Tvl.Polyhose India Private Ltd v. The Assistant Commissioner(Ct)
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated :04.07.2017 Coram:
The Hon'ble Mr.Justice T.S. Sivagnanam W.P.Nos. 2184 to 2188 of 2017 and W.M.P.Nos. 2158 to 2162 of 2017 Tvl. Polyhose India Private Limited No.1/119, Kelampakkam Vandalur Road, Pudupakkam Village, Pudupakkam Post, Kanchipuram District - 603 103.
...Petitioner in all the WPs
Versus
The Assistant Commissioner (CT) Kelampakkam Assessment Circle, Station: III Floor, Yazhini Complex First Main Road, Burma Colony, Perungudi, Chennai - 600 096.
...Respondent in all the WPs
Prayer in W.P.Nos. 2184 to 2188 of 2017:
Writ Petitions filed under Article 226 of the Constitution of India, praying for issuance of a Writ of Certiorari calling for the records connected with the impugned order dated 30.11.2016 passed by the respondent herein issued in respect of TIN No. 33651120860/2011-12, 2012-13, 2013-14, 201516 and 2014-15 respectively of the petitioner company, pertaining to the assessment years 2011-12, 2012-13, 2013-14, 2015-16 and 2014-15 respectively and to quash the same, in so far as it relates to disallowance of ITC on capital goods and the penalty imposed there for on the petitioner company, holding the same to be unconstitutional, contrary to law and highly excessive besides being without jurisdiction. For petitioner in all the petitions : Mr. N. Viswanathan For respondent in all the petitions : Mr. K. Venkatesh, Government Advocate
C O M M O N O R D E R Heard Mr. N. Viswanathan, learned counsel appearing for the petitioner and Mr. K. Venkatesh, learned Government Advocate appearing for the respondent. With the consent on either side, the Writ Petitions themselves are taken up for final disposal.
2. The petitioner is a Registered Dealer in the file of the respondent under the Provisions of Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act) and the Central Sales Tax Act, 1956, (CST Act). The petitioner has filed this Writ Petition challenging the assessment orders passed by the respondent dated 30.11.2016 for the assessment years, 2011-12 to 2015-16, insofar as it relates to the disallowance of input tax credit on capital goods and penalty imposed thereon. On 05.03.2016, a tax audit was conducted and the following objections were raised namely:- (i) belated payment of monthly tax both under TNVAT and CST for the Assessment Year 2011-12 to 2015-16 for which the total interest liability worked out to Rs. 52,659/- (ii) liability towards ITC reversal on purchase effected from Registration Certificate Cancelled Dealers, amounting to Rs. 3815/- together with interest.
(iii) belated claim of ITC beyond 90 days from the date of invoice which is liable to be reversed amounting to Rs. 19,761/-.
(iv) reversal of ITC on inter-state sales without C forms for the AY 2011-12 to 2014-15 amounting to Rs. 61,205/-. (v) liability towards non-filing of C Forms for the AY 2011-12 to 2014-15 amounting to Rs.9, 395/- (vi) liability towards non-filing of Form H for the AY 2012-13 amounting to Rs.9,395/-.
(vii) Penalty u/s.10A CST Act towards interstate purchase by issuing C form without inclusion of the same in "B" Certificate under CST Act for the AY 2014-15 amounting to Rs. 1,94,739/-.
(viii) liability towards ineligible claim of ITC on capital goods for the AY 2011-12 to n2015-16 amounting to Rs. 16,75,168/- by contending that in terms of Rule 10(4)(a) of TNVAT Rules, they are not eligible to take the credit for the only reason that they have not maintained the accounts and intimated to the assessing officer within 90 days from the date of commencement of business.
3. The authorized representative, who was present at the time of the proceedings of audit and had given a statement and admitted his liability in respect of objections (i) to (vii) above and paid the tax amounting to Rs.6,81,417/-, out of the total liability raised by the enforcement at Rs. 23,56,585/-. The objections raised by the petitioner is with regard to the
denial of input tax credit on capital goods to the tune of Rs.16,75,168/-. The petitioner did not admit the same before the Audit officials and stated that they will revert back and after obtaining the legal opinion. Pursuant to the tax audit, the respondent/Assessing Officer, issued show cause notice, dated 20.09.2016 for all the five assessment years and called upon the petitioner to submit their objection as to why input tax credit should not be denied on the ineligible capital goods. The petitioner was granted 15 days' time to submit their objection. On receipt of the notice, the petitioner sent a letter to the respondent, dated 27.10.2016, requesting time till December 2016. The respondent granted time upto 25.11.2016 and also afforded an opportunity of personal hearing.
The petitioner did not submit their objections nor availed the opportunity of personal hearing, but sent a letter dated 25.11.2016, stating that they are in the process of getting legal opinion and requested to grant of two months time. The respondent completed the assessment on the ground that the petitioner did not submit any objections to the proposal.
4. The petitioner would contend that the goods which have been mentioned namely, electrical goods, weighing machine, Pallet truck, UPS, generator, etc., would fall within the definition of 'capital goods' as defined under Section 2(11) of the TNVAT Act and the finding of the respondent is erroneous. The contention raised by the petitioner is factual and the onus is on the petitioner to establish that these goods are capital goods and the petitioner is entitled for input tax credit on the same. Without establishing the same before the Assessing Officer, the petitioner cannot urge the said contention before this Court in a Writ Petition and seek for adjudication of this disputed question of fact.
5. The conduct of the petitioner clearly shows that they have been dragging on the issue without submitting their objections nor availing the opportunity of personal hearing. It may be true that the petitioner had admitted his liability in respect of objections (i) to (vii) (supra) before the Enforcement Officer, but that by itself cannot be taken, as if, the petitioner should be granted more lenience. After having fixed the date for personal hearing and filing the objection, the petitioner was not justified in seeking for two months further time. Therefore, this Court is satisfied that this is not a case, where there is violation of principles of natural justice, but a case, where the petitioner failed to avail the opportunity granted to him. Therefore, this Court is not inclined to set aside the impugned assessment orders.
6. Considering the submissions of the learned counsel for the petitioner that if one more opportunity is granted to the
petitioner to establish their case before the Assessing Officer, they will be able to produce the documents and other proof to show that the goods qualify for availment of input tax credit, this Court is inclined to grant one more opportunity, but subject to certain conditions.
7. It is stated that the total input tax credit, which has been denied with regard to this capital goods, is Rs.16,75,168/-. Therefore, the petitioner is directed to pay a sum of Rs.5,00,000/- to the respondent, within a period of 15 days from the date of receipt of a copy of this order. If this payment is made, the petitioner would be entitled to treat the assessment order, as a show cause notice and submit their objections within a period of seven days thereafter. On receipt of the objections, the respondent shall afford an opportunity of personal hearing and redo the assessment under the said head within a period 30 days thereafter. If the petitioner fails to comply with the conditional order of payment of Rs.5,00,000/-, within the time permitted, the benefit of this order will not enure to the petitioner and the Writ Petitions would stand automatically dismissed without reference to this Court, leaving it open to the respondent to proceed in accordance with law. This writ petitions stand disposed of. Connected W.M.Ps are closed. No costs.
Sd/- Assistant Registrar(CS VIII) //True Copy// Sub Assistant Registrar mrr/pbn To The Assistant Commissioner (CT) Kelampakkam Assessment Circle, Station: III Floor, Yazhini Complex First Main Road, Burma Colony, Perungudi, Chennai - 600 096.
+1cc to the Special Government Pleader (Taxes) SR.No.46482 +2cc to Mr.K.Ravindranath, Advocate SR.No.46509 W.P.Nos. 2184 to 2188 of 2017 PA(CO) GN(21/07/2017)