M/S.A.V.Thomas Leather And v. The Assistant Commissioner

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED : 06.06.2016

CORAM

THE HONOURABLE Mr. JUSTICE T.S.SIVAGNANAM W.P.Nos.13673 to 13678 of 2015 and M.P.Nos.1 to 1 of 2015 M/s.A.V.Thomas Leather and Allied Products Pvt.Ltd Rep by H.M.A. Hussai - Authorised Signatory No.22, Marshalls Road, Egmore, Chennai 600 008 .. Petitioner in all WPs ..Vs..

The Assistant Commissioner (CT) Egmore Assessment Circle, No.88, Mayor Ramanathan Road, Chetpet, Chennai 600 031 .. Respondent in all WPs Prayer in W.P.No.13673 of 2015: Writ Petition filed under Article 226 of the Constitution of India, praying to issue a Writ of Certiorari to call for the records in TIN 33360440128/2007-08 and quash the proceedings dated 27.03.2015 in so far as the reversal of ITC of Rs.59,65,677/- is concerned.

Prayer in W.P.No.13674 of 2015: Writ Petition filed under Article 226 of the Constitution of India, praying to issue a Writ of Certiorari to call for the records in TIN 33360440128/2008-09 and quash the proceedings dated 27.03.2015 in so far as the reversal of ITC of Rs.40,48,201/- is concerned.

Prayer in W.P.No.13675 of 2015: Writ Petition filed under Article 226 of the Constitution of India, praying to issue a Writ of Certiorari to call for the records in TIN 33360440128/2009-10 and quash the proceedings dated 27.03.2015 in so far as the reversal of ITC of Rs.42,26,602/- is concerned.

Prayer in W.P.No.13676 of 2015: Writ Petition filed under Article 226 of the Constitution of India, praying to issue a Writ of Certiorari to call for the records in TIN 33360440128/2010-11 and quash the proceedings dated 27.03.2015 in so far as the reversal of ITC of Rs.29,13,339/- is concerned.

Prayer in W.P.No.13677 of 2015: Writ Petition filed under Article 226 of the Constitution of India, praying to issue a Writ of Certiorari to call for the records in TIN 33360440128/2011-12 and quash the proceedings dated 27.03.2015 in so far as the reversal of ITC of Rs.22,63,500/- is concerned.

Prayer in W.P.No.13678 of 2015: Writ Petition filed under Article 226 of the Constitution of India, praying to issue a Writ of Certiorari to call for the records in TIN 33360440128/2012-13 and quash the proceedings dated 27.03.2015 in so far as the reversal of ITC of Rs.25,32,136/- is concerned.

For Petitioner in all WPs : Mr.P.Rajkumar For Respondent in all WPs : Mr.Manokaran Sundaram Additional Government Pleader COMMON ORDER Heard Mr.P.Rajkumar, learned counsel appearing for the petitioner, and Mr.Manokaran Sundaram, learned Additional Government Pleader appearing for the respondent and with their consent, these Writ Petitions are taken up for final disposal.

2. The petitioner is a Private Limited Company, incorporated under the Indian Companies Act and registered as a dealer, on the file of the respondent, under the provisions of Tamil Nadu Value Added Tax Act, 2006, (TNVAT Act), and under the Central Sales Tax Act, 1956 (CST Act). The petitioner is a manufacturer of finished leather, leather products and shoes and in the course of business effected local sales, inter state sales and also exports. The challenge in these writ petitions are to the revision of assessment passed by the respondent for six years (i.e. from 2007-08 to 201213). The impugned orders in all these writ petitions are on identical lines and therefore, it would be suffice to refer to the factual details raised in the first Writ Petition, namely, W.P.No.13673 of 2015 pertaining to the year 2007-08.

3. The petitioner was assessed to tax for the said year, after which an audit was conducted at the business premises of the petitioner by the officials of the Enforcement Wing on 16.11.2013. Based on the report submitted by the Enforcement Wing, the respondent issued notices to the petitioner for all the six assessment years, all dated, 21.04.2014. Though in the notices, various other issues were pointed out as discrepancies, in these cases we are not concerned with those issues, except with regard to the issue pertaining to the difference between the input tax credit claim and the tax paid by the petitioner's seller. The quantum of such difference differed in each of the assessment year.

On receipt of these notices, the petitioner submitted individual representations pointing out that certain issues which were stated to be defects have been rectified and with regard to the difference in between the input tax credit claim and tax paid by the petitioner's sellers. The petitioner requested the respondent that the dealer wise turnover details may be submitted for submitting a reply. They further stated that after getting details from the Department, one month time may be granted for submitting the reply.

4. On receipt of such representation, the respondent by notice dated 16.06.2014 enclosed a copy of the dealer wise turnover details to enable the petitioner to file a reply. From the documents annexed at page 37 of the typed set of papers, it is seen that the details were web reports pertaining to the cross verification of buyer and seller. However, as rightly pointed out by the learned counsel for the petitioner, this Web report does not contain the invoice number. On receipt of the details for all the assessment years, the petitioner filed individual replies on 27.06.2014 pointing out that some of their sellers filed monthly VAT returns along with Annexure II manually and others filed the same electronically. The Annexures II filed electronically only found place in the website.

The Annexures II filed manually do not find place in the website. Further, the filing of returns electronically by all dealers came into force with effect from 15th May 2012 vide Rule 7(5) of TNVAT Rules. Thus, the website statement contains the details of Annexures II filed electronically only and not the Annexures II filed manually by the sellers during 2010-11. The difference of ITC of Rs.28,98,817/- arrived at with reference to website statement for the year 2010-11 is not correct. The website statement for the year 2010-11 shows that there are 153 sellers. With great difficulty in most of the cases they collected Annexures II filed by their sellers and submitted to the Department for verification.

5. After mentioning the above, the petitioner stated that so far as the year 2010-11 is concerned, the difference has been reduced to Rs.8,62,458/- from Rs.28,98,817/-. Similar replies were given by the petitioners for other years as well. The petitioner placed reliance on the decision of this Court in the Case of Altaf Shoes (P) Ltd vs. Assistant Commissioner (CT) reported in [2012] 50 VST 179 (Mad). In the said representation, the petitioner also stated that they are making all efforts to collect Annexure II from their sellers for the balance ITC and requested that they may be granted some more time. Subsequently, the petitioner submitted another representation on 29.12.2014 once again reiterating their earlier stand and enclosing the original invoices for verification by the respondent. This representation pertain to the year 200708. Similar representations were given for other assessment years as well.

6. Thereafter, the respondent has passed the impugned order of revision of assessment for all the six years. As pointed out earlier, the only issue which is being agitated by the petitioner in all these cases pertain to the difference in claim of ITC as per Annexure-I of the dealer with that of the Annexure-II of the other dealers. On perusal of the impugned order, it is seen that after referring to the averments made in the show cause notice, the respondent has extracted the objections given by the petitioner and while taking note of the fact that the proposals under others heads had been accepted by the petitioner, the respondent took up the issue with regard to the difference in claim of ITC. However, the respondent did not give any specific reasoning as to why the

petitioner's case should not be accepted, except to state that the ITC which has been claimed by the petitioner is not supported by proof for movement of goods, the genuineness of the very purchases in respect of the ITC claim. Reference has been made to the decision of this Court in the case of M/s.Sujana Towers Limited Vs Assistant Commissioner in W.P.No.1481/2014 dated 10.06.2014.

7. In my view, the decision made in the case of Sujana Towers has absolutely no applicability to the facts and circumstances of the case on hand. Therefore, the reliance placed on the said decision is incorrect. So, with regard to the averment that the proof for movement of goods has not been produced, it has to be pointed out that this was never the stand of the department in the show cause notice. At no point of time, the petitioner was called upon to produce any documents to prove the movement of goods. Therefore, the respondent has passed the impugned order giving reasons which were not the basis on which show cause notice was issued. Hence, this amounts to clear violation of principles of natural justice.

8. That apart, the respondent has not considered the specific case of the petitioner that some of their sellers have filed monthly VAT returns along with Annexure-II manually and others have filed electronically. The petitioners had further stated that on their own volition, they made verification and it was found that the alleged difference in tax was reduced. This aspect of the matter was also not considered by the respondent. That apart, the petitioner had raised a specific ground by placing reliance on the decisions of this Court in which these were never even adverted to.

9. Therefore, for all the above reasons, the impugned order calls for interference only with regard to the aspect pertaining to difference in claim of ITC. Accordingly, the Writ Petitions are partly allowed and the finding recorded by the respondent with regard to the difference in claim of ITC is set aside and the matter is remanded back to the respondent for fresh consideration, after issuing notice to the petitioner, after affording an opportunity of personal hearing and perusing all the records which the petitioners may place before the respondent and thereafter, pass a speaking order on merits and in accordance with law. To facilitate the compliance of the above direction, at the first instance, the respondent is directed to furnish the invoice numbers in which according to the respondent, there is a difference in the claim of ITC. This detail should be accompanied along with the notice to be sent to the petitioner as per the above direction. Consequently, connected miscellaneous petitions are closed. No costs.

Sd/- Asst.Registrar (CS IV ) /true copy/ Sub Asst. Registrar pgp/srn

To:

The Assistant Commissioner (CT) Egmore Assessment Circle, No.88, Mayor Ramanathan Road, Chetpet, Chennai 600 031 1 cc to Mr.P. Rajkumar, Advocate, Sr. 30060 1 cc to Spl.Government Pleader, (Taxes), Sr.30216 W.P.Nos.13673 to 13678 of 2015 and M.P.Nos.1 to 1 of 2015 MSM (CO) kk 16/6