2021 (10) TMI 929 - HC - VAT and Sales Tax

Reversal of input tax credit - no C declaration form made available or filed by the petitioner for part of value - section 19(2)(5) read with section 19(5)(c) of the Tamil Nadu value Added Tax Act, 2006 and Rule 10(9)(a) of Tamil Nadu Value Added Tax Rules, 2007 - HELD THAT - In the judgment in M/S. EVEREST INDUSTRIES LIMITED VERSUS THE STATE OF TAMIL NADU, THE DEPUTY COMMISSIONER (CT) (FAC) 2017 (3) TMI 279 - MADRAS HIGH COURT , the learned Judge has exactly confronted with the similar issue, where after having exhaustive discussion on the issue, the learned Judge has concluded that, if the manufacturer, who claimed that they have purchased inputs, which are referred to in first schedule of 2006 Act, in respect of them, if tax have been paid, and the tax suffered inputs have been used in manufacturing or processing of goods industries, they should be allowed to full credit of the tax paid on the inputs without being fatal by the proviso of Section 19(2)(v) of the TNVAT Act, 2006. Since it is the case of the petitioner that the same logic and the principle would apply to the facts of the present case also, accordingly, the learned counsel claimed that, the said benefit given in Everest Industries Limited case shall also be extended to the petitioner - the impugned pre-revision notice is quashed - petition allowed.

Summary

Issues:
Challenge to reversal of input tax credit under TNVAT Act, 2006 based on pre-revision notice issued to dealer for interstate sales discrepancy.

Analysis:
The petitioner, a dealer under TNVAT Act, 2006, challenged a pre-revision notice issued by the revenue department regarding the reversal of input tax credit due to alleged discrepancy in interstate sales declaration. The notice was issued based on the petitioner's submission of "C" declaration form for a lower value than the actual sales amount. The petitioner sought a writ of certiorari to quash the notice, citing provisions of Section 19(2)(v) of TNVAT Act, 2006 and Rule 10(9)(a) of TNVAT Rules, 2007.

The petitioner's counsel referred to a previous judgment in M/s. Everest Industries Limited case, where a similar issue was addressed. The counsel argued that the principles applied in the Everest case should also be extended to the present case, emphasizing that manufacturers claiming input tax credit should be allowed full credit without being restricted by Section 19(2)(v) of TNVAT Act, 2006.

The government counsel contended that the applicability of the Everest Industries Limited case judgment to the present case should be verified, and if the judgment is upheld on appeal, it should also apply to the petitioner. The court noted that the Everest case judgment allowed full credit of tax paid on inputs used in manufacturing, without being constrained by Section 19(2)(v) of TNVAT Act, 2006.

Based on the precedent set in the Everest Industries Limited case and the similar nature of the issue at hand, the court quashed the impugned pre-revision notice and allowed the writ petition. The court ruled in favor of the petitioner, extending the benefit granted in the Everest case to the present petitioner. The judgment concluded with the dismissal of costs and closure of the connected miscellaneous petition.