2024 (11) TMI 341 - HC - VAT / Sales Tax

Challenge to Assessment orders passed under Section 27 of the TNVAT Act, 2006 - allegations against the petitioner was that the petitioner had availed input tax credit under Section 19 of the TNVAT Act, 2006 on the dealers whose registrations were cancelled - HELD THAT - Having perused the notices that preceded the impugned order and the reply of the petitioner and the impugned orders, this is a fit case for quashing the impugned order and remitting the case back to the respondent to pass a fresh order on merits after furnishing copies of the orders cancelling the registration certificate of the respective dealers. This exercise may be carried out by the respondent within a period of 30 days from the date of receipt of a copy of this order. It is for the petitioner to thereafter file a fresh/additional reply within a period of 30 days thereafter. The impugned order which stands quashed shall be treated as addendum to the Show Cause Notice dated 05.07.2016. The entire exercise shall be completed within a period of six months from the date of receipt of a copy of this order. Petition allowed.

Summary

Issues:
Challenge to Assessment orders under Section 27 of TNVAT Act, 2006 regarding input tax credit availed on cancelled dealer registrations.

Analysis:
In a series of Writ Petitions, the petitioner contested Assessment orders issued under Section 27 of the TNVAT Act, 2006, dated 23.09.2021, based on notices from 05.07.2016. The petitioner was accused of claiming input tax credit on dealers whose registrations were canceled, with the Department alleging the transactions were bogus. The petitioner argued that the registration cancellations were retrospective and that the selling dealers held valid registrations at the time of the transactions, citing provisions of the Foreign Trade and Development Act, 1992. Additionally, the respondent failed to provide the actual dates of registration cancellations for the dealers involved.

The petitioner relied on precedents such as Althaf Shoes P Ltd, Sri Vinayaga Agencies, Deputy Commissioner (CT) Trichy, and Sales Service Company, while the Government Advocate contended that these precedents were weakened by a later Division Bench ruling in Tvl.Sahyadri Industries Ltd v. The State of Tamil Nadu. After considering the arguments and reviewing the notices, replies, and impugned orders, the Court decided to quash the impugned orders and remand the case to the respondent for fresh consideration. The respondent was directed to provide copies of the orders canceling the dealers' registrations, and the petitioner was given an opportunity to respond. The Assessing Officer was instructed to issue new orders considering the Division Bench ruling within 30 days. The entire process was to be completed within six months.

Ultimately, the Writ Petitions were allowed, with no costs imposed, and connected miscellaneous petitions were closed.