2022 (6) TMI 608 - 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 - The Division Bench of this Court in the case of 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 has decided the issue in favour of the assessee and it was held that Amendment Act 5 of 2015 is curative / declaratory in nature and would thus relate back to 11.11.2013, resultantly, the position insofar as the right of the manufacturers to avail ITC is, it becomes an absolute right, once the inputs are used in the manufacture or processing of the goods within the State, the subsequent event of the manufactured goods being sold by way of iner-state / intra-state sale would have no bearing nor does it result in imposing any limitation/restriction or whittle down the right to ITC earned in terms of Section 19(2)(ii) or 19(2)(v) of the TNVAT Act in the interregnum period. Thus, in view of the conclusion of the Division Bench of this 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 the impugned order of assessment dated 11.12.2022 regarding Input Tax Credit (ITC) under Section 19(2)(v) of the Tamil Nadu Value Added Tax Act, 2006.

Analysis:
The judgment addresses the challenge to the assessment order that reversed the petitioner's claim for Input Tax Credit (ITC) under Section 19(2)(v) of the Tamil Nadu Value Added Tax Act, 2006. The Division Bench of the Court had previously ruled in favor of the assessee in a similar case, emphasizing the curative and declaratory nature of the amendment to Section 19(2)(v). The Court highlighted that the legislature's intention was to rectify the wrongful implementation of the provision, leading to the restoration of the original position. The retrospective effect of the curative provision was emphasized, stating that it should be effective from a date prior to its enactment. The judgment clarified that the amendment aimed to restore benefits to all dealers involved in interstate sales, ensuring that manufacturers have an absolute right to avail ITC when inputs are used in the manufacturing process, irrespective of subsequent sales. The Court concluded that the amendment in question was curative and declaratory, entitling the petitioner to relief and setting aside the impugned assessment order.

Conclusion:
The Court's decision in this case underscores the significance of interpreting legislative provisions to discern their actual applicability and nature, particularly in the context of tax laws. By recognizing the curative and retrospective effects of the amendment to Section 19(2)(v), the judgment upholds the rights of manufacturers to claim Input Tax Credit, providing clarity and relief to the petitioner in challenging the assessment order.