2016 (8) TMI 1485 - HC - VAT and Sales Tax

Reversal of input credit taken on capital goods beyond 4% - TNVAT Act - HELD THAT - Reliance can be placed in the case of SARA LEATHERS VERSUS COMMERCIAL TAX OFFICER, TAMBARAM I ASSESSMENT CIRCLE, CHENNAI 2009 (10) TMI 848 - MADRAS HIGH COURT where it was held that We do not accept the submission of the learned Additional Government Pleader that the petitioner, who is a purchaser of the capital goods, is not entitled to have the benefit of total refund of the amount. Following the decision in the case of Sara Leathers, the Writ Petition is allowed - decided in favor of petitioner.

Summary

Issues:
Challenge to assessment order under TNVAT Act for the year 2007-2008 regarding reversal of input credit on capital goods beyond 4%.

Analysis:

1. Issue: Challenge to assessment order
- The petitioner, a registered dealer under the TNVAT Act, challenged the assessment order dated 22.04.2014 for the year 2007-2008. The challenge was based on the reversal of input credit taken on capital goods beyond 4%.

2. Legal Precedents:
- The petitioner relied on the decision of the High Court in the case of Sara Leathers V. Commercial Tax Officer, Chennai, [2010] 30 VST 581 (Mad) to support their argument. This decision was subsequently followed in the case of Tvl.Tata Refractories Limited V. The Commercial Tax Officer, Omalur.

3. Operative Portion of the Order:
- The Court, after considering the arguments and materials, found that the issue in the writ petition was covered by the decision in the Sara Leathers case. The Court emphasized the provisions of Section 18(1) and 18(2) of the Act, stating that the petitioner's claim for refund of the amount paid should be granted without any adjustment.

4. Decision and Rationale:
- The learned Additional Government Pleader did not contest the legal position established by the Sara Leathers case. Consequently, the Court allowed the Writ Petition, quashed the impugned order, and closed the connected Miscellaneous Petitions without any costs.

By relying on established legal precedents and interpreting the relevant provisions of the TNVAT Act, the High Court granted relief to the petitioner by setting aside the assessment order that reversed input credit on capital goods beyond the permissible limit. The judgment reaffirmed the importance of following legal principles and precedents in tax matters to ensure fair treatment for taxpayers under the law.