2021 (2) TMI 484 - HC - VAT and Sales Tax

Maintainability of petition - availability of alternate remedy - TNVAT Act - adjustment done towards the sales tax dues payable by the appellant - Section 19(17) of TNVAT Act - HELD THAT - If we are to accept the submission of Mrs.G.Dhanamadhri, learned Government Advocate appearing for the respondent, the consequence, which would follow is that the Department has to refund the amount of ₹ 14,84,690/- together with interest from January 2015 i.e when the adjustment was made till the date it is paid and the interest should be definitely compensatory. From the facts placed before the Court in the two earlier writ petitions as well as before the learned Single Judge in the impugned order, it is clear that the excess input tax credit, which accrued to the said M/s.Essa Hosiery Mills is not in dispute. Therefore, it will be too late in the day for the Department now to reopen the entire issue and conduct an autopsy of the matter especially because the adjustment was at the behest of the Department. Even assuming that the adjustment was erroneous and it had to be reversed, then the dealer would have to be refunded the entire amount with interest, which, in our opinion, should be not less than 18% per annum. Thus, considering the factual situation and bearing in mind the interest of the Revenue, we are of the considered view that the order dated 04.12.2015 impugned in the present writ petition has to be quashed. Appeal allowed.

Summary

Issues Involved:
1. Whether the appellant should avail the alternate remedy under the Tamil Nadu Value Added Tax Act, 2006 before approaching the High Court through a writ petition?

Analysis:
The High Court judgment involved a case where the appellant, engaged in garment business, sought a refund of excess input tax credit following the closure of another business, M/s.Essa Hosiery Mills. The appellant requested the adjustment of the refundable amount towards their own sales tax arrears. The Assessing Officer initially allowed this adjustment. However, subsequent notices challenged these adjustments under the Act. The High Court reviewed the actions taken by the Department and the legal implications of reversing the adjustment.

The Court emphasized the importance of considering whether the Department's actions were reasonable and sustainable. It noted that interference under Article 226 of the Constitution of India is possible if the action is found to be wholly unreasonable. The Court highlighted that no disputed questions of fact needed examination in this case, justifying the exercise of discretion under Article 226.

The judgment delved into the history of adjustments made by the Department, including the quashing of a notice challenging the adjustments. The Court concluded that the Department's attempt to reopen the matter against the appellant was unwarranted given the prior adjustments and legal proceedings. The Court also addressed the potential consequences of accepting the respondent's arguments, highlighting the need for the Department to refund the excess input tax credit with compensatory interest.

Ultimately, the Court decided to quash the order dated 04.12.2015, emphasizing that the judgment was specific to the case at hand and should not set a precedent. The writ appeal was allowed, the impugned order was set aside, and the appellant's writ petition was allowed. No costs were awarded, and the connected CMP was closed, concluding the legal proceedings in this matter.