2020 (8) TMI 218 - HC - VAT and Sales Tax

Demand and computation of belated payment of tax - TNVAT Act - availability of transition of the entry tax to credit ledger - petitioner has filed a TRAN 1 Declaration under GST - HELD THAT - Let a computation of interest under Section 42(3) of Act be furnished to the petitioner forthwith - The petitioner will either effect payment of the interest if the computation found to be in order or file its objections/response to the computation of interest furnished to it, including the request for interest on the available credit. Petition disposed off.

Summary

Issues:
Challenge to an 'Urgent Notice' for payment of VAT under the Tamil Value Added Tax Act, 2006. Dispute regarding the transfer of entry tax credit upon amalgamation, availing of partial credit, and claiming interest on the entry tax amount.

Analysis:
The petitioner contested an 'Urgent Notice' demanding payment of ?2,17,72,603 as VAT for April 2017 under the Tamil Value Added Tax Act, 2006. The petitioner acknowledged the tax liability and paid the amount following an interim court order. The main challenge revolved around the transfer of entry tax credit of approximately ?2.27 crores from M/s. TAFE Reach Limited to the petitioner post-amalgamation. The petitioner faced technical difficulties on the Commercial Taxes Department's website, hindering the transfer of credit. Despite filing a TRAN 1 Declaration under the Goods and Service Tax Act, 2017, to transition the entry tax credit, only a partial amount was utilized. The petitioner sought interest on the unutilized entry tax credit for the period between September 2016 to August 2017, attributing the delay to technical issues on the online portal, not due to their fault.

The court issued specific directions in response to the challenges raised. Firstly, a computation of interest under Section 42(3) of the Act was ordered to be provided to the petitioner promptly. Subsequently, the petitioner was directed to either pay the interest if the computation was correct or submit objections/response to the interest calculation, including the request for interest on the available entry tax credit. The court mandated that any objections raised should be addressed within four weeks of receipt and after hearing the petitioner. Following these directives, the writ petition was disposed of, and the connected miscellaneous petition was closed without any cost implications.