2021 (7) TMI 126 - HC - VAT and Sales Tax

Validity of assessment order - Reversal of Input tax credit - difference in purchase turnover to tax - TNVAT Act - HELD THAT - Reliance placed in the case of M/S. CHAKARAVARTHY READYMADES VERSUS THE STATE TAX OFFICER, VANDAVASI, TIRUVANNAMALAI DISTRICT. 2019 (2) TMI 1447 - MADRAS HIGH COURT where it was held that In the present case, the Department, does not dispute the position that the purchasers have duly produced the original invoices from the seller. In such a circumstance, no reversal is liable to be made, in the absence of any further condition imposed upon the dealer in this regard. The assessment will be re-done - petition allowed by way of remand.

Summary

Issues:
Challenge to assessment orders based on VAT Act provisions and input tax credit claim.

Analysis:
The judgment concerns the challenge to assessment orders under the Tamil Nadu Value Added Tax Act, 2006 (the 'Act') regarding the claim of input tax credit (ITC). The petitioner argued that the issues raised in the Writ Petitions had already been decided in previous judgments by the Court, thus warranting the allowance of the Writ Petitions. The respondent, represented by the Government Counsel, did not contest the judgments passed in connected Writ Petitions, leading the Court to follow a previous order dated 11.02.2019 in W.P.Nos.3680 and 3683 of 2019. The judgment cited Section 19(10)(a) of the Act, emphasizing the requirement for registered dealers to claim ITC only upon receiving original tax invoices from the selling dealer. The Court noted that in the present case, the purchasers had indeed produced the required original invoices, and without any additional conditions imposed, no reversal of ITC was warranted.

Furthermore, the judgment referred to a case where dealers' ITC claims were reversed due to discrepancies between their returns and those of the sellers. The Court highlighted the importance of following statutory provisions and criticized the ineffective procedures adopted by assessing officers, leading to numerous assessments being set aside and remanded for reconsideration. The Court stressed the need for a centralized mechanism to address discrepancies and ensure fair treatment for dealers, suggesting that the Department should evolve a detailed procedure in consultation with officers to handle cases of mismatch effectively.

Consequently, the Writ Petitions were allowed, and the impugned assessment orders were set aside. The matters were remanded to the respective assessing officers for a fresh examination in consultation with officers of the other end dealer. The Court directed the Commissioner of Commercial Taxes to empower assessing officers to seek information from other circles and to devise a fair and reasonable procedure for dealers to present their case. The judgment highlighted that the petitioners were not entitled to raise a plea of limitation when fresh show cause notices were issued, emphasizing the need for a thorough enquiry and a holistic approach to address discrepancies in ITC claims.

In conclusion, the Writ Petitions were allowed, and the impugned assessment orders were set aside, with a directive for a fresh assessment following the principles outlined in the judgment. No costs were awarded, and the connected miscellaneous petitions were closed, bringing the matter to a resolution based on the legal analysis and precedents cited in the judgment.