Tvl.Nakoda Agencies vs. The Commissioner Of Commercial Taxes

Held

The Court held that the impugned order of assessment was made by the second respondent without applying their mind to the objections raised by the petitioner. The petitioner had clearly stated that no Input Tax Credit (ITC) was availed, and therefore, the question of reversal of ITC amounting to Rs. 2,13,585/- did not arise. The Court found that the assessment order failed to deal with these crucial objections. The Court was inclined to remit the matter back to the authorities for a fresh examination of the petitioner's claim. The Court directed that reasonable opportunities be provided to the petitioner for being heard before passing fresh orders in accordance with the law. The Court did not decide on the merits of the petitioner's claim regarding the non-availing of ITC or the validity of the penalty, as the matter was being remitted.

Facts

The petitioner, Tvl. Nakoda Agencies, represented by its Proprietor G. Pawan Kumar, filed a writ petition challenging an order dated 31.07.2020 passed by the Assistant Commissioner (CT), Rockfort Assessment Circle. The impugned order pertains to the assessment for the year 2011-2012 and requires the petitioner to reverse Input Tax Credit (ITC) amounting to Rs. 2,13,585/. The petitioner contended that they had submitted objections on 17.03.2017 and 24.07.2017, stating that no ITC was availed and therefore, reversal was not warranted. The petitioner argued that the assessment order failed to address these objections and was based on an alleged acceptance of ITC before Enforcement Directorate officials, which they disputed. The petitioner also argued that levying penalty was unwarranted as no ITC was claimed.

Key Issues

1. Whether the impugned assessment order dated 31.07.2020, which demands reversal of Input Tax Credit (ITC) of Rs. 2,13,585/-, is arbitrary and contrary to the material on record, particularly in light of the petitioner's objections? 2. Whether the Assessing Officer applied their mind to the objections raised by the petitioner regarding the non-availing of ITC before demanding its reversal? Petitioner's Arguments: The petitioner argued that they had clearly stated in their objections that no ITC was availed, and therefore, the question of reversal did not arise. They submitted that they were effecting second and subsequent sales after 12.07.2011 and did not collect any tax on such sales, claiming exemption on this turnover. Consequently, they did not claim any ITC involved in the purchases of these goods. They contended that the reversal of ITC would amount to double taxation. The petitioner also argued that the penalty proposed was unwarranted as no ITC was claimed. They relied on the case of Madras Granites (P) Ltd. V. Commercial Tax Officer, Arisipalayam Circle, Salem, (2006) 146 STC P.642, where a similar order was set aside. The petitioner further argued that the impugned order was made without considering their objections and was based on an alleged acceptance before Enforcement Directorate officials, which they disputed. Revenue's Arguments: The judgment does not record any specific arguments made by the revenue or the respondents.