2021 (2) TMI 1339 - HC - VAT and Sales Tax

Demand of differential tax on the goods sold in terms of Section 3(4)(b) of the Tamil Nadu Value Added Tax - payment of concessional rate of tax by availing the benefit of Section 3(4)(a) of the Tamil Nadu Value Added Tax Act, 2006 - HELD THAT - The court there held that it is well settled that if a statute is curative or merely declaratory of the previous law, retrospective operation is generally intended - It observed that provision for surcharge under the Finance Act, 2002 was in existence since 1995, insofar as levy of surcharge for block assessment was concerned. However, it was introduced by insertion of aforesaid proviso to Section 113 therefore a question arose as to whether this surcharge on block assessment has been levied for the first time by the aforesaid proviso coming into effect from 1-6-2002 or it is only clarificatory in nature because of the reason that the provision for surcharge was made in the Finance Act in the year 1995 and that covered surcharge on block assessment as well. In the absence of clear words indicating that the amending Act is declaratory, it would not be so construed when the pre-amended provision was clear and unambiguous. An amending Act may be purely clarificatory to clear a meaning of a provision of the principal Act which was already implicit. A clarificatory amendment of this nature will have retrospective effect and, therefore, if the principal Act was existing law which the Constitution came into force, the amending Act also will be part of the existing law. The amendment to Section 3(4)(b) of the Tamil Nadu Value Added Tax Act, 2006 received the assent of the Governor on 26.09.2011. It was notified vide G.O.Ms.No.135, Commercial Taxes and Registration (B1), dated 31.10.2011 for the purpose of Section 1(2) of Act No.27 of 2011 - Though the said amendment was notified vide G.O.Ms.135, Commercial Taxes and Registration (B1), dated 31.10.2011, the Government appointed the 1st day of April 2012 as the date from which the said amendment was to come into force. It has not declared that the amendment will come into force from an anterior date. Since the Government has not given the amendment effect from an earlier date during the Assessment Years 2010-2011 20112012, it cannot be given effect with retrospective date on an earlier date. This aspect was not brought to the attention of the Court in the two decisions which were cited. Cases remitted back to the respondents for a limited purpose for passing fresh Revised Assessment Orders by allowing the petitioner to adjust the Input Tax Credit in terms of Section 3(4)(b) of the Tamil Nadu Value Added Tax Act, 2006 which benefit has not been given to the petitioner - petition disposed off.

Summary

Issues Involved:
1. Validity of the assessment orders dated 30.01.2015.
2. Retrospective application of the amendment to Section 3(4)(b) of the Tamil Nadu Value Added Tax Act, 2006.
3. Entitlement to input tax credit for the petitioner.

Issue-wise Detailed Analysis:

1. Validity of the assessment orders dated 30.01.2015:
The petitioner challenged the assessment orders dated 30.01.2015 for the Assessment Years 2010-2011 and 2011-2012, which demanded differential tax under Section 3(4)(b) of the Tamil Nadu Value Added Tax Act, 2006. The petitioner argued that the amendment to Section 3(4)(b) by Act No.27 of 2011, effective from 26.09.2011, clarified the law and should be applied retrospectively. However, the court upheld the assessment orders, stating that the petitioner knowingly violated the conditions under Section 3(4)(a) by exceeding the Rs.50,00,000/- turnover limit, thereby disqualifying itself from the concessional tax rate.

2. Retrospective application of the amendment to Section 3(4)(b) of the Tamil Nadu Value Added Tax Act, 2006:
The petitioner relied on previous court decisions that interpreted the amendment as clarificatory and therefore retrospective. However, the court noted that the amendment was intended to be prospective, as indicated by the notification specifying its effective date as 01.04.2012. The court referenced the principles laid down by the Supreme Court in CIT v. Scindia Steam Navigation Co. Ltd. and Commissioner of Income Tax (Central) Vs. Vatika Township Private Limited, emphasizing that a subsequent amendment cannot be applied retrospectively unless explicitly stated. The court concluded that the amendment to Section 3(4)(b) was not intended to have retrospective effect.

3. Entitlement to input tax credit for the petitioner:
The court acknowledged that the petitioner is entitled to input tax credit under Section 3(4)(b) of the Tamil Nadu Value Added Tax Act, 2006, for the relevant assessment years. The assessment orders did not grant this benefit, and the court remitted the cases back to the respondents to pass fresh revised assessment orders, allowing the petitioner to adjust the input tax credit. The respondents were directed to complete this exercise within three months, and the petitioner was given one month to file a reply/representation.

Conclusion:
The court upheld the assessment orders but remitted the cases for the limited purpose of allowing the petitioner to adjust the input tax credit. The writ petitions were disposed of with the above observations, and no costs were awarded. The connected miscellaneous petitions were also closed.