2021 (1) TMI 308 - HC - VAT and Sales Tax

Demand of differential amount of tax due with interest and penalty - validity of procedure adopted under the Maharastra VAT Act - Reversal of ITC - reopening of assessments - HELD THAT - Reliance placed in M/S. JKM GRAPHICS SOLUTIONS PRIVATE LIMITED VERSUS THE COMMERCIAL TAX OFFICER 2017 (3) TMI 536 - MADRAS HIGH COURT and after analyzing in detail the rival contentions raised by parties and referring to the earlier decisions governing the issue, it has been held that this Court is fully convinced that the procedure adopted by the respondent, Assessing Officers in all these cases are half baked attempts, which have not yielded results and these cases are before this Court or before the Appellate Authorities and all that the Assessing Officers can record is that they have issued show cause notices or passed orders reversing the Input Tax Credit with no appreciable impact on the revenue collection. The impugned order, which cannot be sustained, is set aside - The concerned assessing officer shall issue fresh show cause notice with all required details in respect of levy of tax for mismatch invoices and the Petitioner shall be entitled to submit his explanation within the prescribed time - Petition disposed off.

Summary

Issues:
1. Challenge to Notice regarding sales transactions and tax liability for the year 2009-2010.
2. Legal position on mismatch of tax invoices and procedures to be followed by tax authorities.

Analysis:
1. The Writ Petition challenges a Notice issued by the Respondent regarding the verification of sales transactions of the Petitioner during the year 2009-2010, claiming payment of the differential amount of tax due with interest and penalty. The Petitioner's Counsel referred to a previous judgment by the Court in a similar matter, emphasizing the need for a centralized mechanism to handle cases of mismatch to avoid multiplicity of proceedings and ensure a fair process for dealers to explain discrepancies. The Court set aside the impugned order and directed the assessing officer to issue a fresh show cause notice with all required details, allowing the Petitioner to submit an explanation within the prescribed time without raising any plea of limitation. The assessing officer was instructed to afford the Petitioner an opportunity of hearing, pass reasoned orders on the contentions raised, and communicate the decision in writing.

2. The Court highlighted the legal position on mismatch of tax invoices and the procedures to be followed by tax authorities. Referring to a circular issued by the Commissioner of Sales Tax, the Court emphasized the need for a systematic approach when dealing with cases involving mismatch of Input Tax Credit (ITC) and other issues. The circular provided detailed instructions for assessing authorities to follow when discrepancies are identified, including the process for finalizing assessments, maintaining lists of cases involving mismatches, and expediting the resolution of pending proposals. The Court stressed the importance of adhering to the prescribed procedures, ensuring a fair and reasonable process for dealers to address discrepancies and avail necessary concessions or set-offs. The judgment underscored the significance of a centralized mechanism and collaboration among assessing officers to effectively handle cases of mismatch and uphold the interests of revenue.

Overall, the judgment addressed the challenges faced by dealers in tax assessments due to discrepancies in sales transactions and emphasized the need for a structured approach by tax authorities to handle cases of mismatch effectively and fairly.