2015 (6) TMI 158 - HC - VAT and Sales Tax

Denial of Input tax credit - Held that - Respondent issued a notice dated 22.7.2013 stating that on verification of the returns filed by the petitioner for the assessment years through departmental website, it is noticed that mismatching transaction had taken place and that such transaction is proposed to be brought under the taxable net element. When the petitioner has filed their monthly returns/furnishing particulars etc., in consonance with Section 19(10)(a) of Tamil Nadu Value Added Tax and Rule 10(2) of Tamil Nadu Value Added Rules, 2007 claiming Input Tax Credit as per Section 19(11) of the said Act, the respondent ought not to have directed the petitioner to furnish the proof for payment of tax by the petitioner s seller for the purpose of allowing input tax credit. - issue is squarely covered by the decision of this Court reported in Sri Vinayaga Agencies Vs. Assistant Commissioner (CT), Vadapalani - I Assessment Circle, Chennai and another (2013 (4) TMI 215 - MADRAS HIGH COURT). - Decided in favour of assessee.

Summary

Issues:
Challenging impugned orders passed by respondent, mismatching transactions leading to tax liability, input tax credit claim, interpretation of Section 19(1) of TNVAT Act, applicability of previous court decision.

Analysis:
The petitioner, a registered dealer, challenged orders passed by the respondent regarding mismatching transactions leading to a proposed tax liability. The petitioner had filed Form I Returns for the years in question, reporting total and taxable turnover. The respondent issued a notice based on discrepancies in the returns, proposing to bring certain transactions under the taxable net element. The petitioner, in accordance with relevant provisions, claimed Input Tax Credit and argued against the respondent's demand for proof of tax payment by the seller. The petitioner relied on a previous court decision to support their case.

The respondent, represented by the Additional Government Pleader, contended that the issue at hand was covered by a previous court decision involving similar circumstances. The court referred to the relevant portion of the previous decision, emphasizing that a registered dealer can claim input tax credit if they establish payment of tax on purchases. The court highlighted that the petitioner's self-assessment under the TNVAT Act justified their claim for input tax credit, even if the selling dealer had not paid the collected tax. The court held that the liability for unpaid tax by the selling dealer should not be imposed on the purchasing dealer who had provided proof of tax payment on purchases.

Based on the above analysis and the interpretation of Section 19(1) of the TNVAT Act, the court set aside the impugned orders passed by the respondent and allowed the writ petitions. No costs were awarded, and connected miscellaneous petitions were closed as a result of the judgment.