2018 (2) TMI 1481 - HC - VAT and Sales Tax

Validity of assessment order - Section 27 of the TNVAT Act 2006 - Held that - It is not in serious dispute that the turn over was exceeded Rupees Fifty Lakhs even during the year 2007 and the petitioner has submitted a letter along with Form I on 22.04.2008, which is prior to the substitution of Section 34 of TNVAT Act under Tamil Nadu Act 49 of 2008 with effect from 18.06.2008. Admittedly and no doubt, after the said substitution, the petitioner did not inform the said fact within 7 days as contemplated under Section 3(4) of the TNVAT Act. In a case of similar in nature, a clarification in VAT Cell/41922/2007 (VCC No.1161), dated 29.08.2007 has been issued with regard to the compounding scheme in respect of one Mr.Nanjundamoorthy, Sundaram Complex, 19-F, Co-op. Colony, Mettupalayam, Coimbatore District and as per the said clarification, the said assessee is eligible for input tax credit for his purchases made from the beginning of the year, but the time barred sales tax credit to stock held as on 31.12.2006 cannot be claimed. Appeal allowed in part.

Summary

Issues:
Challenge to order of revision of assessment under TNVAT Act 2006 - Availability of alternative remedy - Input tax credit eligibility - Application of compounding scheme clarification - Binding effect of circular on assessing Authority - Review of assessment in accordance with law and clarification.

Detailed Analysis:

Issue 1: Challenge to order of revision of assessment under TNVAT Act 2006
The appellant/writ petitioner challenged the order dated 25.05.2011, passed by the respondent regarding the revision of assessment under Section 27 of the Tamil Nadu Value Added Tax Act 2006. A Single Bench of the Court dismissed the writ petition on the ground of the availability of an alternative remedy in the form of an appeal, leading to the filing of the present Writ Appeal.

Issue 2: Input tax credit eligibility
The appellant contended that despite not informing the assessing Authority within the stipulated time frame as per Section 34(b) of the TNVAT Act, the fact that tax was remitted prior to the amendment was crucial. The appellant emphasized the unjust denial of input tax credit and sought relief based on the compounding scheme clarification and a previous court order recognizing the binding nature of such clarifications on the assessing Authority.

Issue 3: Application of compounding scheme clarification
Reference was made to a circular issued on 29.08.2007, providing guidance on the compounding scheme under TNVAT Act. The circular highlighted the eligibility for input tax credit for purchases made during the year, while disallowing time-barred sales tax credit. This clarification was deemed binding on the assessing Authority, as established in a previous court order.

Issue 4: Review of assessment in accordance with law and clarification
The Court acknowledged the significance of the circular and the previous court order in directing the reviewing of assessments in line with the law and clarification provided. The judgment in a similar case was cited, emphasizing the necessity for the assessing Authority to consider the clarification and pass appropriate orders accordingly.

In conclusion, the Writ Appeal was partly allowed, setting aside the previous order and directing the appellant to provide turnover details to the respondent. The respondent was instructed to consider the clarification and make decisions within the specified timelines. The judgment highlighted the applicability of the previous court order and the binding nature of the compounding scheme clarification on the assessing Authority.