Back
IN THE HIGH COURT OF JUDICATURE AT MADRAS
ANITA SUMANTH, J.
M/s. CBC Fashions (Asia) Private Limited, Rep. By its Managing Director– T.R. Vijayakumar, Tirupur – Appellant
Versus
The Assistant Commissioner [ST] [FAC] Bazaar Circle, Tirupur – Respondent
W.P. Nos. 14783, 14786, 14788, 14791, 14793, 16305, 16310, 16312 & 16315 of 2020 & W.M. P.Nos. 4945 of 2021, 18372, 18373, 18374, 18375, 18377, 18379, 18380, 18381, 18370, 18371, 20405, 20406, 20415, 20418, 20422 to 20425 of 2020
Decided On : 15-03-2023
Input Tax Credit - Commercial Taxes - Circular No.5 of 2021 - TNVAT Act, 2006 - Mismatch verification process - Movement of goods - Await decision in W.A.No.2607 of 2021 and complete assessments thereafter in light of the judgment of the Hon'ble Supreme Court in Ecom Gill Coffee Trading Private Limited and the decision of the Division Bench within a period of 12 weeks from date of pronouncement of the decision in W.A.No.2607 of 2021
Fact of the Case:
The case involved the disallowance of Input Tax Credit (ITC) due to alleged mismatch between returns filed by the petitioners and those filed by third party dealers, as well as the reversal of ITC based on allegations of no actual movement of goods.
Finding of the Court:
The court directed the re-doing of the impugned assessments in light of Circular No.5 of 2021 and the pending decision in W.A.No.2607 of 2021, setting aside the assessments and disposing of the writ petitions accordingly.
Issues: The issues included the disallowance of Input Tax Credit and the movement of goods, with specific reference to the verification process and pending decisions in related cases.
Ratio Decidendi: The court's decision was influenced by the directions in Circular No.5 of 2021 and the pending decision in W.A.No.2607 of 2021, as well as the judgment of the Hon'ble Supreme Court in Ecom Gill Coffee Trading Private Limited.
Final Decision: The impugned assessments were set aside and the writ petitions were disposed of, with a directive to await the decision in W.A.No.2607 of 2021 and complete the assessments thereafter in light of the relevant judgments.
JUDGMENT
(Prayer in W.P.No.14783 of 2020: Petition filed under Article 226 of the Constitution of India praying to issue a writ of certiorari to call for the records on the file of the respondent in his impugned proceedings made in TIN.33492425404/2008-09 dated 19.08.2020 quash the same as illegal and contrary to the directions of this Court in W.P.Nos.23015, 23025, 23028, 23032 & 23034 of 2019 dated 06.08.2019 and W.P.Nos. 23165, 23184, 23185 & 23187 of 2019 dated 08.08.2019.)
Common Order:
1. Heard the detailed submissions of Ms.R.Hemalatha, learned counsel for the petitioner in all matters and Mr.Prashanth Kiran, learned Government Advocate for the Commercial Taxes Department.
2. Both learned counsel concur on the position that the issue arising in these matters relates to (i) the disallowance of Input Tax Credit (ITC) arising out of the alleged mismatch between the returns filed by the petitioners when compared with the returns and annexures filed by the purchasing / selling third party dealers and (ii) reversal of ITC on the allegations that there has been no actual movement of goods qua the transactions in question.
3. In regard to the first issue a Bench of this Court in the case of M/s.JKM Graphics Solutions Private Limited v Commercial Tax Officer (99 VST 343) had issued certain directions for conduct of verification and assessment in such matters. While some of these directions have been complied with in the present cases, learned counsel concur on the position that there are other conditions that have been set out under Circular No.5 of 2021 dated 24.02.2021 that yet remain to be complied.
4. Hence, and in light of the discussions as aforesaid, the impugned assessments are to be re-done in light of Circular No.5 of 2021, the relevant part of which is set out hereunder:-
“3.3 Procedure to be followed in the cases of Mis-Match
3.3.1 The assessing authority who has raised the dispute of mismatch (herein after called as Original Assessing Authority) shall list out all such pending mismatch cases in respect of his/her assessment circle and report to the DC/JC as well as in the next statistics to be furnished after this circular comes into effect, for which suitable table is being prescribed and thereafter the report the progress every month.
3.3.2 The Original Assessing Authority shall undertake verification mismatch transaction report in the department intranet website (tnvat.gov.in) with reference to the data available at both the ends i.e., buyer and seller. On verification of the data, if the Original Assessing Authority could reconcile the mismatch and finds that the mismatch is due to clerical or inadvertent error the Assessing Authority shall pass appropriate orders dropping further action.
3.3.3 If the Original Assessing Authority is unable to resolve either the whole or part of the mismatch, then the Original Assessing Authority shall issue notice to the dealer concerned indicating the discrepancy with an opportunity to show cause to reconcile the same. After the receipt of reply and after due enquiry, the Original Assessing Authority finds that the seller has effected the transaction shall make a request to Other End Assessing Authority through email (zimbra mail) marking copy to the concerned DC and JC and seek for the requisite details of verification. If on enquiry Original Assessing Authority is of the view buyer has made bogus claim / wrong claim, by being involved in bill trading by producing bogus invoice, etc., the buyer shall be assessed to tax / reversal of ITC, as the case may be then the Original Assessing Authority shall pass appropriate orders in accordance with provisions of the TNVAT Act, 2006.
3.3.4 The Other End Assessing Authority shall verify the details provided to him / her with reference to the manually filed original / revised returns or by issuing show cause notice and calling for the details from the dealer. After the receipt o
The main legal point established in the judgment is the importance of complying with Circular No.5 of 2021 and awaiting pending decisions in related cases before completing assessments.
The court emphasized the importance of following the prescribed procedure for addressing mismatch issues under the Tamil Nadu Value Added Tax Act, 2006.
The importance of providing an opportunity to the assessee prior to framing assessments and the directive to follow the procedure outlined in Circular No. 5/2021 for dealing with mismatch cases.
The Assessing Authority must consider all objections and the deviation proposal in a holistic perspective before passing a speaking order of assessment on the issue relating to the claim of input tax....
Tribunal must remand for mismatch reconciliation instead of substituting appellate findings in ITC reversal cases.
Proper verification of transactions and the requirement for a match of details in claims of Input Tax Credit, as mandated by Section 42(3) of the CGST Act, are crucial for the assessment process.
The central legal point established in the judgment is the requirement to adhere to principles of natural justice in GST assessment proceedings, the consideration of Circular No.183 in addressing mis....
An assessment order must consider the relevant material placed on record by the assessee and exhibit proper application of mind; failure to do so may result in its quashing by the court.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
