2021 (7) TMI 1054 - HC - VAT and Sales Tax

Input tax credit - benefit of credit to be extended in respect of the transactions occurred prior to the issue of amendment in the Tamil Nadu Act 5 of 2015 - HELD THAT - The issue decided in 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. Petition allowed.

Summary

Issues:
- Challenge to impugned order dated January, 2014
- Extending benefit of input tax credit for transactions prior to amendment in Tamil Nadu Act 5 of 2015

Analysis:
1. Challenge to Impugned Order:
The writ petition challenges the order dated January, 2014. The petitioner argues that the amendment rectified an anomaly rather than introduced a new policy. The petitioner contends that the benefit of Input Tax Credit (ITC) should cover transactions that occurred before the amendment in the Tamil Nadu Act 5 of 2015.

2. Extension of Input Tax Credit:
The core issue revolves around whether the benefit of input tax credit should be extended to transactions that took place before the insertion of the amendment in the Tamil Nadu Act 5 of 2015. The petitioner's counsel argues that a previous order by the Madurai Bench of the Court, which was not appealed by the respondent Department, supports extending the benefit of ITC to the petitioner.

3. Court's Decision and Reasoning:
The Court refers to the previous order's contentions, which focused on the retrospective or prospective application of the amended provisions. The Court analyzes Section 8 of the CST Act, emphasizing the purpose of the substitution and the intent behind the amendment. It is noted that the legislature broadened the grant of ITC to transactions with unregistered dealers in 2015, correcting an anomaly. The Court concludes that the amendment was made to rectify an anomaly and should be effective retrospectively from the inception of the Act.

4. Final Judgment:
Based on the precedent set by the previous decision and the interpretation of the relevant provisions, the Court quashes the impugned order and allows the writ petition. No costs are awarded, and connected Miscellaneous Petitions are closed. The decision favors the petitioners, extending the benefit of input tax credit to transactions prior to the amendment in the Tamil Nadu Act 5 of 2015.

This detailed analysis of the judgment highlights the legal arguments, court's reasoning, and the final decision regarding the challenge to the impugned order and the extension of input tax credit benefits for transactions preceding the legislative amendment.