2022 (5) TMI 555 - HC - VAT and Sales Tax

Reversal of input tax credit - interstate sale - Section 19(2)(v) and 19(5)(c) of the TNVAT Act, 2006 - HELD THAT - The subsequent notice issued on 31.08.2021 was responded to by a communication dated 28.09.2021 by the petitioner stating that, he needs some more time to file further objections. However, prior to that, pursuant to the earlier show cause notice, the petitioner had already given a reply on 08.11.2017, wherein he has stated that, the only transaction which is involved does not fall under interstate purchase and therefore it does not attract input tax credit under Section 19(2)(v) and 19(5)(c) of the TNVAT Act, 2006, therefore, the proposal made in this regard through the show cause notice should be dropped. However, whether this reply given by the petitioner has been considered or not has not been mentioned in the impugned order. Therefore, on that ground, this Court feels that, the matter can be remitted back to the respondent for reconsideration. The matter is remitted back to the respondent for reconsideration - Petition allowed by way of remand.

Summary

Issues involved:
Challenge to assessment order for the assessment year 2014-15 based on interstate sale and reversal of input tax credit under TNVAT Act, 2006. Petitioner's response to show cause notice and subsequent request for more time to produce records. Consideration of petitioner's replies by Revenue in passing assessment order. Violation of principles of natural justice in assessment proceedings.

Analysis:
The judgment concerns a challenge to an assessment order for the assessment year 2014-15 under the TNVAT Act, 2006, based on an interstate sale and reversal of input tax credit. The Revenue issued a show cause notice regarding the input tax credit availed by the petitioner, alleging interstate sale. The petitioner responded to the notice, stating that the specific commodity involved in the transaction was an interstate purchase and should not attract input tax credit under relevant sections of the Act. The petitioner also requested additional time to produce relevant records. However, the Revenue proceeded to pass the assessment order on 29.10.2021, reversing the input tax credit without considering the petitioner's responses adequately.

The petitioner argued that their responses to the show cause notice, including the clarification on the interstate nature of the transaction, should have been taken into account before passing the assessment order. The Revenue contended that the petitioner did not provide a proper reply to a subsequent notice issued on 31.08.2021, where the petitioner requested more time to file objections. The Revenue claimed that since no objections were filed by the petitioner, there was no violation of natural justice in the assessment proceedings.

The Court examined the submissions from both sides and found that while the petitioner had responded to the subsequent notice requesting more time, the earlier response clarifying the nature of the transaction was not adequately considered by the Revenue in the impugned order. Therefore, the Court set aside the assessment order dated 29.10.2021 and remitted the matter back to the respondent for reconsideration. The Court directed the respondent to provide the petitioner with another opportunity to present their case, including a personal hearing, before passing a final order in accordance with the law.

In conclusion, the Court disposed of the writ petition by remitting the matter back to the respondent for reconsideration, emphasizing the importance of considering the petitioner's submissions and providing a fair opportunity for the petitioner to present their case in assessment proceedings.