2019 (1) TMI 363 - HC - VAT and Sales Tax

Principles of Natural Justice - case of petitioner is that the impugned orders of assessment were passed without considering the objections raised by the petitioner - ITC reversal as per annual scrutiny cross verification report - ITC reversal on exempted sales - Held that - Though the Assessing Officer extracted the whole reply in the assessment orders, has however, not dealt with in detail with his independent reasoning and finding as to how those objections raised by the petitioner are not sustainable. On the other hand, the Assessing Officer, simply rejected the objections by stating that copies of purchase invoices were not filed by the petitioner - this Court is of the view that the Assessing Officer can consider the matter afresh, more particularly, under the circumstances that the assessment orders came to be passed, without hearing the petitioner, by the new Assessing Officer, since the earlier personal hearing given was by the previous Officer - petition allowed by way of remand.

Summary

Issues:
Challenging assessment orders for assessment years 2009-10 to 2013-14 - ITC reversal as per annual scrutiny cross verification report and ITC reversal on exempted sales.

Analysis:
The writ petitions were filed challenging assessment orders for the assessment years 2009-10 to 2013-14, specifically focusing on two issues - ITC reversal as per annual scrutiny cross verification report and ITC reversal on exempted sales. The petitioner did not dispute their liability on other issues determined by the Assessing Officer. The petitioner contended that the Assessing Officer did not consider detailed objections raised by them on the disputed issues and passed the assessment orders without providing reasoning or findings on those objections.

The petitioner argued that they should not be held liable for tax if other dealers did not report all sales and tax amounts, especially when the petitioner had valid purchase invoices to claim Input Tax Credit (ITC). The petitioner claimed that a personal hearing with the new Assessing Officer could have clarified the factual inaccuracies in the findings related to the two disputed issues. On the contrary, the Additional Government Pleader for the respondent stated that the assessment orders were passed after considering the objections raised by the petitioner and providing a personal hearing, thus asserting that the petitioner had no grounds for grievance.

After hearing both sides, the High Court observed that the dispute between the parties was limited to the two issues of ITC reversal as per annual scrutiny cross verification report and ITC reversal on exempted sales. While the petitioner had responded to the proposal notice with detailed replies, the Assessing Officer failed to provide independent reasoning and findings on why the objections raised by the petitioner were not sustainable. The Court acknowledged the petitioner's argument that they should not be penalized for discrepancies in reporting by other dealers when they possessed valid purchase invoices.

Consequently, the High Court allowed the writ petitions, setting aside the assessment orders concerning the two disputed issues. The matter was remitted back to the Assessing Officer for reassessment on those issues, with a directive to conduct a fresh assessment after affording the petitioner a due opportunity for a hearing. The Assessing Officer was instructed to complete this reassessment within six weeks from the date of receiving the court order, with no costs imposed. As a result, the connected miscellaneous petitions were closed.