Tvl. Sree Vadivambigai Textile vs. The Commissioner Of Commerical

Held

The Court held that the impugned assessment order dated 19.09.2016 was set aside. Regarding the stock variation and alleged sales suppression, the Court found that the assessing authority's conclusion that the petitioner accepted the stock variation and admitted defects at the time of inspection, and that their subsequent explanations were 'after thought', was not adequately supported by the record. The Court emphasized that the petitioner had raised specific objections regarding incorrect figures and failure to consider work-in-progress. On the issue of ITC reversal, the Court noted that the petitioner claimed the ITC was valid and supported by documents, while the assessing authority stated it was unsupported by Rs.2,55,160/-. The Court reiterated the principle that the assessee bears the primary burden to establish the ITC claim, but upon discharge of this burden, the onus shifts to the officer to examine the claim and provide materials for rebuttal. The Court found that the officer had not adequately discharged this onus. Consequently, the Court directed the petitioner to appear before the assessing authority on 14.08.2019 with all supporting materials, after which the assessing authority was to pass a fresh assessment order de novo within four weeks of the personal hearing.

Facts

The petitioner, Tvl.Sree Vadivambigai Textile Mills(P) Ltd., is challenging an order of assessment dated 19.09.2016 passed by the Assistant Commissioner (CT), Sivagangai Assessment Circle, under the Tamil Nadu Value Added Tax Act, 2006. The impugned order stemmed from an inspection by the Enforcement Wing on 15.06.2016, which noted discrepancies in stock as compared to opening stock recorded for the period 2015-2016, leading to allegations of sales suppression. A pre-revision notice dated 10.06.2016 was issued, proposing additions for stock difference, suppression of turnover, reversal of Input Tax Credit (ITC), and penalty. The petitioner responded with various arguments, highlighting alleged errors by the inspecting team, including incorrect opening stock adoption and failure to consider work-in-progress. The petitioner also contended that the proposal for ITC reversal lacked proper justification and supporting details.

Key Issues

1. Whether the assessment order dated 19.09.2016 is vitiated by a failure to properly consider the petitioner's objections regarding stock reconciliation and alleged sales suppression, particularly in light of the petitioner's contention that the inspecting team adopted incorrect figures and failed to account for work-in-progress? (Mixed question of law and fact, concerning Section 22(5) of the Tamil Nadu Value Added Tax Act, 2006 and principles of natural justice). 2. Whether the reversal of Input Tax Credit (ITC) to the extent of Rs.2,55,160/- was justified, given the petitioner's assertion that the claim was valid and supported by documents, and the assessing authority's failure to provide specific reasons or materials for the alleged error? (Mixed question of law and fact, concerning Rule 10(2) of the Tamil Nadu Value Added Tax Rules, 2006). Petitioner's Arguments: The petitioner argued that the inspecting team committed errors in stock reconciliation by adopting incorrect opening stock and not considering work-in-progress. They contended that proper reconciliation using their books of accounts would reveal no discrepancies. Regarding ITC reversal, the petitioner claimed the proposal was made without proper justification or details, and that all supporting documents were produced. They argued that the impugned order merely reiterated the inspection findings without addressing their submissions. Revenue's Arguments: The respondents, through the impugned order, stated that the petitioner accepted the stock variation at the time of inspection. Regarding sales suppression, the order noted that the explanations of the dealer were not acceptable as the suppression was arrived at through verification of accounts and records produced by the dealer, and that the dealer admitted suppressions at the time of inspection, making their subsequent contentions 'after thought'. The equal time addition was justified as a measure for probable omission and defects, indicating willful non-disclosure. The ITC reversal was justified by stating the amount was unsupported by documents.