In a recent ruling, the Madurai Bench of the Madras High Court set aside an order rejecting the Value Added Tax (VAT) Input Tax Credit (ITC) claim made based on a web-generated report.
In this case,the petitioner, ARASPVPV Automobiles Pvt. Ltd. had filed a writ petition challenging the reassessment order issued by the Assistant Commissioner (ST), Palayamkottai Assessment Circle, for the assessment year 2015-16, in which the order for reassessment, dated 8-05-2024, rejected the company’s claim to ITC, stating a failure to disclose purchases amounting to Rs. 2.27 crores as shown in the web report.
Complete Draft Replies of GST ITC Related Notices, Click Here
The company contended that the reassessment was conducted in violation of the procedure outlined in Circular No. 5/2021. The circular states that due verification is to be carried out and that an opportunity for explanation be given to the concerned parties before any adverse conclusions are drawn.
ARASPVPV Automobiles argued that this procedure had not been followed. Moreover, they revealed that a sum of Rs. 11 lakhs had already been recovered from their attached bank account, which had been seized as part of the reassessment process. The court noted that previous orders had consistently overturned similar assessments based on web reports where the required procedural safeguards had not been adhered to.
The bench referred to the relevant portions of Circular No. 5/2021. This circular outlines the steps for resolving mismatches, including verifying data from both the purchasing and selling dealers. It also allows for personal hearings and cross-examinations when necessary. The court observed that the assessment against the petitioner was conducted without following the mandated steps.
Complete Draft Replies of GST ITC Related Notices, Click Here
The High Court ordered to set aside the impugned order and directed the Assistant Commissioner to redo the assessment, strictly adhering to the procedures laid out in the circular. The petitioner was directed to appear before the assessing authority on 21-10-2024, for further proceeding.
The Single bench of the High Court comprising of Justice Mohammed Shaffiq, directed to lift the petitioner’s bank attachment.
Adv. Aparna Nandakumar appeared for the petitioner and Adv..R.Suresh Kumar appeared for the respondent.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
