TMI Blog2017 (3) TMI 536X X X X Extracts X X X X X X X X Extracts X X X X ..... er, the dealer wise mismatch projections alone are being enclosed and no detailed information provided. It was further observed that unless invoice wise data of mismatches are provided for each dealer, the dealer under analysis will not be able to come to a conclusion as to specific transactions for which, the tax is being demanded. Not providing invoice wise data of mismatch would tantamount to violation of principles of natural justice rendering the notices to be struck down by Appellate Forums and the High Courts. The problems on account of the mismatch is a Pan India problem and to my mind, the procedure adopted under the Delhi VAT Act regime and the circulars issued under the said Act, appear to be a more transparent system and assessee friendly. This can be borne in mind by the Revenue for necessary follow up action. In the instant case, there is no challenge to the statutory provisions and the complaint of all the 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 circul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 39106/2015 and MP.Nos.1 to 1/2015 and WP.No.31205/2016 and WMP.No.27080/2016, WP.No.5130/2016 and WMP.No.4495/2016, WP.Nos.5480 5481/2016 and WMP.Nos.4825 4826/2016, WP.Nos.5686 to 5688/2016 and WMP.Nos.5030 to 5032/2016, WP.Nos.5689 5690/2016 and WMP.Nos.5033 5034/2016, WP.Nos.6044 to 6048/2016 and WMP.Nos.5364 to 5368/2015, WP.Nos.7513 to 7515/2016 and WMP.Nos.6737, 6739 6741/2016, WP.Nos.8775 to 8779/2016 and WMP.Nos.7788 to 7792/2016, WP.Nos.8765 8766/2016 and WMP.Nos.7780 7782/2016, WP.Nos.9723 to 9725/2016 and WMP.Nos.8705, 8707 8709/2016, WP.Nos.10193 to 10198/2016 and WMP.Nos.9047 to 9052/2016, WP.No.582/2016 and WMP.Nos.421 422/2016, WP.No.10653/2016 and WMP.No.9347/2016, WP.No.11070/2016 and WMP.No.9632/2016, WP.Nos.901 902/2016 and WMP.Nos.684 685/2016 and WP.No.32300/2015 and MP.No.1/2015, WP.Nos.12896 to 12898/2016 and WMP.Nos.11269, 11271 11273/2016 and WP.Nos.12899 to 12901/2016 and WMP.Nos.11274, 11275 11276/2016, WP.Nos.12690 to 12693/2016 and WMP.Nos.11079 to 11082/2016, WP.No.12364/2016 and WMP.No.10699/2016, WP.Nos.12146 to 12153/2016 and WMP.Nos.10500 to 10507/2016, WP.Nos.12079 to 12086/2016 and WMP.Nos.10449 to 10456/2016, WP.No.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case and suffice to take such of those facts, which are necessary to decide as to the correctness of the procedure, adopted by the respective Assessing Officers, while reversing the ITC availed by the dealers. 2. The reversal of ITC are at both ends, namely, at the end of the selling dealer as well as the end of the purchasing dealer. But the basis of such reversal is common to both the dealers, since the reversal has taken place, based on verification done by the respective Assessing Officers or at the direction of superior authorities, by comparing the returns filed by the purchasing/selling dealer with that of the data maintained by the Commercial Tax Department. Thus, over a period of time, the Assessing Officers through out the State of Tamil Nadu have been issuing notices, proposing to reverse the Input Tax availed by the dealers by pointing out that the returns filed by the dealers, do not match with the data maintained by the Department. Owing to large number of cases being filed raising similar issues, it turned out be called as mismatch/web report batch of cases. 3. Before I proceed into the actual controversy involved in these cases, it may be necessary to have a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmerce falling under sub-section (1) of section 8 of the Central Sales Tax Act, 1956. Central Act 74 of 1956. (vi) Agency transactions by the principal within the State in the manner as may be prescribed (3) (a) Every registered dealer, in respect of purchases of capital goods wholly for use in the course of business of taxable goods, shall be allowed input tax credit in the manner prescribed. (b) Deduction of such input tax credit shall be allowed only after the commencement of commercial production and over a period of three years in the manner as may be prescribed. After the expiry of three years, the unavailed input tax credit shall lapse to Government. (c) Input tax credit shall be allowed for the tax paid under section 12 of the Act, subject to clauses (a) and (b) of this sub-section. (4) Input tax credit shall be allowed on tax paid or payable in the State on the purchase of goods, in excess of four per cent of tax relating to such purchases subject to such conditions as may be prescribed,- (i) for transfer to a place outside the State otherwise than by way of sale; or (ii) for use in manufacture of other goods and transfer to a place outsi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 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. (b) If the original tax invoice is lost, input tax credit shall be allowed only on the basis of duplicate or carbon copy of such tax invoice obtained from the selling dealer subject to such conditions as may be prescribed. (11) In case any registered dealer fails to claim input tax credit in respect of any transaction of taxable purchase in any month, he shall make the claim before the end of the financial year or before ninety days from the date of purchase, whichever is later. (12) Where a dealer has availed credit on inputs and when the finished goods become exempt, credit availed on inputs used therein, shall be reversed. (13) Where a registered dealer without entering into a transaction of sale, issues an invoice, bill or cash memorandum to another registered dealer, with the intention to defraud the Government revenue, the assessing authority shall, after making such enquiry as it thinks fit and giving a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age or closure of business, the amount of tax availed shall be reversed on the date of stoppage or closure of such business and recovered. 7. In terms of first proviso under Section 19[1], the registered dealer who claims ITC shall establish that the tax due on purchase of goods has actually been paid in the manner by the registered dealer who sold such goods and that the goods have actually been delivered. However, the proviso under Section 19[1] were substituted by the Act 13 of 2015 w.e.f. 29.01.2016. Sub-Section 2 of Section 19 deals with circumstances under which, ITC shall be allowed for the purchase of goods made within the State. 8. Similarly, Section 19(3)(a) pertains to purchase of capital goods for use in the manufacture of taxable goods on which ITC will be allowed. The position prior to 29.01.2016 is that, in terms of Section 19[1] that there shall be ITC of the amount of tax paid or payable under the Act by the registered dealer to the seller on his purchase of taxable goods specified in the first schedule. Thus, the subsequent change brought out by the Act 13 of 2015 is by substituting the expression tax paid or payable with the expression tax paid. 9. Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the best of its judgment the turnover which has escaped assessment and assess the tax payable on such turnover after making such enquiry as it may consider necessary. (b) Where, for any reason, the whole or any part of the turnover of business of a dealer has been assessed at a rate lower than the rate at which it is assessable, the assessing authority may, at any time within a period of five years from the date of order of assessment by the assessing authority, reassess the tax due after making such enquiry as it may consider necessary. (2) Where, for any reason, the input tax credit has been availed wrongly or where any dealer produces false bills, vouchers, declaration certificate or any other documents with a view to support his claim of input tax credit or refund, the assessing authority shall, at any time, within a period of five years from the date of order of assessment, reverse input tax credit availed and determine the tax due after making such a enquiry, as it may consider necessary: Provided that no order shall be passed under sub-sections (1) and (2) without giving the dealer a reasonable opportunity to show cause against such order. (3) In mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itation for assessment or re-assessment under this section, the time during which any appeal or proceeding in respect of any assessment or re-assessment of the same or part of the turnover made under any other enactment was pending before any appellate or revisional authority or the High Court or the Supreme Court shall be excluded. 12. Section 40 prohibits any person, other than a dealer registered under the Act to collect any amount by way of tax or purporting to be by way of tax and no registered dealer shall make any such collection except in accordance with the provisions of the Act. Sub-Section 2 empowers the Assessing Officer to direct the offending registered dealer to refund the excess amount collected if done under a bonafide belief, but have collected wilfully 150% of the amount so collected. In terms of Section 63, every dealer is liable to produce the accounts to the Assessing Officer. In terms of Section 64, the dealer has to maintain an up-to-date true and correct accounts and records. This is with a view to ensure that the Assessing Officer can examine them, to verify the correctness of the returns filed and accepted by the Assessing Officer. Section 65 confers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it may consider necessary. Section 67 deals with establishment of check post or barrier and inspection of goods while in transit and gives power to the officer to make such enquiry as it deems fit. Thus, enough power has been conferred on the Assessing Officers to make an enquiry as it thinks fit or may consider necessary or as he deems fit or deems necessary. 18. Section 19 of the Act deals with Input Tax Credit, sub-section (1) states that there shall be Input Tax Credit of the amount of the tax paid or payable under the Act, by the registered dealer to the seller on his purchase of taxable goods specified in the First Schedule to the Act. Proviso states that the registered dealer who claims input tax credit, shall establish that the tax due on purchases has been paid by him in the manner prescribed. Sub-section (2) sets out for what purposes the Input Tax Credit shall be allowed. Sub-section (3) deals with circumstances under which input tax shall be allowed in respect of purchase of capital goods. Sub-section (5) to (9) set out the types of transaction, where the ITC shall not be allowed; Clause (a) of Section 19(10), states that the registered dealer shall not claim ITC, u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions 22(4), 22(5), 27(1) and 27(3). Therefore, if the selling dealer fails to pay tax, the Revenue has to proceed against the selling dealer in terms of the provisions of the Act and not deny credit to the purchasing dealer, who has fulfilled the parameters by producing the original tax invoice, filing returns and paying tax. Therefore, if the sale is not in dispute and if there are no allegations that the tax invoices are fraudulent, then the purchasing dealers are automatically entitled for credit. It is further submitted that Section 19(1) of the Act was amended by Amendment Act 13 of 2015, providing for proof of payment of tax by the vendor as condition for credit. However, this provision is prospective in effect from 29.01.2016. Further, it is submitted that when the petitioners have filed monthly returns along with required annexures, which contain the details of the purchases made as well as the sales effected, the Department compares these annexures with annexures of the seller and stating that there are discrepancies in the figures found in the two sets of annexures rejects the return of the petitioner alleging purchase suppression etc. However, before doing so, the depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and purchaser would have accounted in the subsequent months. Therefore, unless the intranet web report along with all details are furnished, the purchaser would not be in a position to reconcile the mismatch. If the details have furnished, the purchaser would be able to reconcile the mismatch and it is thereafter the Assessing Authority has to verify the books of accounts and then cross verify it with the selling dealer before completing the assessment. In this regard, the Commissioner of Commercial Taxes has issued a circular in Circular No.10 of 2015, dated 01.04.2015 and such circular should be directed to be scrupulously followed. The learned counsels relied on the following decisions to substantiate their contentions that the procedure adopted by the respective Assessing Officer to reverse the ITC without conducting an enquiry and without verification, is wholly untenable. The decisions are:- (i) State of Kerala vs. K.T.Shaduli Yusuff reported in [1977] 39 STC 478 (SC); (ii) T.M.Rajaganapathi Traders vs. Commercial Tax Officer, Salem reported in [2005] 142 STC 130 (Mad); (iii) State of Tamil Nadu vs. S.Ramanathan Ors., reported in [2010] 27 VST 198 (Mad); ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile the returns; b) when the seller has filed the returns, but has failed to disclose all the transactions or a portion of the transaction sales; c) when the seller furnishes incorrect details like incorrect TIN No., value, Tax, etc., as there is no validation in the earlier system; d) when the seller has failed to remit the tax; e) as per Section 19(11) of TNVAT Act 2006, the dealers are allowed to include purchases till the end of the financial year and on this count, mismatch occurs; f) before June-2016 though the dealers are permitted to file revised returns only in manual form and not electronically and this fact may also result in mismatch; g) when the purchasing dealer claims his transaction and ITC without making any purchases and generates the Bills only with the intention to reduce his output tax liability. 22. It is further submitted that under Section 2(n) of the Sale of Goods Act, four elements are required to constitute a valid sale, there must be a seller and a buyer; there must be an order and acceptance (invoices/mutual assent); there must be transfer of property (movement of goods from seller to buyer) and payment of consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted at the first sale within the state must be remitted with the Government. From that point onwards, every subsequent sale is though taxable, the seller will have to remit the tax on only the value added to his purchase value, provided he had paid tax at the time of purchase. It is also pertinent to mention that the seller must be a registered dealer. If in case, the tax at the point of first sale within the state is not remitted to the government, then the subsequent purchasers, who make subsequent sale will not be entitled to ITC. Therefore, when the transaction is not reported by the seller, unless the purchasing dealer establishes to the satisfaction of the assessing authority that the tax at the time of purchase has been paid and that the tax collected at the point of first sale has been deposited with the government, the purchaser will not be entitled to ITC or proportionate Input Tax Credit. It is submitted that the followings Sections are relevant to this case as Section 22, Section 19(6), Section 22(4), Section 25, Section 27, Section 19(20), Section 29. 24. It is further submitted that on perusal of the return online, the mismatch is deducted, notice is issued to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r dismissal of the Writ Petitions. 25. Heard the learned counsels appearing for the parties and perused the materials on record. 26. The revenue objects to the maintainability of the Writ Petitions on the ground that the Act provides for an effective and efficacious alternate remedy and they seek for a direction upon the dealers to avail the alternate remedy and dismiss the Writ Petitions as not maintainable. The settled legal position is that mere existence of alternate remedy would not automatically oust the jurisdiction of this Court under Article 226 of the Constitution of India. The cases have to be tested on the facts, which are available before Court and there can be no straight jacket formula. The petitioners' contention in all these Writ Petitions is on the procedural aspect which has been adopted by the respective Assessing Officers for proposing to reverse the Input Tax Credit or ordering for such reversal. It is their submission that though the statute provides for an enquiry to be done, the Assessing Officer without embarking upon such an exercise have proceeded to reverse the Input Tax Credit, solely based upon the alleged mismatch of the details furnished i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer is of the opinion that a registered dealer has acted with an intention to defraud the Government revenue, he would be entitled to deny the benefit of Input Tax Credit to such registered dealer after making such enquiry, as it thinks fit and giving a reasonable opportunity of being heard. 30. Similarly, in cases of deemed assessment under Section 22(4) of the Act, the Assessing Officer shall make such enquiry, as it may consider necessary and assess the dealer to the best of its judgment. Likewise under Section 27(1) and (2) where for any reason whole or any part of the turnover has escaped assessment, the Assessing Officer is entitled to make an assessment to the best of its judgment within the prescribed period after making such enquiry, as it considers necessary. Thus, the statute provides for a procedure to be adopted by the Assessing Officer, while denying the benefit of Input Tax Credit or while making an assessment on best of judgment basis or while making an assessment in respect of an escaped turnover. Thus, the moot question would be what is the procedure that is required to be adopted by the Assessing Officer for making such an enquiry. The statute does not prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inuous) (b) The fact of enclosing such mismatch transaction data (Invoice level) shall be clearly mentioned entered in the notice and acknowledgment receipt obtained (c) Personal hearing, if requested by the dealer shall be mandatorily ensured and a patient hearing provided to the dealer in order to understand the basis of his contentions and the same should be recorded in the assessment proceedings. (d) Orders passed thereafter must be speaking and must address every contention raised by the dealer in clear terms to ensure that the orders are fair and justified not only in appellate forum but also it is felt by the dealers, there by to which the dealer might not tend recourse. (e) The receipt of the circular should be acknowledged. 32. In the impugned proceedings, the Assessing officers have either totally ignored the directions issued in the above circular or there has been partial compliance. Therefore, when procedure which is required to be followed, has been not adhered to that would suffice to set aside the impugned proceedings with direction for denova consideration. However, since the Court has embarked upon an exercise to examine as to what would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 VST 405, Delhi, the Hon'ble Division Bench while distinguishing Mahalaxmi Cotton Ginning Pressing and Oil Industries (supra), held that in the absence of mechanism by way of which the purchasing dealer can verify, if the selling dealer has deposited tax, input tax cannot be denied to the purchasing dealer. To be noted that under the Delhi VAT Act, circulars have been issued for cross verification of the seller/purchaser returns, after the insertion of Section 9(2)(g) with effect from 01.04.2010. 36. In Gheru Lal Bal Chand vs. State of Haryana reported in [2011] 45 VST 195, (P H) the Hon'ble Division Bench of the Punjab Haryana held that while genuineness of a certificate and a declaration may be examined by a taxing authority, the onus cannot be placed on the assessee to establish the correctness and truthfulness of the statements recorded therein. The Department must allow the claims once proper declaration is furnished and the department can proceed against the defaulter, when the genuineness of the declaration is not in question. The Court distinguished the decision in the case of Mahalaxmi Cotton Ginning Pressing and Oil Industries (supra). 37. Under the Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment said to be indicated in the statement filed for the purpose of the case. The assessee succeeded before the Tribunal in Second Appeal, which deleted the revision of assessment stating that there is nothing to show that it represented turnover of sale or purchases. While testing the correctness of the decision, the Hon'ble Division Bench pointed out that if there had been any intrinsic evidence to show, however limited it may be, it seems themselves that the transaction related to sales or purchases certainly burden was on the dealer thereafter to establish that they did not relate to the transactions of the sales or purchases. Once, it is found, as a fact by the Tribunal that there was no inkling of evidence to show that the transactions related to sales or purchases, it was certainly for the department which relies on the slips for including the amounts mentioned therein in the taxable turnover to establish that the said transactions evidenced by the slips related to sales or purchases. Thus, in terms of law laid down by the Hon'ble Division Bench, the burden of proof would be on the Department, if the Department is of the view that there is material to show that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Coromandel Engineering Company Ltd., vs. The Assistant Commissioner (CT) in W.P.Nos.33118 to 33126 of 2015, dated 18.08.2016 considered the circular issued by the Commissioner, dated 01.04.2015, and held as follows:- 7. In terms of the above circular, in cases of mismatch invoice-wise data for mismatch to each demand must be mandatorily attached or to the notice either in print form or as a CD or send as email (in case it is voluminous). Further, the fact of enclosing such mismatch transaction date (Invoice level) shall be clearly mentioned entered in the notice and acknowledgment receipt obtained. Further, personal hearing has been held to be mandatorily granted and the Assessing Officer was directed to give a patient hearing to the dealer in order to understand the basis of his contentions and the same should be recorded in the assessment proceedings. Further, the circular prescribes that the order of assessment must be a speaking order and must address every contention raised by the dealer in clear terms to ensure that the orders are fair and justified not only in appellate forum but also it is felt by the dealers there by to which the dealer might not tend recourse. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ike the income-tax Department or other Departments and above all these things, further power is also granted to the authorities concerned, to rectify any error apparent on the face of the record. It is also pertinent to point out that the Legislature has thought it fit correctly to include in section 54 of the Act that an assessing authority or Commercial Tax Officer or any officer of the Commercial Tax Department not lower in the rank of Commercial Tax Officer for the purpose of this Act have all powers conferred on a court by the Code of Civil Procedure. Such a power was granted and given by the Legislature only with the intention that the authority, when deciding the factor, whether a return filed by the assessee is correct and to decide whether it is correct, all the necessary ingredients to be made available and which can be brought forward by the authority to ultimately to come to a correct conclusion that the assessment is in fact valid under law. Such wide power has been granted by the Legislature, so that such finding of fact by the first authority or latter, thus accepted or reviewed by the appellate authorities, who are also empowered to seek such further informatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration local knowledge and repute in regard to the assessee's circumstances, and his own knowledge of previous returns by and assessments of the assessee, and all other matters which he thinks will assist him in arriving at a fair and proper estimate; and though there must necessarily be guess-work in the matter, it must be honest guess-work. In that sense, too, the assessment must be to some extent arbitrary. Explaining what is best of his judgment, the Hon'ble Supreme Court pointed out that:- Judgment is a faculty to decide matters with wisdom truly and legally judgment does not depend upon the arbitrary caprice of a judge, but on settled and invariable principles of justice. Though there is an element of guess-work in a best judgment assessment. It shall not be a wild one, but shall have a reasonable nexus to the available material and the circumstances of each case. Though sub-section (2) of section 12 of the Act provides for a summary method because of the default of the assessee, it does not enable the assessing authority to function capriciously without regard for the available material. 46. Various provisions of the TNVAT Act had been referred to demon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by a dealer is accepted and an order is passed, then the Assessing Authority can only revise the return and this can be done under Sections 25 and 27 of the Act or even under Section 28. Therefore, the sanctity attached to the return filed by the dealer accompanied by proof of payment of tax and documents prescribed is far more greater, than under the TNGST regime. 47. As pointed out earlier, a deemed assessment, as the assessment under Section 22(2) of the Act is popularly called, is as good as an assessment made after scrutiny. In the absence of the Assessing Authority exercising its power either under Section 25, 27 or 28 or as a result of order in appeal or revision or by way of rectification, the return attains a finality. In such circumstances, the Department is of a prima facie view that the transaction disclosed by the purchasing dealer in the annexures accompanying his return is incorrect or does not match with the transactions reported by the selling dealer in the annexure appended to his return, this may be a starting point for the Assessing Officer to embark upon an enquiry. However, in these batch of cases all that the Assessing Officers have done is to issue show c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prior to issuance of the show cause notices, the Department has to conduct an enquiry into the matter. It is not always the case, where the selling dealer is at fault and in certain cases, the purchasing dealer could be at fault and in certain other cases both may not be at fault and it may be an inadvertent error. There is a yet another category of cases, where a mismatch occurs on account of when the dealer has reported his turnover. There may be cases of unfructified transactions, cases of loss of goods due to various force major conditions and such other matters. Therefore, every case of mismatch cannot give rise to a cause of action to revise or reopen an assessment. 50. As pointed out earlier, in cases where mismatch occurs, it is a starting point for an enquiry. The first phase of enquiry should be at the Department level, as in most cases, both the dealers are registered in different assessment circles. The Court has come across cases, where such mechanically drafted show cause notices have been sent by Assessing Officers without embarking upon any enquiry, even though the other end dealer is also registered within his jurisdiction. Thus, when the Assessing Officer has d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing dealer to seek any document from the vendor other than the tax invoice for the purchases made. Therefore, to deny benefit of set-off for the failure of the selling dealer to deposit the tax would be to impose a condition which is impossible to perform. The selling dealers are registered in the State and collect tax as agents for the State and the State has statutory powers to recover tax from a defaulting dealer by taking recourse to the coercive arm of the law, including by way of assessment, recovery, attachment and prosecution. 52. The State contended that set-off is available in respect of tax paid; tax paid means tax in actual fact paid. Set-off is a concession which has been granted by the State Legislature in order to prevent a cascading effect and while granting such concession, the Legislature is entitled to prescribe the condition of the nature provided in Section 48(5) and but for the said provision, there would have been no right to a set-off and therefore, set-off can be availed only where the tax is paid that there is no right to a set-off independent of the provisions of Section 48, the grant of a set-off is a matter of policy introduced to protect the ultimat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effect of the tax burden on the ultimate consumer. This element of legislative policy is to be balanced with the need for securing tax compliance and ensuring against a loss of legitimate revenue owing to Government. The balance between the two considerations is drawn by ensuring that while a set off is available in respect of the purchase tax paid on the same goods at an earlier stage, the set off is based on the actual payment of tax into the government treasury. Even considering the legislative history of the erstwhile VBC 36/71 wp33.12.resv provisions contained in Section 42(3) of the Bombay Sales Tax Act, 1959, it is evident that the legislative intent was not only to confine it to a case such as Century Plastics. The plain language of Section 48(5) of the MVAT Act, 2002, cannot be controlled by the Statement of objects and reasons accompanying the introduction of a Bill pertaining to a provision contained in an earlier legislation. But we have also traced the legislative history of the earlier provision as well (since it was relied upon by the Petitioner) in order to establish the fundamental precept that a set off arises out of the tax which has been deposited in the Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it as a matter of right. In the considered view of this Court, the amendment to the Act brought about by Act 13 of 2015 with effect from 29.01.2016, does not cause much impact on the controversy, which is being dealt with in these Writ Petitions, as the benefit of credit itself is a creation of the statute. 54. As explained by the Hon'ble Supreme Court, it is a concession extended to the dealer and a person, who claims such a concession has to establish that he is entitled to such concession. Such provision providing for such concession should be construed strictly, thus but for this provision under the statute, the dealer does not acquire a legal right to claim credit of the purchase tax paid and of input credit from the sales tax payable on the sale of goods manufactured by him. The entitlement to such credit flows from the statute. Therefore, the conditions to be fulfilled by the dealer to be entitled to such a credit, which is statutory in character, is mandatory. Therefore, it will be too broad principle to state that all that the dealer is required to produce along with his return, proof of payment of tax and documents required to be filed along with return and would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it would only result in multiplicity of proceedings with more 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 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 Officer 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. 57. Hence, for all the above reasons, all the Writ Petitions are allowed and the noti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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