2022 (8) TMI 3 - HC - VAT and Sales Tax

Validity of assessment order - reversal of Input Tax Credit (ITC) in terms of Section 19(2)(v) of the Tamil Nadu Value Added Tax Act, 2006 - HELD THAT - In light of the categoric findings and conclusion of the Division Bench of this Court in THE STATE OF TAMIL NADU REPRESENTED BY ITS SECRETARY COMMERCIAL TAXES DEPARTMENT, THE DEPUTY COMMISSIONER (CT) (FAC) VERSUS M/S. EVEREST INDUSTRIES LIMITED 2022 (4) TMI 1204 - MADRAS HIGH COURT to the effect that the amendment to Section 19(2)(v) is curative and declaratory, the petitioner is entitled to the relief as sought and the impugned assessment order is set aside. Petition allowed.

Summary

Issues:
Challenge to assessment order denying Input Tax Credit (ITC) under Section 19(2)(v) of Tamil Nadu Value Added Tax Act, 2006.

Analysis:
1. The court considered the challenge to the assessment order denying Input Tax Credit (ITC) under Section 19(2)(v) of the Tamil Nadu Value Added Tax Act, 2006. The respondent, represented by the Additional Government Pleader, agreed with the petitioner that the issue had to be resolved in favor of the petitioner. The assessment had disallowed the petitioner's claim for ITC, leading to the challenge through a Writ Petition.

2. Reference was made to a previous judgment by a Division Bench of the court in a case involving the State of Tamil Nadu and M/s. Everest Industries Limited. The court in that case had determined that the amendment to Section 19(2)(v) was curative and declaratory in nature. The court emphasized that the amendment aimed to rectify a mischief caused by wrongful implementation. The court concluded that the amendment restored the benefit to all dealers involved in interstate sales, and it was effective retrospectively. As a result, the court held that the right of manufacturers to avail ITC was absolute, irrespective of subsequent events like interstate or intrastate sales.

3. Based on the clear findings and conclusion of the Division Bench regarding the nature of the amendment to Section 19(2)(v) as curative and declaratory, the court allowed the Writ Petition. The impugned assessment order disallowing ITC was set aside, granting the relief sought by the petitioner. The court's decision was in line with the interpretation of the amendment's intent and applicability, ensuring that the petitioner was entitled to the benefit of ITC under the relevant provision.

4. In the final order, the court allowed the Writ Petition without imposing any costs on either party. The connected Miscellaneous Petition was closed as a result of the judgment. The comprehensive analysis of the legal issues involved in challenging the assessment order showcased the court's interpretation of the law, particularly regarding the nature of the amendment and its impact on the entitlement to Input Tax Credit under the relevant provisions of the Tamil Nadu Value Added Tax Act, 2006.