards gross profit on these purchases. The appellant argued that this was unjustified since the turnover had already been disclosed as sales, and sales tax had been paid. The respondent's estimation was deemed arbitrary, especially when sales were reported, and tax was paid. The writ court noted that these factual disputes required a detailed factual analysis, which was beyond the scope of the writ petition.

3. Reversal of Input Tax Credit and Imposition of Penalty:
The appellant objected to the respondent's proposal to reverse input tax credit on local purchases from registered dealers, arguing that the turnover was not disclosed, and tax was not paid by them. The imposition of a penalty without specifying the provision was also challenged. The respondent's actions were seen as arbitrary, particularly since the sales turnover was declared, and tax was paid. The writ court held that these issues could be raised before the appellate authority.

4. Violation of Principles of Natural Justice:
The appellant argued that the respondent violated principles of natural justice by not conducting an enquiry, not calling for books of accounts, and not verifying facts before invoking Section 27 of the TNVAT Act. The writ court acknowledged the importance of adhering to natural justice principles and noted that the appellant's objections regarding the lack of a proper hearing could be addressed in the appeal process.

5. Availability and Efficacy of Alternative Appellate Remedy:
The writ court emphasized the necessity of exhausting the alternative appellate remedy available under the TNVAT Act. The court dismissed the writ petition on the grounds that disputed factual issues and the correctness of the respondent's actions should be adjudicated through the statutory appeal process, which was deemed both efficacious and effective.

Separate Judgments Delivered by Judges:
The judgment was delivered by S. Manikumar, J., with V. Bhavani Subbaroyan, J., concurring. The judgment was unanimous, and no separate judgments were delivered.

Conclusion:
The High Court set aside the impugned order and remitted the matter back to the Assessing Officer for fresh consideration, directing adherence to principles of natural justice and providing the appellant an opportunity to be heard. The court emphasized the importance of following the statutory appeal process for resolving disputed factual issues.

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