M/S.Cauvery Electronics vs. The Commissioner Of

Held

The Court held that the pre-revision notices issued by the second respondent were indeed bereft of particulars regarding the name and TIN of the dealers involved and the necessary web reports. The Court found that the Assessing Officer failed to follow the guidelines laid down in Circular No. 10 of 2015 (which directed mandatory attachment of invoice-wise data for mismatches) and the procedural requirements elaborated in the case of M/s. JKM Solutions Private Limited. This failure prevented the petitioner from adequately reconciling mismatches and submitting a proper defence. The Court acknowledged the revenue's argument regarding factual disputes but emphasized that the challenge was to the manner in which the proceedings were conducted. Consequently, the impugned revised assessment orders were quashed, and the matter was remitted back to the second respondent for fresh consideration. The Assessing Officer was directed to conduct a thorough enquiry, consult with other assessing officers if necessary, issue a show-cause notice with all particulars (invoice-wise details, reasons) as per Circular No. 10 of 2015 and the JKM Solutions judgment, afford a personal hearing, and then pass a fresh order within eight weeks.

Facts

The petitioner, M/s. Cauvery Electronics, filed writ petitions challenging revised assessment orders for the tax periods 2011-12 to 2015-16, issued by the Commercial Tax Officer, Karur South Assessment Circle. The petitioner, a dealer in home appliances, had their returns accepted for these periods. However, based on an inspection report, the second respondent issued pre-revision notices alleging discrepancies, leading to the reversal of Input Tax Credit (ITC). The petitioner contended that the pre-revision notices lacked necessary particulars, including copies of invoices and web reports, preventing them from verifying transactions and submitting a proper reply. They also argued that any action for non-disclosure of sales should lie against the defaulting seller, not the purchasing dealer.

Key Issues

1. Whether the pre-revision notices issued by the second respondent were bereft of requisite particulars, thereby violating the principles of natural justice and preventing the petitioner from submitting a proper objection, as per Circular No. 1 of 2009 and the decision in M/s. JKM Solutions Private Limited? 2. Whether the reversal of Input Tax Credit (ITC) against the petitioner, a purchasing dealer, was justified when the alleged mismatch was due to the non-disclosure of sales by the selling dealer, as argued by the petitioner, relying on the decision in Assistant Commissioner (CT) v. Infiniti Wholesale Ltd.? Petitioner's Arguments: The pre-revision notices lacked essential details like web reports and invoice particulars, hindering their ability to respond. They cited Circular No. 1 of 2009 and the judgment in M/s. JKM Solutions Private Limited. On merits, they argued that ITC reversal against a purchaser is incorrect if the seller defaulted, referencing the decision in Assistant Commissioner (CT) v. Infiniti Wholesale Ltd. Revenue's Arguments: The petitioner was issued pre-revision notices with opportunities for written objections and personal hearings, which they failed to utilize. Therefore, the proceedings did not violate natural justice. The revenue contended that the issues involved factual disputes that should be raised before the appellate authority, not in writ petitions.