2018 (3) TMI 160 - HC - VAT and Sales Tax

Validity of assessment order - adjustment of input tax credit - Section 19 (2) of the TNVAT Act read with Rule 10 (7) (c) of the TNVAT Rules, 2007 - Held that - when Section 19 (17) provides that, if the ITC determined by the Assessing Officer for a year exceeds tax liability for that year, the excess can be adjusted against any outstanding tax due from the dealer/assessee The word any has significance. The petitioner, being the registered dealer, both under the TNVAT Act and CST Act, would be entitled to adjust the ITC and for such liability under the CST Act - petition allowed - decided in favor of petitioner.

Summary

Issues:
Challenge to assessment orders under CST Act for the years 2010-11 to 2013-14 - Adjustment of input tax credit (ITC) for commission sales against 'C' Forms - Interpretation of Section 19(17) of TNVAT Act - Application of decision in Tvl. Sogan Starch Industries case.

Analysis:
The petitioner, a registered dealer under both TNVAT Act and CST Act, filed Writ Petitions challenging assessment orders under the CST Act for the years 2010-11 to 2013-14. The respondent issued notices stating that the petitioner adjusted tax due from commission sales against 'C' Forms to the ITC, proposing that such adjustment is not eligible under Section 19(2) of TNVAT Act read with Rule 10(7)(c) of TNVAT Rules, 2007.

Upon receiving notices, the petitioner submitted objections on consignment sales and legal issues, citing the decision in Tvl. Sogan Starch Industries case. The respondent attempted to distinguish the Tvl. Sogan Starch Industries case, contending it does not apply to the petitioner. However, the Assessing Officer should consider the ratio decidendi of the case, which allowed adjustment of excess tax against outstanding tax due from the assessee under Section 19(17) of the TNVAT Act.

The Court held that the decision in the Tvl. Sogan Starch Industries case binds the respondent, emphasizing that the word 'any' in Section 19(17) holds significance. As the petitioner is a registered dealer under both Acts, they are entitled to adjust the ITC against liability under the CST Act. The Court found no valid reason for the respondent to revise the assessments for the relevant years, ruling in favor of the petitioner.

Therefore, the Court allowed the Writ Petitions, quashed the impugned orders, and closed the connected Writ Miscellaneous Petitions, concluding that the petitioner is entitled to succeed due to the binding nature of the decision in the Tvl. Sogan Starch Industries case and the provisions of Section 19(17) of the TNVAT Act.