2013 (3) TMI 546 - HC - VAT and Sales Tax

Input Tax Credit denied - as per the dept. assessee is eligible only for the purchasers from the registered dealers as per Section 19(2) of the Tamil Nadu Value Added Tax Act, 2006 - as per the assessee first respondent is not the competent authority to issue the impugned notice of denial of credit - Held that - Except raising a plea regarding the competency of the authority, nothing is submitted before this Court by the petitioner to prove his case that the first respondent is not the assessing authority as defined under Section 2(5) of the TNVAT Act, and therefore, the plea of the petitioner is rejected on this ground. However, looking into the impugned notice, it is seen that the petitioner is called upon to explain as to what are all their grievances, by filing objections, and such an opportunity having been already provided in the impugned notice itself, without availing of the same, the petitioner has rushed to this Court challenging the said notice. Thus the notice under challenge is only calling upon the petitioner to make payment of the tax immediately and stating that if the petitioner has any objection, they may furnish the details along with documentary evidence and connected records. When such a course is available to the petitioner to approach the concerned authority, it does not require any interference by this Court in the stage of notice. Therefore, the challenge made by the petitioner to the said notice, is rejected - the petitioner is directed to approach the competent assessing authority and make detailed objections to the impugned notice along with documentary evidence and if already submitted the competent assessing authority is directed to consider the same, after giving an opportunity of hearing to the petitioner.

Summary

Issues:
Challenge to notice demanding tax based on Input Tax Credit eligibility under TNVAT Act.

Analysis:
The petitioner, a Private Limited Company, challenged a notice demanding tax due to the rejection of Input Tax Credit claims. The notice was issued based on the retrospective cancellation of the seller's registration, affecting the petitioner's tax liabilities. The petitioner contended that the assessing authority, not the first respondent, has the right to levy and collect tax under Section 2(5) of the TNVAT Act. However, the court found that the first respondent, being authorised by the Government and the Commissioner, was competent to issue the notice. The petitioner was directed to raise objections with documentary evidence before the assessing authority.

The petitioner had purchased goods for manufacturing machinery and claimed Input Tax Credit for taxes paid. The seller's registration was retrospectively cancelled, leading to the disallowance of Input Tax Credit for the petitioner. The petitioner argued that the retrospective cancellation date should not shift the tax burden to them, as the seller continued business activities till March 2010, paying taxes regularly. The court emphasized the importance of raising objections before the assessing authority to resolve such disputes.

The court referred to a previous judgment where it was held that petitioners must present evidence before the competent authority and contest issues through objections rather than filing Writ Petitions directly. In this case, the court rejected the challenge to the notice, directing the petitioner to address grievances through objections with supporting evidence. The petitioner was instructed to approach the assessing authority for a detailed review of the matter within a specified timeframe.

In conclusion, the court disposed of the Writ Petition, emphasizing the need for the petitioner to follow the proper procedure by submitting objections with evidence before the assessing authority. The court highlighted that challenging tax demands should be addressed through the appropriate channels rather than directly through Writ Petitions.