M/S.Tejaswi Motors PVT LTD vs. Asst Commissioner(CT)Ltu

Held

The Court set aside the orders of the Commissioner of State Tax to the extent that they disallowed input tax credit on the sale of second-hand motor vehicles. The Special Appeals were remanded to the assessing authority. The assessing authority is directed to reconsider the appellant's liability to pay VAT for the periods April 2011-March 2012 and April 2012-March 2013. This reconsideration must include providing the appellant with an opportunity for a personal hearing and to submit documentary evidence. The evidence should establish (i) the price paid for the used/second-hand vehicles and (ii) whether these vehicles had suffered VAT at the time of their initial registration within the undivided State of Andhra Pradesh and Telangana. The assessing authority is to pass fresh orders within four months of receiving this order, with all other aspects of the original assessment orders remaining valid. The Court did not expressly leave any issue undecided.

Facts

The appellant, M/s. Tejaswi Motors Pvt. Ltd., a dealer in second-hand motor vehicles, claimed input tax credit (ITC) on purchases, limited to the VAT payable on its sales. The Assessing Officer allowed this ITC. However, the Commissioner of State Tax reversed these orders for the periods April 2011-March 2012 and April 2012-March 2013, disallowing the ITC. The Commissioner held that the appellant failed to provide documentary proof that the second-hand vehicles purchased had suffered VAT at the time of their initial registration. The appellant argued that it was entitled to an opportunity for a personal hearing to produce evidence regarding the purchase price and whether the vehicles had suffered VAT within the State.

Key Issues

1. Whether the appellant is entitled to an opportunity of personal hearing before the assessing authority to produce documentary evidence regarding the purchase price of used/second-hand vehicles and whether these vehicles had suffered VAT at the time of their initial registration within the State of Telangana (or undivided Andhra Pradesh) and to what extent? The appellant contended that, as per a previous Division Bench order in WP.Nos.20186 of 2016 and batch, it is entitled to a personal hearing to present evidence. The respondent, represented by the Special Standing Counsel for Taxes, conceded that the appellant is entitled to an opportunity of being heard by the assessing authority in light of the aforementioned Division Bench order.