M/S. Thangamayil Jewellery vs. The Assistant Commissioner

Held

The Court acknowledged that a clarification had been issued by the Commissioner of Commercial Taxes regarding the adjustment of excess credit, which the petitioner followed. However, the Court noted that the respondent had called for objections from the petitioner in the revision notices. Therefore, the Court deemed the petitioner's approach to the High Court premature, as the petitioner had not yet exhausted the opportunity to submit objections to the assessing authority. The Court directed the petitioner to submit their objections, along with the Commissioner's clarification and account books, within 15 days. The respondent was then directed to consider these objections on merits, afford a personal hearing, and decide the matter within one month of receiving the objections. The issue of whether the respondent mechanically forwarded the Enforcement Wing's report without independent application of mind was implicitly deferred pending the adjudication by the assessing authority.

Facts

The petitioner, M/s. Thangamayil Jewellery Limited, is challenging revision notices issued by the respondent, The Assistant Commissioner (CT), Madurai. These notices, dated 15.05.2015, pertain to tax periods from 2006-07 to 2012-13. The petitioner, a jewellery dealer, had adjusted excess input tax credit against monthly purchase tax payments as per a clarification issued by the Commissioner of Commercial Taxes in 2007. The respondent found fault with this adjustment, stating that the full amount of tax had not been paid. Additionally, the revision notices were based on reports from the Enforcement Wing concerning alleged suppression of sales, without the petitioner being afforded an opportunity to explain. The petitioner argues that the Assessing Officer should independently verify such reports before issuing proposals.

Key Issues

1. Whether the petitioner was entitled to adjust excess input tax credit against monthly purchase tax payments under Section 12 of the TNVAT Act, following the clarification issued by the Commissioner of Commercial Taxes dated 29.11.2007? The petitioner contended that the Commissioner's clarification permitted such adjustments, and they acted in accordance with it. The respondent argued that full tax was not paid and the adjustment was incorrect. 2. Whether the respondent, as the Assessing Officer, followed the prescribed procedure by independently applying his mind and affording the petitioner an opportunity to explain the findings of the Enforcement Wing before issuing revision proposals, particularly concerning alleged sales suppression? The petitioner argued that the Assessing Officer failed to independently verify the Enforcement Wing's report and provide an opportunity to explain. The respondent's argument on this point is not explicitly recorded, but the court notes that objections were called for.