2007 (11) TMI 552 - HC - VAT and Sales Tax

Availment of input tax credit for the period from January 2007 to June 2007 reversed - Held that - Recording the submission of the learned counsel for the petitioner, to adjudicate the factual finding before the appellate authority, the petitioner is at liberty to prefer the statutory appeal along with the payment of statutory tax within 30 days from the date of receipt of a copy of this order and on receipt of the same, the appellate authority shall consider all the points raised in the appeal and pass orders on merits and in accordance with law. The letter of the Assistant Commissioner (CT), Fast Track Court, Assessment Circle-I, Coimbatore, addressed to the Branch Manager, Indian Bank, Main Branch, Coimbatore, for realisation of the reversal of VAT for the period between January 2007 to June 2007 is directed to be withdrawn immediately and the Bank Manager, Indian Bank, Main Branch, Coimbatore, is hereby directed not to give effect to the request made by the Assistant Commissioner (CT), Fast Track Court, Assessment Circle-I, Coimbatore. With the above directions, the writ petitions are disposed of.

Summary

Issues:
Challenging order of Assistant Commissioner reversing input tax credit under TNVAT Act, 2006 for the period from January 2007 to June 2007.

Detailed Analysis:

1. Factual Background:
The petitioner, a textile machinery manufacturing company, procured various components from local dealers to manufacture textile machinery. The petitioner supplied subsidiary components to selling dealers in Coimbatore to be fixed in the purchased control panels. The petitioner claimed input tax credit under section 12 of the Act for the period in question.

2. Reversal of Input Tax Credit:
The respondent issued notices alleging excess input tax credit availed by the petitioner and demanded payment. The respondent reversed the input tax credit and imposed a penalty of 150% under section 27(4) of the TNVAT Act. The petitioner challenged this order citing violation of natural justice.

3. Court Intervention:
The court set aside the impugned assessment order and directed the petitioner to submit objections within a specified time frame. The petitioner submitted objections, but the assessing officer held that the input tax credit must be refunded along with a penalty. The assessing officer found a mismatch between purchase turnover and input tax claims.

4. Legal Interpretation:
The assessing officer determined that as there was no purchase of goods, the petitioner was not entitled to the input tax credit. The officer emphasized that input tax credit is only eligible on the purchase of specified goods from registered dealers within the state. Any wrong payment of VAT cannot be claimed as input tax credit.

5. Alternative Remedy:
The court advised the petitioner to avail the alternative remedy of appeal under section 51 of the TNVAT Act. The court directed the petitioner to prefer an appeal within 30 days from the date of receipt of the order. The court emphasized that coercive recovery steps should not be taken hastily before the appeal period expires.

6. Judicial Directions:
The court directed the withdrawal of the letter addressed to the bank for realization of the reversal of VAT. The bank was instructed not to act upon the request. The court disposed of the writ petitions with no costs and closed connected miscellaneous petitions.

This detailed analysis highlights the factual background, reversal of input tax credit, court intervention, legal interpretation, alternative remedy, and judicial directions provided in the judgment by the Madras High Court regarding the challenge to the order of the Assistant Commissioner under the TNVAT Act, 2006.