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TMI Blog2013 (4) TMI 615X X X X Extracts X X X X X X X X Extracts X X X X ..... ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ For Petitioners in W.P.Nos.24656 to 24661 of 2012: Mr. V. Sundareswaran ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ For Petitioner in W.P.No.29929 of 2011: Ms. C. Rekha Kumari ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ For Respondent in all WPs : Mr. A.R. Jaya Prathap, Government Advocate (Tax) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ORDER This batch of writ petitions is taken up for disposal by consent of the counsel for the petitioners and Mr.A.R.Jaya Prathap, learned Government Advocate (Tax), as all the batch of cases relate to a common issue as to the liability of the petitioners, who are registered dealers, to repay the input tax credit availed by them on lawful purchase of goods from another dealer. 2. The brief facts of the case are as follow: Each one of the petitioners in this case is a registered dealer under the Tamil Nadu Value Added Tax Act, 2006 (for brevity, "the TNVAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.R. Jaya Prathap, learned Government Advocate (Tax) appearing for the respondents, who stated that Section 19(15) of the TNVAT Act, 2006 provides for reversal of input tax credit consequent to the cancellation of the registration certificate of the selling dealer. Section 19(5) of the TNVAT Act, 2006 reads as follows: "Section 19(15): Where a registered dealer has purchased any taxable goods from another dealer and has availed input tax credit in respect of the said goods and if the registration certificate of the selling dealer is cancelled by the appropriate registering authority, such registered dealer, who has availed by way of input tax credit, shall pay the amount availed on the date from which the order of cancellation of the registration certificate takes effect. Such dealer shall be liable to pay, in addition to the amount due, interest at the rate of one and a quarter per cent, per month, on the amount of tax so payable, for the period commencing from the date of claim of input tax credit by the dealer to the date of its payment." 7. He submitted that on a plain reading of the above, as and when the appropriate registering authority cancels the registration cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods have been purchased from dealers whose registration certificates have been cancelled by the appropriate registering authority. There is no dispute on this proposition. What is the effect of cancellation of the registration certificate and how and when the reversal of the input tax credit will take effect is the question to be considered. 11. Section 19(15) of the TNVAT Act, 2006 provides that the registered dealer who availed the input tax credit should pay the amount availed on the date from which the order of cancellation of the registration certificate takes effect. In all these cases, without dispute, the orders cancelling the registration certificates of the selling dealers is given with retrospective effect, That is to say, after the assessment orders have been passed granting the benefit of input tax credit. 12. Insofar as the cancellation of the registration certificates of the selling dealers is concerned, it is for those selling dealers to canvas the plea as to when it will take effect either on the date of the order or with retrospective effect. Insofar as the petitioners are concerned, they have purchased the taxable goods from registered dealers who had va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowing the deductions claimed by the respondents was, in substance, to tax transactions which were otherwise not taxable. The condition precedent for becoming entitled to make a tax-free resale was the purchase of the goods which were resold from a registered dealer and the obtaining from that registered dealer of a certificate in this behalf. This condition having been fulfilled, the right of the purchasing dealer to make a tax-free sale accrued to him. Thereafter to hold, by reason of something that had happened subsequent to the date of the purchase, namely, the cancellation of the selling dealer's registration with retrospective effect, that the tax-free resales had become liable to tax, would be tantamount to levying tax on the resales with retrospective effect. 5. In our view, the High Court was right. A purchasing dealer is entitled by law to rely upon the certificate of registration of the selling dealer and to act upon it. Whatever may be the effect of a retrospective cancellation upon the selling dealer, it can have no effect upon any person who has acted upon the strength of a registration certificate when the registration was current. The argument on behal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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