2014 (9) TMI 507 - HC - VAT and Sales Tax

Denial of input tax credit - penal interest under Section 42(3) of TNVAT Act, 2006 - Held that - Assessing Authority is under mandate to give a reasonable opportunity of being heard, in the event of denying the benefit of Input Tax Credit to registered dealer, who has claimed input tax credit based on invoice, bill or cash memorandum. However, a perusal of the impugned orders, which are subject matter of challenge in these writ petitions would disclose that the respondent has not given an opportunity of personal hearing to the petitioner or to its authorised representative and hence, on this sole ground, the impugned orders passed by the respondent are liable to be interfered with. Matter remanded back - Decided in favour of assessee.

Summary

Issues:
Assessment of Input Tax Credit under TNVAT Act for assessment years 2011-12, 2012-13, and 2013-14 without providing a reasonable opportunity of being heard to the registered dealer.

Analysis:
The petitioner, a registered dealer under the Tamil Nadu Value Added Tax Act, 2006 and Central Sales Tax Act, claimed Input Tax Credit (ITC) for local purchases and paid Output tax as per statutory provisions. The respondent, without providing a personal hearing, issued notices reversing the ITC claim and subsequently passed orders directing the petitioner to pay the reversed amount along with penal interest under Section 42(3) of TNVAT Act, 2006.

The petitioner contended that the impugned orders were passed without jurisdiction under Section 25 of TNVAT Act and without providing a reasonable opportunity of being heard as mandated by Section 19(13) of the Act. The respondent argued that the petitioner had an alternative remedy of appeal to the Appellate Deputy Commissioner of Commercial Taxes III, Chennai - 108 and that the impugned orders were passed after due consideration of relevant provisions.

Upon careful consideration, the Court noted that the respondent failed to provide a reasonable opportunity of being heard to the petitioner before reversing the Input Tax Credit, as required by Section 19(13) of the TNVAT Act. Therefore, the impugned orders were set aside, and the matter was remitted back to the respondent for fresh adjudication with directions to provide a personal hearing to the petitioner or its authorized representative within three weeks from the date of the order.

In conclusion, the Court partially allowed the writ petitions, emphasizing the importance of adhering to procedural requirements such as providing a reasonable opportunity of being heard before making decisions on Input Tax Credit under the TNVAT Act.