2022 (2) TMI 1117 - HC - VAT and Sales Tax

Input tax credit - It is the specific plea of the appellant that the Assessing Officer, without furnishing the list containing the details of the sales made by the appellant's vendors has concluded that there is a mismatch between the purchases reported by the appellant and the corresponding sales reported by the vendors - violation of principles of natural justice - HELD THAT - Even in the reply to the pre-assessment notices, the appellant specifically requested the Assessing Officer to furnish such a list to enable them to submit an effective representation. However, the respondent, without furnishing the list, has passed the orders dated 31.05.2016 impugned in the writ petitions, levying tax on the appellant, which are arbitrary, illegal and violative of the principles of natural justice, in the opinion of this court. However, the learned Single Judge while disposing of the writ petitions, granted liberty to the appellant to file appeals before the appellate authority. Such course adopted may be an empty formality, especially when the appellant complained of the violation of the principles of natural justice and admittedly, the required details were not furnished by Assessing officer, despite repeated demands. Therefore, on this score alone, the orders passed by the learned single Judge as well as the Assessing Officer are set aside and the matter remanded back to the respondent for fresh consideration. Appeal allowed by way of remand.

Summary

Issues:
Challenging a common order dated 19.07.2021 in W.P. Nos. 22198 to 22201 of 2016 regarding differential Value Added Tax (VAT) imposed on the sale of goods, violation of principles of natural justice, availability of alternative remedy, and the necessity of furnishing details by the Assessing Officer.

Analysis:
The appellant, engaged in the business of manufacturing and selling automobile components, availed input tax credit for assessment years 2011-12 to 2014-15. The respondent issued pre-revision notices proposing a higher VAT rate on sales to certain companies due to alleged non-production of industrial input certificates. The appellant argued that certain items were taxed at a lower rate without the need for industrial input certificates. Despite requests for details to respond effectively, the Assessing Officer passed orders imposing higher taxes based on alleged mismatches between purchases and sales without providing necessary information.

The appellant challenged the assessment orders in writ petitions before a single Judge, citing the inability to respond adequately due to lack of details provided by the Assessing Officer. However, the single Judge refused to interfere, stating the existence of an alternative remedy and dismissed the writ petitions. The appellant contended that the failure to provide essential details violated principles of natural justice, justifying recourse to Article 226 of the Constitution. The High Court found the Assessing Officer's actions arbitrary and violative of natural justice principles by not furnishing necessary details for the appellant to respond effectively.

The High Court set aside the single Judge's order and the assessment orders, remanding the matter to the respondent for fresh consideration. The court directed the respondent to provide all material documents to the appellant, allow them to submit objections, and issue a fresh order within eight weeks. The court emphasized the importance of affording the appellant a fair opportunity to respond and ensuring compliance with legal requirements. The writ appeals were allowed, and no costs were awarded, with connected miscellaneous petitions closed.