Mismatch in VAT Return: Madras HC directs to Provide Opportunity of Cross-Examination [Read Order]

While considering a writ petition, the Madras High Court has directed the VAT department to follow the instructions in a case relating to the mismatch in the VAT returns.

The petitioner, M/s Lakshmi Agency, has challenged an order of assessment dated 20.07.2021 passed under the provisions of the Tamil Nadu Value Added Tax Act, 2006, relatable to the period 2011-12.

The issue of mismatch has long plagued assessees and the Commercial Taxes Department and as early as in 2018,pursuant to several decisions of this Court, the Special Commissioner/Commissioner of Commercial Taxes had directed the Assessing Authorities to keep assessments relating to mismatch of particulars in abeyance till a proper and appropriate scheme be formulated for addressing this issue.

On 24.02.2021, a Circular has been issued bearing No.5/2021, wherein, the Principal Secretary/Commissioner, Commercial Taxes has dealt with this issue in extenso. As per the circular, the Assessing Authority is required to issue notice along with all details connected to the assessment and seek objections from the assessee concerned. Thereafter, a personal hearing shall be afforded, either physically or virtually, granting adequate opportunity to the dealer to put forth its objections. The Circular also envisages a request of the assessee for cross examination of the third party dealer and provides for such an opportunity of cross examination to be granted suo motu, if the Assessing Authority believes that it would be so appropriate. The assessment will thereafter be concluded within a period of 180 days from date of issue of show cause notice.

Relying on the circular, Justice Anita Sumanth allowed the petition and held that “Let this procedure be followed in the present matter as well. Show cause notice, as indicated in the Circular will be issued to the petitioner within a period of four (4) weeks from today with all necessary enclosures. The assessments will be completed thereafter within a period of 180 days, in accordance with law, after hearing the petitioner.”

To Read the full text of the Order CLICK HERE

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