2023 (9) TMI 53 - HC - VAT and Sales Tax

Seeking adjustment of 25% of the tax confirmed by the second respondent towards pre-deposit - HELD THAT - The Writ Petition has to fail as no amounts remains for being adjusted towards pre-deposit in the Input Tax Credit of the petitioner. The Writ Petition fails. However, liberty is given to the petitioner to pay 25% of tax as is contemplated under Section 51 of the TNVAT Act within a period of thirty days from the date of receipt of a copy of this order.

Summary

Issues involved:
The petitioner seeks to quash a notice demanding 25% pre-deposit of disputed tax for an appeal filed against an adverse Assessment Order. The main issue is whether the petitioner is entitled to adjust the refund amount towards the pre-deposit as claimed.

Details of the Judgment:

Issue 1: Adjustment of Refund Amount for Pre-deposit
The petitioner received an adverse Assessment Order for the Assessment Year 2015-2016 and filed an appeal seeking a refund of Rs. 59,44,262. The petitioner wanted to adjust 25% of the tax confirmed by the second respondent towards pre-deposit. However, the respondents did not allow this adjustment, leading to the appeal not being numbered. The respondents argued that the credit amount relates to a carry forward amount for the year 2015-2016 and has already been adjusted in the succeeding year, making it ineligible for re-deposit. They cited relevant legal provisions such as Rule 10(10)(b) and Section 42(5) of the Act to support their position. The Court considered these arguments and concluded that no amounts remained for adjustment towards pre-deposit in the Input Tax Credit of the petitioner. The Writ Petition was dismissed, but the petitioner was given liberty to pay 25% of the tax within thirty days for the appeal to be numbered and decided on merits.

Key Legal Points:
- Rule 10(10)(b) allows adjusting excess input tax credit against arrears of tax or other amounts due.
- Section 42(5) mandates refunding excess tax paid after adjustment of arrears, with provisions for interest.
- The Court's decision was influenced by the absence of remaining amounts for pre-deposit adjustment.

Precedent and Conclusion:
The respondents relied on a previous court decision to support their stance that adjustment of the amount for pre-deposit was not permissible. Despite the dismissal of the Writ Petition, the petitioner was granted an opportunity to comply with the pre-deposit requirement within a specified timeframe for the appeal to proceed and be decided on its merits.