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2017 (9) TMI 1418 - HC - VAT and Sales TaxReversal of ITC - interpretation of statute - proviso to Section 19 (2) (ii) of TNVAT Act - Held that - it appears that the State is in the process of preferring Appeals, by re-presenting the Appeal papers and the Appeals are yet to be numbered. The settled legal position being that, mere pendency of the Appeal(s), without interim order(s), will not amount to the grant of stay of the order(s) passed by the Lower Court or Lower Forum - In the instant cases, it appears that the Appeals filed by the State are yet to be numbered - the decision in the case of M/s. Everest Industries Limited Versus The State of Tamil Nadu, The Deputy Commissioner (CT) (FAC) 2017 (3) TMI 279 - MADRAS HIGH COURT apply, where it was held that the limitation provided in the proviso would apply only vis-a-vis the purpose specified in clause (v) and not qua other purposes set out in clause (i) to (iv) and (vi) of Section 19(2) of the 2006 Act. Writ Petitions are disposed of, by directing the respondent to consider the petitioner s petitions/letters/representations, dated 30.03.2017, taking note of the decision of the Court in M/s. Everest Industries Ltd. s case - petition allowed by way of remand.
Issues:
1. Interpretation of proviso to Section 19(2)(ii) of TNVAT Act. 2. Reversal of Input Tax Credit (ITC) by the respondent. 3. Pending Appeals by the State against similar decisions. 4. Legal position regarding stay of orders during appeal process. 5. Compliance with court directions in similar cases. Issue 1: Interpretation of proviso to Section 19(2)(ii) of TNVAT Act The judgment discussed the interpretation of the proviso to Section 19(2)(ii) of the TNVAT Act in the context of a batch of cases involving M/s. Everest Industries Ltd. The court emphasized that a dealer is entitled to claim ITC for tax-suffered inputs used for specific purposes outlined in the Act. The proviso limits ITC claims to excess of 3% of tax for certain purposes, clarifying that it does not apply to all clauses under Section 19(2). The court highlighted that the proviso's misinterpretation by the Revenue caused difficulties for manufacturers, affecting their competitiveness as detailed in the Statement of Objects and Reasons. Issue 2: Reversal of Input Tax Credit (ITC) by the respondent The petitioner, a registered dealer, sought a Writ of Mandamus to direct the respondent to reconsider their petitions and cancel the reversal of ITC amounts, seeking refunds. The petitioner's counsel argued that based on the court's decision in M/s. Everest Industries Ltd.'s case, the reversal of ITC was not justified. The court directed the respondent to review the petitioner's representations in light of the previous court decision and pass appropriate orders within a specified timeframe. Issue 3: Pending Appeals by the State against similar decisions The State had preferred Appeals against decisions similar to the present case, which were pending at the SR Stage awaiting numbering. The court noted that the mere pendency of appeals without interim orders did not stay the lower court's decisions. Despite the pending appeals, the court inclined to issue directions in the present case while allowing the State to pursue their appeals concurrently. Issue 4: Legal position regarding stay of orders during appeal process The court clarified that the pendency of appeals without interim orders did not automatically stay the lower court's decisions. In this case, the State's appeals were yet to be numbered, allowing the court to issue directions in the writ petitions while permitting the State to continue with their appeals. Issue 5: Compliance with court directions in similar cases The court referred to a previous case where directions were issued but allegedly not complied with. In the present judgment, the court directed the respondent to consider the petitioner's representations within a specified timeline, emphasizing compliance with the court's decision in M/s. Everest Industries Ltd.'s case. In conclusion, the judgment addressed the interpretation of the TNVAT Act, reversal of ITC, pending appeals, legal stay positions, and compliance with court directions, providing detailed analysis and directives for each issue raised in the writ petitions.
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