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2021 (4) TMI 1282 - MADRAS HIGH COURTValidity of pre-revision notices issued by the respondent - it is alleged that Assessing Officer failed to take note of the specific direction issued by the Commissioner of Commercial Taxes in Circular dated 04.11.2013, as to how the operation of Section 19(20) of the Act should be adopted - vires of Section 19(20) of TNVAT Act - HELD THAT:- The substantial portion of the contention advanced by the appellants were accepted and found favour with the learned Writ Court. However, ultimately, the learned Writ Court sustained the objection raised by the learned Additional Government Pleader and directed the assessee to submit their objections, after the Assessing Officer issued a supplemental show cause notice. The correctness of this direction is called in question. In the instant case, the pre-revision notices were triggered on account of the inspection conducted by the Enforcement Wing. As pointed out by the learned Writ Court, this can be at best cause of action to reopen the assessment by invoking power under Section 27 of the Act, but while issuing pre-revision notices, assessee cannot straightaway make a proposal for ad-hoc reversal of the input tax credit, when the appellant assessee would state that they have got sufficient records to prove that no such reversal can be done, much less ad-hoc reversal on input tax credit. Therefore, the appropriate procedure that should have been followed by the respondent Assessing Officer, on receipt of the proposal by the enforcement wing, is to issue a notice to the assessee to produce all records to examine as to whether there has been any huge accumulation of input tax credit on account of lesser sale price than purchase price. This required to be mandatorily done by the Assessing Officer in the light of the Circular dated 04.11.2013. The circular instructions cannot bind the assessee, but it binds the Assessing Officer, who is the subordinate authority in the hierarchy of authority in the Commercial Tax Department. Therefore, the pre-revision notices straightaway proposing the ad-hoc reversal is not sustainable in law. The pre-revision notices are set aside and these matters are remanded to the respondent. The respondent is directed to issue a show cause notice to the appellant directing them to produce all their books of accounts and other records to examine them in the light of the direction issued in the Circular, dated 04.11.2013 and ascertain as to whether there is any accumulation of input tax credit on account of lesser sale price than the purchase price - Appeal allowed by way of remand.
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