SHAM S M EHM OOD M IRZA, J. This order shall decide the present writ petition as well as connected Writ Petition No.51087 of 2024 on account of a similar legal issue that is involved in both these writ petitions.
2. The issue agitated in both the writ petitions relates to the unilateral action of the respondents in modifying/amending clause 6 of the digital sales tax returns filed by the petitioners under section 26 of the Sales Tax Act, 1990 (the Act). Clause 6 of the tax return relates to "credit brought forward from previous tax year in terms of section 10 of the Act. It is alleged that the respondents through their impugned action changed the nature of the amount mentioned in clause 6 into non- creditable inputs which are reflected in clause 7 of the tax return. It is also stated that after the amendment/modification the respondents issued notices to the petitioners on 23.07.2024 which are not in conformity with law and do not reflect the relevant provision under which the proposed action is sought to be taken against the petitioner.
3. Learned counsel for the respondents in rebuttal arguments states that the respondents rightly modified/amended clause 6 of the sales tax return and in this regard placed reliance on section 21(4) of the Act as the petitioner claimed fraudulent input tax/refund. If is also contended that the petitioners were wrongly reflecting amounts in clause 6 as credit brought forward whereas they ought to seek refund thereof in terms of section 10(1) of the Act as the same related to zero rated local supplies and exports. The petitioners dispute the stance so taken by the respondents.
4. Section 10(1) of the Act in so far as it is relevant reads as under:
(1) If the input tax paid by a registered person on taxable purchases made during a tax period exceeds the output tax on account of zero rated local supplies or export made during that tax period, the excess amount of input tax shall be refunded to the registered person not later than forty-five days of filing of refund claim in such manner and subject to such conditions as the Board may, by notification in the official Gazette specify: Provided that in case of excess input tax against supplies other than zero-rated or exports, such excess input tax may be carried forward to the next tax period, along with the input tax as is not adjustable in terms of subsection (1) of section 8B, and shall be treated as input tax for that period and the Board may, subject to such conditions and restrictions as it may impose, by notification in the official Gazette, prescribe the procedure for refund of such excess input tax.
5. It is the case of the petitioners that their case falls to be decided by virtue of the first proviso to section 10(1) of the Act. It is also stated that the petitioners have been filing tax returns reflecting credit brought forward since the year 2021 without any objection from the respondent department.
6. This Court is not inclined to indulge in the exercise of ascertaining whether the amounts mentioned in clause 6 of the tax returns relate to zero rated local supplies export or otherwise as the decision in this regard falls in the domain of the respondents to be made under the adjudicatory, mechanisms provided for in the Act. The only question before this Court is whether the respondents could unilaterally modify/amend the tax return of the petitioners without issuing any prior show-cause notice to them. It has been argued before this Court that the amounts for which the petitioners ought to have claimed refund in terms of section 10(1) of the Act and the amounts which they could have brought forward as credit in terms of the first proviso to section 10(1) are mentioned in the notices impugned in this writ petition which person that the petitioners wrongly reflected the amounts in clause 6 which could not be brought forward. That may be so, but the fact remains that modifications/amendments were made in the tax returns without putting the petitioners to notice. The petitioners were thus deprived of the due process to which they were entitled. The notices in question also do not depict the provision of law under which they have been issued. Similarly, the provision of law under which action is required to be taken against the petitioner is also absent in the notices. The petitioners ought to know the action that is proposed to be taken against them and the notices to be issued to the petitioners must make full disclosure of the provisions of the Act that are attracted to this case enabling them to counter the same. It is apparent that the impugned action of the respondents in unilaterally amending/modifying the tax returns cannot sustain. The same is the case with the impugned notices.
7. For what has been stated above, this writ petition is allowed and the action of the respondents in making amendments/modifications in the tax return of the petitioner relating to clause 6 is declared to be without lawful authority and of no legal effect. The notices impugned in this writ petition are also struck down. The connected writ petition is also allowed on the same terms. The respondents are, however, at liberty to issue a proper show-cause notice to the petitioners for eliciting their response and for holding the inquiry relating to the amounts mentioned in clause 6 of their tax returns.