2022 (1) TMI 1064 - HC - VAT and Sales Tax

Recovery of credit availed by the petitioner - vires of Section 19(11) of the Tamil Nadu Value Added Tax Act, 2006 - it is submitted that impugned order has now been passed by the respondent after a lapse of 1 years and without the following principles of natural justice - HELD THAT - The petitioner is not entitled to credit availed by the petitioner beyond the period of limitation. Therefore, on merits as far as the demand of the input tax credit is concerned there is no case made out by the petitioner - the petitioner is directed to pay the amount confirmed in the impugned orders for a sum of ₹ 70,720-00 and ₹ 2,84,642-00 for the respective Assessment Year - As far as the imposition of penalty which appears to be 200% of the amount confirmed in the impugned order is concerned the petitioner appears to have made out a case for interference. Principles of natural justice - HELD THAT - Considering the fact that the petitioner's representation dated 29.08.2013 has not been considered by the respondent, while passing the order under Section 27(4) as it stood during the material period though did not specifically contemplate the benefit of personal hearing and also considering the fact that the order has been passed long after the notices were issued in view of the pendency of the writ petition and after the reply was filed by the petitioner vide reply dated 29.08.2013 which duly acknowledged by the respondent on 12.09.2013, the case is remitted back to the respondent to pass a speaking order within a period of forty five (45) days from the date of receipt of a copy of this order. These writ petitions stand partly allowed by quashing the impugned order in so far as the imposition of penalty is concerned. The petitioner shall pay the amount of tax/input tax sought to be recovered within a period of forty five (45) days from the date of receipt of a copy of this order.

Summary

Issues:
Challenge to notice for recovering ineligible credit under Section 19(11) of TNVAT Act, 2006; Delay in passing the impugned order; Principles of natural justice not followed; Entitlement to credit availed by the petitioner; Imposition of penalty; Consideration of petitioner's representation; Interference with the impugned order; Payment of confirmed amount within specified time; Remitting the case back to the respondent.

Analysis:
The petitioner initially challenged a notice for recovering ineligible credit availed under Section 19(11) of the TNVAT Act, 2006. The writ petitions were disposed by the court's order dated 17.07.2013, where the vires of Section 19(11) were upheld, allowing affected parties to file appeals or reply to notices within thirty days. The petitioner responded to the notice on 29.08.2013, acknowledged by the respondent on 12.09.2013. However, the impugned order was passed after a delay of 1 ½ years without following principles of natural justice, leading to the petitioner seeking quashing of the order.

The Government Advocate opposed the prayer, arguing that the issue was decided against the petitioner previously, and there was no merit in the current writ petition. Regarding the penalty, it was contended that as long as the opportunity to show cause was given, a personal hearing was not necessary. The show cause notice was issued in 2011, and the petitioner had an opportunity to reply, as per the court's decision, which was considered in the impugned order.

Upon considering the arguments, the court found that the petitioner was not entitled to credit beyond the limitation period, leading to a direction to pay the confirmed amounts for respective assessment years. However, regarding the penalty, the court noted that the petitioner had a case for interference. The court also observed that the petitioner's representation from 29.08.2013 was not considered by the respondent, prompting the court to remit the case back for a speaking order within forty-five days, allowing additional representation if needed.

In conclusion, the writ petitions were partly allowed by quashing the penalty imposition in the impugned order. The petitioner was directed to pay the tax/input tax within forty-five days, with liberty to make submissions on the penalty. No costs were awarded, and connected miscellaneous petitions were closed as a result of the judgment.