2024 (10) TMI 44 - HC - VAT / Sales Tax

Challenge to demand notice - petitioner seeks set-off of VAT payment as against entry tax liability - HELD THAT - Section 4 of the Entry Tax Act provides for reduction in tax liability and states that where the importer of a motor vehicle remits entry tax, and becomes liable to pay sales tax under the General Sales Tax Act and additional sales tax under the Tamil Nadu Additional Sales Tax Act, 1970 as well, then liability under the General Sales Tax Act shall be reduced to the extent of entry tax paid. For the availment of benefit under Section 4 of the Act, the assessee is required to establish a one-to-one nexus between the entry tax and VAT payment and prove that the payments relate to the same motor vehicles. It is only upon such onus being discharged, then the benefit of Section 4 would be available to the assessee. The respondents have only taken note of the shortfall under statement II. The conflict can only be resolved if the liability under both enactments is crystallized. The admitted position as on date is that while returns filed under the TNVAT Act have been processed and assessments completed, the returns of entry tax filed on 16.04.2008 are pending. This Writ Petition is disposed off.

Summary

Issues: Challenge to demand notice under TNVAT Act, liability under Entry Tax Act, claim for set-off of VAT payment against entry tax liability, establishment of nexus between taxes paid and vehicles sold.

Analysis:

The petitioner, a dealer under the TNVAT Act, challenged a demand notice issued by the Assistant Commissioner regarding interstate sales of vehicles and tax remittance. The petitioner claimed to have remitted VAT but had not filed timely returns for entry tax under the Entry Tax Act. The petitioner sought set-off of excess VAT against entry tax liability, citing Section 4 of the Entry Tax Act, which allows for reduction in tax liability based on payments made.

The Court noted that the petitioner's claim for set-off of VAT payment against entry tax liability had been accepted in a previous case. However, the Court emphasized the need for the petitioner to establish a one-to-one nexus between the taxes paid and the vehicles sold to avail the benefit of Section 4. The Court directed the respondent to confirm the entry tax payments made by the petitioner and assess the entry tax returns promptly.

A discrepancy arose from conflicting statements submitted by the petitioner regarding excess VAT paid and deficit amounts. The Court directed the Assessing Authority to assess the entry tax returns promptly and consider the petitioner's plea for set-off once the entry tax liability is determined. The petitioner was instructed to appear before the Assessing Authority to facilitate the resolution of the matter within a specified timeframe.

In conclusion, the Court disposed of the Writ Petition, granting no costs and closing the connected Miscellaneous Petition. The judgment aimed to balance the interests of both parties by ensuring a proper assessment of entry tax liability and consideration of the petitioner's claim for set-off in accordance with the law and previous judicial observations.