2021 (5) TMI 284 - HC - VAT and Sales Tax

Concessional rate of tax - C Form could not be obtained due to default on the part of the other State dealers - validity of reversal of input tax credit when there was no input tax credit - HELD THAT - There can be no dispute that the issue on hand is squarely covered by TVL. BHARATH TRADERS VERSUS THE COMMISSIONER OF COMMERCIAL TAXES, THE COMMERCIAL TAX OFFICER, SOUTH AVANI MOOLA STREET CIRCLE, MADURAI 2019 (8) TMI 1699 - MADRAS HIGH COURT where it was held that Since the substitution in the present case only seeks to set right an anomaly it necessarily has to be effective from the date of inception of the Act itself, retrospectively. The respondents erred in effecting reversal of input tax credit - Petition allowed - decided in favor of petitioner.

Summary

Issues:
Assessment under Tamil Nadu Value Added Tax Act for the year 2011-12, reversal of input tax credit on Inter-State sales not covered by "C" Form, applicability of Section 19(2)(v) of the Tamil Nadu Value Added Tax Act, retrospective or prospective application of statutory provisions.

Analysis:
The petitioner, an assessee registered under the Tamil Nadu Value Added Tax Act, faced an issue regarding the reversal of input tax credit on Inter-State sales not covered by "C" Form for the assessment year 2011-12. The petitioner reported taxable sales under the Central Sales Tax Act, with a portion of turnover lacking "C" Form declaration due to default by other State dealers. Despite the petitioner's payment of tax at concessional rates for transactions with "C" Form and original rates for those without, the second respondent proposed to reverse input tax credit, leading to the imposition of tax and penalty. The impugned order stated that sales without "C" Forms were ineligible for input tax credit.

In response, the petitioner challenged the order, arguing that the issue was covered by a previous judgment in Bharath Traders vs. The Commissioner of Commercial Taxes and Another. The key question was whether the provisions of Section 19(2)(v) of the Tamil Nadu Value Added Tax Act, as amended, applied retrospectively or prospectively. The court, after considering various case laws, held that the benefit of input tax credit should extend to transactions with unregistered dealers under Section 8(2) of the CST Act, not just registered dealers under Section 8(1). The court emphasized that the legislative amendment in 2015 corrected an anomaly and should be applied retrospectively from the Act's inception.

Consequently, the court ruled in favor of the petitioner, stating that the respondents erred in reversing the input tax credit. The impugned order was quashed, and the writ petition was allowed without costs. The judgment emphasized the retrospective application of statutory provisions to ensure consistency and fairness in tax assessments, closing the connected miscellaneous petition.