Tvl.Maruthi Poly Bags (P) LTD. vs. The Assistant Commissioner (CT)(Fac)

Held

The Court held that the impugned orders were vulnerable on two counts: purchase omission and reversal of input tax credit. Regarding purchase omission, the Court found that the assessing officer appeared to have proceeded on an inferential basis, merely because there was sales suppression, rendering the basis weak. Concerning the reversal of input tax credit, the Court noted that the petitioner had filed "C" Form declarations which were accepted by the authority under CST on 31.07.2015. The respondent had reversed the input tax credit without considering these declarations, despite the petitioner referring to this aspect in their replies. The Court also acknowledged the petitioner's submission that the reversal of input tax credit might not be valid in light of the decision in Bharath Traders. Consequently, the Court quashed the impugned orders and allowed the writ petitions, remitting the matters to the respondent for fresh orders in accordance with law. The Court also recorded the petitioner's undertaking to remit Rs. 5 Lakhs by 31.03.2020, failing which the order would stand recalled and the petitions dismissed. The issue of sales suppression and its implication on current proceedings was left open, as was the exact quantum of tax dues related to sales suppression.

Facts

The petitioner, Tvl. Maruthi Poly Bags (P) Ltd., filed three writ petitions challenging orders passed by the Assistant Commissioner (CT) (FAC), Pudukkottai. The impugned orders pertained to tax periods of 2009-10, 2010-11, 2011 and 2012, and were passed on 29.08.2019. The assessments were finalized on a deemed assessment basis under Section 22 of the Tamil Nadu Value Added Tax Act, following an inspection of the petitioner's premises based on information from the Central Excise department. Pre-revision notices were issued, and after hearing the petitioner, the impugned orders were passed. The respondent argued that the petitions should be dismissed for non-availing of alternative remedies.

Key Issues

1. Whether the impugned orders, which were passed on a deemed assessment basis under Section 22 of the Tamil Nadu Value Added Tax Act, are valid, particularly concerning the issues of sales suppression, purchase omission, and reversal of input tax credit? (Mixed question of law and fact) Petitioner's arguments: - The petitioner contended that the reversal of input tax credit may not hold good in light of this Court's decision in Bharath Traders (W.P.No.5103 of 2015 dated 30.08.2019). - The petitioner also argued that the respondent failed to consider the "C" Form declarations accepted by the authority under CST on 31.07.2015 when reversing input tax credit. Respondent's arguments: - The respondent argued that the impugned orders do not warrant interference and that the writ petitions should be dismissed for non-availing of the alternative remedy.