2015 (3) TMI 84 - HC - VAT and Sales Tax

Reversal of input tax credit - petitioner filed petitions under Section 84 of the Tamil Nadu Value Added Tax, 2006 for rectification - Request of rectification denied by Revenue - petitioner contended that the petitioner's vendors were all registered dealers on the file of the department and the same was available with the department and the department ought to have taken action against the vendors for not remitting the tax collected by them. Without doing so, the department could not deny the request made by the petitioner. - Held that - Additional Government Pleader (Taxes) appearing for the respondent is unable to refute the factual legal submissions. Hence, I have no other option except to set aside the impugned orders and remit the matters back to the authority concerned to consider the case of the petitioner afresh on merits. - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
Challenge to orders proposing to reverse Input Tax Credit (ITC) and subsequent rejection of rectification petitions.

Analysis:
The petitioner challenged the respondent's orders dated 28.08.2014 proposing to reverse ITC and the consequential proceedings dated 09.01.2015. The petitioner's place of business was inspected, revealing discrepancies in purchases made from other dealers. The respondent proposed to reverse ITC based on these findings. The petitioner provided detailed replies to the notices, but the respondent confirmed the proposal in the impugned orders. Subsequently, the petitioner filed rectification petitions under Section 84 of the Tamil Nadu Value Added Tax Act, 2006, which were rejected on 09.01.2015. The petitioner contended that the reasons for rejection were unfounded, including issues with Annexure II authentication and lack of clear proof for earlier tax sufferance.

The petitioner argued that their vendors were registered dealers, and the department should have taken action against them for not remitting the tax collected. Citing precedents, the petitioner emphasized that if the purchasing dealer complied with requirements, the claim for refund could not be denied. The court referred to decisions highlighting that the liability for unpaid tax by selling dealers should not be imposed on purchasing dealers who had proof of tax payment. The court held that the department's observation in the impugned order was unsustainable and that the assessing authority lacked the power to revoke ITC solely based on the selling dealer's non-payment of tax.

The court, after considering the submissions, set aside the impugned orders and remitted the matters back to the authority for fresh consideration on merits. The petitioner was directed to produce required documents attested by the seller, with a deadline set for further proceedings. Failure to comply would empower the authority to pass orders without influence from the set-aside orders. The writ petitions were disposed of with these directions, and no costs were awarded.