Sri Ram Gunny Store vs. The Commissioner Of Commerical

Held

The Court held that the assessing authority erred by not conducting an inquiry with the other end dealer concerning the mismatch ascertained from the department's website, as mandated by the decision in JKM Graphics Solutions. Therefore, on this ground, the Court found it necessary to interfere with the impugned order. Regarding the reversal of input tax credit due to non-production of 'C' Forms, the Court followed the principle laid down in Bharath Traders, which held that the amendment broadening the grant of ITC to transactions with unregistered dealers should be effective from the inception of the Act to correct an anomaly. The Court reasoned that restricting the benefit only from the date of substitution would discriminate against prior periods. Consequently, the reversal of input tax credit on this ground was also deemed liable to be quashed. The impugned order was quashed, and the writ petition was allowed, with a remand specifically for the mismatch component alone. No costs were awarded.

Facts

The petitioner, Tvl. Sri Ram Gunny Stores, challenged an order dated 28.03.2018 passed by the Deputy State Tax Officer, Theni, imposing tax and penalty for the assessment year 2013-14. The impugned order was based on two defects identified by the assessing authority: a mismatch in particulars from the department's website and the reversal of input tax credit due to non-production of 'C' Form declarations for interstate sales. The petitioner contended that the assessing authority failed to conduct an inquiry with the other end dealer regarding the website mismatch and that the reversal of input tax credit was incorrect. The respondents argued that the writ petition was not maintainable as the petitioner had not availed the alternative remedy.

Key Issues

1. Whether the assessing authority erred in not conducting an inquiry with the other end dealer when a mismatch was ascertained from the department's website, as per the ruling in JKM Graphics Solutions Vs. The Commercial Tax Officer (2017) 99 VST 343? 2. Whether the reversal of input tax credit for non-production of 'C' Form declarations for interstate sales is valid, considering the amendment to Section 19(2)(v) of the CST Act and the principles laid down in Bharath Traders vs. The Commissioner of Commercial Taxes and Another (order dated 30.08.2019)? Petitioner's Contentions: The petitioner argued that the assessing authority's failure to conduct an inquiry with the other end dealer for the website mismatch vitiates the order. Regarding input tax credit, the petitioner relied on the principle that the benefit of ITC should extend to transactions with unregistered dealers retrospectively from the inception of the Act, as corrected by the 2015 amendment, citing the reasoning in Bharath Traders. Revenue's Contentions: The revenue argued that the writ petition should be dismissed as not maintainable because the petitioner had not availed the alternative remedy available.