M/S.Vadamalayan Medi Pharma vs. The Commercial Tax Officer

Held

The Court held that the impugned assessment order dated 30.11.2016 was passed by the respondent with total non-application of mind. The Court found the respondent's observation that the petitioner had not produced documentary evidence to be absurd, particularly concerning the discount claim. Regarding purchases from RC cancelled dealers, the Court noted that the petitioner had denied wrongly claiming ITC and had furnished correct TIN numbers, contradicting the respondent's assertion. Similarly, concerning the mismatch claim, the Court found that the petitioner had produced original tax invoices, and the respondent's conclusion of ITC reversal was based on a wrong premise. The Court also found the penalty levied under Sections 27(3) and 27(4) to be based on a similar non-application of mind. The Court relied on the judgments in Infiniti Wholesale Limited and JKM Graphics Solutions Private Limited. The assessment order was quashed, and the matter was remanded to the respondent for fresh consideration, with directions to provide adequate opportunity, including a personal hearing, and to pass final orders within eight weeks, following the cited judgments. The ratio decidendi is that assessment orders passed without due application of mind to the petitioner's submissions and evidence, and contrary to established legal precedents, are liable to be quashed and remanded.

Facts

The petitioner, M/s.Vadamalayan Medi Pharma, filed writ petitions challenging an assessment order dated 30.11.2016 passed by the Commercial Tax Officer for the assessment years 2010-11, 2011-12, 2012-13, and 2013-14. The petitioner, a registered dealer under the Tamil Nadu Value Added Tax (TN VAT) Act, 2006, had their returns accepted initially. However, the respondent proposed to revise the assessment, citing discrepancies in sales turnover, discount claims, wrong input tax credit (ITC) on inter-state purchases, purchases from RC cancelled dealers, and annual cross-verification mismatches. The petitioner submitted detailed objections on 12.10.2015 and 08.02.2016, refuting these claims and providing supporting documents. The respondent, by the impugned order, confirmed the reversal of ITC amounting to Rs.29,32,343/- and levied penalty under Sections 27(3) and 27(4) of the TN VAT Act, 2006.

Key Issues

1. Whether the assessment order dated 30.11.2016, which reversed input tax credit and levied penalty, was passed with total non-application of mind by the respondent authority, contrary to the petitioner's objections and supporting documents? (Question of fact and law) Petitioner's arguments: The petitioner contended that the assessment order was passed without proper application of mind and was contrary to the judgment in Infiniti Wholesale Limited Vs. Assistant Commissioner (CT) reported in (2015) 82 VST 457. They argued that they had provided detailed replies and supporting documents, including original tax invoices and correct TIN numbers, to address the respondent's concerns regarding sales turnover differences, discount claims, purchases from RC cancelled dealers, and annual cross-verification mismatches. They asserted that the respondent failed to consider these submissions and wrongly concluded that original tax invoices were not produced and that ITC was wrongly claimed. Respondent's arguments: The respondent argued that the petitioner failed to produce supporting documents for their replies and that adequate opportunity was provided, which the petitioner did not utilize. They contended that the petitioner's only remedy was to file a statutory appeal under Section 51 of the TN VAT Act, 2006, making the writ petition not maintainable.