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2016 (6) TMI 987 - HC - VAT and Sales TaxRestriction in input tax credit - deduction of input tax in excess of 2% of the tax - KAT - returns were to be discarded and the re-assessment was to be undertaken - Held that - It is hardly required to be stated that even if the return of the assessee is discarded resulting in a process of re-assessment, the Assessing Officer further needs to examine the permissibility of the input credit and if permitted, then to what extent. While considering the said aspects, the Assessing Officer had to also examine as to whether a claim be submitted including restricted claim, if any, deserved to be accepted or not. It is a different matter that for valid reasons, he may discard such a restricted claim too. But in any case, it was obligatory on his part to record the reasons. Order set aside - Matter remanded back.
Issues:
1. Revision of assessment order regarding input tax credit percentage. 2. Lack of reasons recorded by the revisional authority. 3. Compliance with legal requirements for recording reasons in quasi-judicial matters. Analysis: Issue 1: Revision of assessment order regarding input tax credit percentage The appeals were directed against an order passed by the Addl. Commissioner of Commercial Taxes, setting aside the order of the first appellate authority and ordering re-assessment due to discrepancies in input tax credit. The appellant initially claimed 4% input tax credit instead of 3%, leading to a series of filings and appeals. The revisional authority ultimately passed the impugned orders on 30/11/2015, prompting the appeals before the High Court. Issue 2: Lack of reasons recorded by the revisional authority The principal contention raised was the absence of reasons recorded by the revisional authority to justify restricting the input tax credit to 2% or 4%. The appellant argued that the revisional authority failed to provide any rationale for its decision, contrasting with previous cases where reasons were crucial. The revisional authority's reproduction of the appellant's reply in the order did not suffice as proper justification, as it lacked detailed discussion on the crucial aspects of the matter. Issue 3: Compliance with legal requirements for recording reasons in quasi-judicial matters The High Court emphasized the necessity of recording reasons, especially in quasi-judicial matters like revision proceedings. It was highlighted that even in cases of re-assessment, the Assessing Officer must examine the permissibility of input credit and provide detailed reasoning for the decision. Failure to record reasons on vital aspects led the High Court to set aside the impugned order and direct the revisional authority to reconsider the matter, ensuring compliance with legal requirements and affording the appellant an opportunity to be heard. In conclusion, the High Court allowed the appeals, set aside the impugned order, and directed the revisional authority to reevaluate the matter with proper reasons and in accordance with the law, within a specified timeframe.
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