Allowed

Tvl. Sri Renuka Electronics v. The Assistant Commissioner(Ct)

Madras HC24 Jun 2021WP/43965/2016

Case brief

AI extract

What is this about?

The High Court allowed writ petitions challenging assessment orders that reversed input tax credit. Relying on prior precedents, the Court quashed the orders and remanded the cases to the assessing officer to conduct a fresh enquiry after issuing new show-cause notices.

What did the court decide?

Impugned assessment orders set aside; matters remanded for fresh enquiry and new show-cause notices.

Tvl. Sri Renuka Electronics Vs The Assistant… — Consumer Protection | Madras HC (2021)

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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DATED : 24.06.2021

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CORAM

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THE HONOURABLE MR. JUSTICE S.M.SUBRAMANIAM W.P.Nos.43965 to 43969 of 2016

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Tvl.Sri Renuka Electronics and Furnitures, Rep. By its Proprietor, L.Ramachandran, S/o.Lakshmipathy, No.86/1, Cuddalore Road, Panruti 607 106, Cuddalore District.

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..Petitioner in W.P.Nos.43965 to 43967/16

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Tvl.Sri Lakshmi Traders, Rep.by its Proprietrix, R.Meenakshi, W/o.L.Ramachandran,29/30, Durga Illam, Cuddalore Road, Panruti-607 106.

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....Petitioner in WP.Nos.43968 & 43969/16

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Vs.

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The Assistant Commissioner (CT) (FAC), Panruti (Town), Panruti, Cuddalore District. ..Respondent in all W.Ps.

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Common Prayer: Writ Petitions filed under Article 226 of the Constitution of India, to issue a Writ of Certiorarified Mandamus, calling for the records relating to the proceedings of the respondent in TIN No.33624481781/2013-14 dated 15.03.2016, TIN No.33624481781/2014-15 dated 22.01.2016, TIN No.33624481781/2015-16 dated 31.05.2016, TIN No.33456258672/2014-15 dated 23.12.2015 and TIN No.33456258672/2015-16 dated 15.06.2016 and quash the same and consequently direct the respondent to conduct fresh enquiry and pass assessment order for the years 2013-14, 2014-15, 2015-16, 2014-15 and 2015-2016 respectively.

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(In all W.Ps.)

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For Petitioner : Mr.S.Rajasekar

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For Respondent : Mr.V.Veluchamy (Government Advocate)

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https://hcservices.ecourts.gov.in/hcservices/

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COMMON ORDER

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The assessment orders, issued by the respondent, are under challenge in the present Writ Petitions. The learned counsel appearing for the petitioner made a submission that the issues raised in these Writ Petitions were already decided by this Court in number of judgments and therefore, the Writ Petitions are to be allowed.

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2.The learned Government Counsel appearing for the respondent has not raised any serious disputes with reference to the judgments passed by this Court in connected Writ Petitions. Thus, this Court is inclined to follow the order passed by this Court on 11.02.2019 in W.P.Nos.3680 and 3683 of 2019. The relevant paragraphs of the said judgment are extracted hereunder:

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“4. The provisions of section 19(10)(a) of the Tamil Nadu Value Added Tax Act, 2006 ( in short the 'Act') read as under:

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“ The registered dealer shall not claim input tax credit until the dealer receives an original Tax Invoice duly filled, signed and issued by a registered dealer from whom the goods are purchased, containing such particulars, as may be prescribed, of the sale evidencing the amount of input tax”.

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The statutory requirement for claim of ITC is production of proof of purchases by way of original invoices from the selling dealer. In the present case, Mr.Hariharan, learned counsel for the Department, does not dispute the position that the purchasers have duly produced the original invoices from the seller.

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In such a circumstance, no reversal is liable to be made, in the absence of any further condition imposed upon the dealer in this regard.

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A learned Single Judge of this Court in the case of JKM Graphics Solutions Private Limited Vs. Commercial Tax Officer, Vepery Assessment Circle, Chennai, [2017] 99 VST (Mad), has considered an identical challenge raised by several dealers, wherein their claim for Input Tax Credit was reversed on an alleged mis-match between their returns and the returns filed by the sellers. In conclusion, the Writ Petitions were allowed in the following terms:

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Admittedly, in the instant case, there is no challenge to the statutory provisions and the complaint of all the

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https://hcservices.ecourts.gov.in/hcservices/

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dealer is largely on the procedure adopted by the respective assessing officers. The principal Secretary and Commissioner of Commercial Taxes was conscious of the problems faced by the dealers as complaints were received which had lead to issuance of a circular as early as on April 1, 2015. The directions contained in the said circular are very pointed direction, but it is sad to note that the circular remains only on paper and seldom assessing officers follow the circular resulting in several assessments being set aside by the court and remanded for denova consideration. Thus, this court is fully convinced that the procedure adopted by the respondents, 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.

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The procedure adopted under the Maharashtra VAT Act appears to be a more reasonable procedure, the Rules have been so designed to constitute independent authorities, who will in exercise jurisdiction to dispose of the objections, etc. However, this court cannot legislate nor direct the State to legislate in a particular passion and it is for the state to bring about and appropriate rules and set procedures so that when discrepancy is noted while comparing the return with that of the figures available with the Department in their web portal, there should be an exercise carried out by the Department within its level before calling upon the dealer to show cause. This can be achieved only if there is a centralised mechanism and if the present practice is allowed to prevail, it would only result in multiplicity of proceedings with more

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https://hcservices.ecourts.gov.in/hcservices/

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number of cases pending before the courts and appellate forums, thus jeopardizing the interest of revenue. Therefore, it is high time the Principal Secretary and Commissioner of Commercial Taxes in consultation with him officers lays out a detailed procedure as to how to take forward cases of mismatch, evolve a central mechanism, which can go into these aspect and furnish details in full form to the respective assessing officers, who can decide for themselves as to whether there is a case made out to call to call upon their dealer to explain. If this centralized mechanism is not put in place exclusively for such purpose, it would result in notices and orders being issued by the respective assessing officers without even the knowledge of the assessing officers of the other end dealer resultantly no action being taken against other end dealer, assuming, he is at fault. Therefore, it is high time the Department wakes up and stops the one way approach and examine the matter in a holistic manner so that the defaulting dealer is brought to books.

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Hence, for all the above reasons, all the writ petitions are allowed and the notices/orders either original or appellate or revisional are set aside and the matters are remanded to the respective assessing officers, to undertake a fresh exercise by conducting a thorough enquiry in consultation with the assessing officers of the other end dealer for which purpose the Commissioner of Commercial Taxes shall empower the assessing officers to seek information from other circles as well and in the mean time to evolve a centralized mechanism to exclusively deal with the cases of mismatch and while doing so, the Principal Commissioner shall take note of the procedures adopted by the other States, more particularly, in Maharashtra, Gujarat and Delhi and if any statutory

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https://hcservices.ecourts.gov.in/hcservices/

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amendments have to be made, make appropriate recommendations to the State Government, and till then to devise a procedure which is fair and reasonable and afford an opportunity to the dealer to put forth his case and establish that he is entitled to the concession/set-off availed.

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Since these writ petitions have been allowed and the impugned orders have been set aside and the matters have been remanded for fresh consideration the petitioners/dealers are not entitled to raise a plea of limitation, when fresh show cause notices are issued and they are directed to submit their explanation to enable the assessing officers to adjudicate their case.

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In the light of the above, this Writ Petition is allowed and the impugned order of assessment is set aside. The assessment will be re-done as indicated in the order in the case of JKM Graphics (supra) pursuant to fresh show case notice to be issued by the Assessing Authority. No costs. Consequently, connected miscellaneous petitions are closed. ”

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3.In view of the judgment cited supra, all these Writ Petitions stand allowed and the impugned orders of assessment are set aside. The assessment will be re-done as indicated in the order in the case of JKM Graphics, cited supra, pursuant to fresh show cause notice to be issued by the Assessing Authority. No costs.

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Sd/-

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Assistant Registrar(CS-VII)

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//True Copy//

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Sub Assistant Registrar

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gsa

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