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TMI Blog2023 (4) TMI 912X X X X Extracts X X X X X X X X Extracts X X X X ..... r, Ms.Amirtha Poonkodi Dinakaran, Government Advocate COMMON ORDER S.VAIDYANATHAN, J. AND C.SARAVANAN, J. By this common order all these Writ Petitions, Writ Appeals and Tax Cases, are being disposed. 2. In these cases following issue arises for our consideration:- (a)Whether input tax credit availed under Section 19 of the Tamil Nadu Value Added Tax Act, 2006(herein after referred to as TN VAT Act, 2006) by these petitioners/ appellants can be denied retrospectively on account of cancellation of the VAT registration of the dealers who are said to have effected sale of the goods to these petitioners/appellants? (b) Whether, the input tax credit availed by them can be denied in absence of transport documents and other documents to prove movement of goods to these petitioners/appellants from the dealers who effected sale of goods to these petitioners/appellants? (c) Whether amendment to Section 19(1) of TN VAT Act, 2006 vide Tamil Nadu Act, 13 of 2015 with effect from 29.01.2016 is prospective or retrospective? 3. For the sake of convenience, we shall deal with the cases in three parts. The petitioners have challenged the Assessment Orders in Writ Petitions. Writ Appeals p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Commissioner (CT), MANU/TN/5302/2011; xii. Infiniti Wholesale Limited vs. The Assistant Commissioner (CT), W.P.No.9265 of 2013; xiii. Eicher Motors Limited and Ors vs. Union of India, 1999 (106) ELT 3 (S.C.); xiv. Collector of Central Excise, Pune and others vs. Dai Ichikarkaria Limited and Others, 1999(112)ELT353(S.C.); xv. Additional Commissioner of Income Tax vs. BahriBros.Private Limited, 154 ITR 244 (1985), MANU/BH/0136/1984; xvi. Commissioner of Central Excise Chandigarh vs. Neepaz Steels (India), (2007) 213 ELT 100; xvii. Commissioner of Central Excise, Chandigarh vs. Neepaz Steels (India), (2008) 230 ELT 218; xviii. GheruLal Bal Chand vs. State of Haryana and Others, (2012) ILR 2Punjab and Haryana781; xix. Mahalaxmi Cotton Ginning Pressing and Oil Industries, Kolhapurv vs. The State of Maharashtra and Ors,MANU/MH/0620/2012; xx. Shanti Kiran India Private Limited vs. Commissioner Trade and Tax Department, MANU/DE/0058/2013; xxi. On Quest Merchandising India Private Limited and Ors., vs. Government of NCT of Delhi and Ors., MANU/DE/3276/2017; xxii. DuniChondRataria vs. Bhuwalka Brothers Ltd., MANU/SC/0038/1954; xxiii. KalwaDevadattam and Others vs. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and another vs. State of Mysore and another, (1963) 3 SCR 792, AIR 1963 SC 548; xlix. Tata Engineering and Locomotive Company Limited vs. Assistant Commissioner of Commercial Taxes, (1967) 2 SCR 751, AIR 1967 SC 1401; l. Hansraj Gordhandas vs. H.H.Dave, Assistant Collector of Central Excise and Customs, Surat and Others, (1969) 2 SCR 253; li. Raza Textiles Limited vs. Income Tax Officer, Rampur, (1973) 1 SCC 633; lii. Controller of Estate Duty, Madras vs. Smt.Parvathi Ammal, (1975) 4 SCC 176; liii. K.Gopinath Nair and others vs. State of Kerala, (1997) 10 SCC 1; liv.Commissioner of Central Excise, Chandigarh vs. Pepsi Foods Limited, (2011) 1 SCC 601; lv. Whirlpool Corporation vs. Registrar of Trade Marks, Mumbai and Others, (1998) 8 SCC 1; lvi. State Government Houseless Harijan Employees Association vs. State of Karnataka and Others, (2001) 1 SCC 610; lvii. Collector of Central Excise, Bombay vs. Maharashtra Fur Fabrics Limited, (2002) 7 SCC 444; lviii. Commissioner of Central Excise, Hyderabad vs. Sunder Steels Limited, (2005) 3 SCC 363; lix. Sandur Micro Circuits Limited vs. Commissioner of Central Excise, Belgaum, (2008) 14 SCC 336; lx. Meera Sahni vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chennai, 2018 (362) E.L.T. 576 (Mad.); lxxxiii. Madan Lal Arora vs. The Excise and Taxation Officer, Amristar, [1961] 12 STC 387 (SC) lxxxiv. Transworld Shipping Services Private Limited vs. Government of India, 2018 (361) E.L.T. 176 (Mad.); lxxxv. Mr.J.Sheikparith vs. The Commissioner of Customs (Sea port-Exports) Chennai, The Additional Director General Directorate of Revenue Intelligence South Zonal Unit, Chennai, 2020 (9) TMI 311. 8. On behalf of the respondents CTD (Commercial Tax Department), following cases were cited:- (a)Commissioner of Income Tax (Central) - I, New Delhi vs. Vatika Township Private Limited, (2015) 1 SCC 1; (b)Allied Motors Private Limited vs. Commissioner of Income Tax, Delhi (1997) 3 SCC 472; (c)Commissioner of Income Tax - I, Ahmedabad vs Gold Coin Health Food Private Limited, (2008) 9 SCC 622; (d)Zile Singh vs. State of Haryana and Others, (2004) 8 SCC 1; (e) Jayam and Company vs. Assistant Commissioner and Another, (2016) 15 SCC 125; (f) ALD Automotive Private Limited vs. Commercial Tax Officer Now upgraded as Assistant Commissioner (CT) and Others, (2019) 13 SCC 225; (g)C.Bright, Managing Trustee, K.S.M.Educational& Charitable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner. 12. The petitioner herein had earlier filed a Writ Petition before this Court in W.P.Nos.21963 to 21965 of 2015. These Writ Petitions were disposed by directing the petitioner to file a statutory appeal against the assessment orders that came to be passed on 26.05.2015. Thus, the petitioner preferred a statutory appeal before the Appellate Deputy Commissioner (CT) (FAC), Erode in AP.Nos.155 to 157 of 2015. These appeals were partly allowed. Aggrieved by the same, the State preferred appeal before the Sales Tax Appellate Tribunal (STAT) in Appeal Nos.91 to 93 of 2016. 13. Relevant portion of the impugned common order of Sales Tax Appellate Tribunal (STAT)reads as under: "7. Both sides argument was heard and the written statements filed were examined with reference to the records produced by both parties. The points raised for consideration in this present appeal are as below:- IA Point Category Year Amount of Rev.ITC A Due to cancellation of registration 2010-11 2011-12 2012-13 Rs.2,44,821-00 Rs.2,52,492-00 Rs.93,535-00 B Purchase from Masani Industries, Senthur Murugan Sunlight Boards 2010-11 2011-12 Rs.3,43,528-00 Rs.4,67,600-00 C Selling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0+343528-00+467600-00) (for the years 2010-11, 2011-12 and 2012-13) aggregating to Rs.14,03,976-00 involved in item No.(a) and (b) above, and hence this forum find no reasons to interfere in the deletion of the reversal ITC involved in item No.(a) and (b) above. 12.Therefore this appellate Tribunal is of the considered view to concur with the findings of the first appellate authority in deletion of the above reversal tax credit and it is ordered accordingly in favour to the respondent/dealer. Point (c) Rev.ITC on selling dealer not paid: 13 As for as this issue is concerned, though the respondent/dealers produced tax invoices to the effect that they are in possession of the same, as rightly contended by the revenue, they never prepared to come forward to produce the material evidencesfor the proof of movement of goods from the selling dealer. The decision reported in 82 VST 324 of Hon'ble High Court of Gujarath in which it was held that "However while claiming input tax on the purchases, the dealer was also required to prove and establish the actual movement of goods and the genuiness of the transaction. Mere production of the bills, vouchers etc., was not sufficient to claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In fine, i. Point No. (a), (b) and (d) are decided in favour to the dealer and against the revenue. ii. Point No. (c) is remanded back to the assessing authority. In the result, the state appeal filed in CTSA 91/2016, 92/2016 and 93/2016 are "Partly Dismissed and Partly Remanded". 14. In these appeals, the appellant has raised the following questions of law:- "6. Questions of law raised for decision by this Hon'ble High Court: (a)Whether in the facts and circumstances of the case, the Hon'ble Appellate Tribunal was correct, in law, in passing the impugned order on a ground which never formed part of the appeal of the Respondent before Appellate Tribunal? (b)Whether in the facts and circumstances of the case, the Hon'ble Appellate Tribunal was correct, in law, in passing the impugned order against the principles of law laid down by the Apex Court in the cases of Bachhaj Nahar v. Nilima Mandal and Anr. MANU/SC?8199/2008 and Warner Hindustan Limited vs. CCE - 1999 (113) ELT 24 (SC)? (c)Whether in facts and circumstances of the case, the Hon'ble Appellate Tribunal was correct, in law, not following the judgments passed by this Hon'ble Court in Althaf Shoes (P) Ltd vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1996 (88) ELT (SC) - Para 3 refers; Warner Hindustan Limited vs. CCE - 1999 (113) ELT 24 (SC) - Para 2 refers; &Saci Allied Products Ltd vs. CCE - 2005 (183) ELT 225 (SC) - Paras 17, 18 & 19 refers. 2.2 Second, the issue of denial of ITC on account of selling dealers not filing Form - I return is settled in favor of the petitioner through judgments of this Hon'ble Court. Kindly see: (i) Althaf Shoes (P) Ltd - Paras 3, 9 & 10 refers; (ii) Sri Vinayaga Agencies - Paras 6, 8 & 10 refers & (iii) Infiniti Wholesale Ltd - Paras 4, 9, 22, 23 & 24 refers. These judgments were submitted at the time of hearing and form part of the first typed set. The Appellate Tribunal has overlooked and ignored the above binding precedents in clear violation of principles of judicial discipline and decorum. 2.3 Third, the petitioner submits that reliance on the judgement of the Hon'ble Gujarat High Court in the case of Shree Bhairav Metal Corporation is completely misplaced and out of context. In the said case, the registration certificate of the selling dealer of the assessee stood cancelled and it was alleged that M/s Lucky Enterprises is not a genuine dealer and had indulged in to billing activitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive from 14thOctober, 2015. 2.7 Second, an amendment to a substantive provision cannot be retrospectively applied. The condition of 'delivery of goods' is a substantive provision in itself. It is not procedural in nature. Hence, in the instant case, the proviso inserted in section 19 is not a clarificatory provision. 2.8 Third, in the case of CIT v. Vatika Township Private Ltd. - (2015) 1 SCC 1, the Hon'ble Supreme Court has clarified the position regarding general principles against retrospectivity as principle of 'fairness' while holding that legislations which modified accrued rights or which impose obligations or impose new duties or attach a new disability have to be treated as prospective. 2.9 Fourth, an assessee cannot be asked to reverse input tax credit which he has rightfully availed based on law which existed during that period. We may refer to decision of the Hon'ble Supreme Court in CCE vs. Dai IchiKarkaria Limited2002-TIOL- 79-SC-CX-LBwhere it was held that credit once rightfully earned is an indefeasible right. Thus, where the petitioner has earned the credit under section 19 of the Act, prior to the amendment / introduction of the proviso, it would not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... els in these Writ Petitions/Writ Appeals, before we answer the issue. 19. In support of the case of the appellant in W.A. No.2714 of 2021 (M/s. Sameera Timbers and Plywoods), learned Counsel Mr.S.Ramanathan submitted as follows:- (1)Reversal of ITC for the reason that no documents in proof of movement of goods were filed is not correct. (2)The amendment Act 13/2015 which is to the effect that the delivery of goods has to be proved is with effect from 29.1.2016. (3)The assessment year relates to 2011-12. As per the provision existed during that period, it is enough if it is proved that tax has been paid on the purchases effected as per Section 19(1) of the TN VAT Act read with Rule 10(2) of the TN VAT Rules. The show cause notice and the orders were passed prior to the amendment. (4)Original Invoices - Proof for payment - Monthly return of the sellers was filed. The ITC was reversed that no proof for movement of goods were filed. (5)The Respondent has reversed the ITC stating that the registration certificate of the sellers were cancelled with retrospective effect. (6)The Petitioner has purchased the goods when the registration certificates of the sellers were in force ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bogus transactions, this Hon'ble Court found the need for a mechanism for proper enquiry. Vide paras 23 & 56. The mechanism was formed vide Circular No.5/2021 dated 24.02.2021 issued by the Principal Secretary/Commissioner of Commercial Taxes and directed to be applied by this Hon'ble Court in WP No.929 of 2021 dated 26.11.2021 - vide page 30 of Volume IV - WA No.2637 of 2021. There is no writ appeal by the Revenue against this order. (2)The allegation in the show cause notice was one of collusion with the buyer to pass on input credit without transaction of sale. The alleged revenue loss is that though there is no transaction of sale made by the Appellant, the Appellant has issued tax invoices to buyers to enable such buyers to have input tax credit which those buyers would have, used, for payment of tax on sale of goods effected by them from unaccounted purchases made by those buyers - allegation in Notice dated 24.02.20216 - page 24 - A in W.A.2637 of 2021. There was no enquiry with the buyer. If the charge was one collusion, the buyer ought to have been enquired. Collusion is a pact between two people to defraud a third person. Kindly see 1984 (1) SCC page 612 - page 4 Volum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed proviso. "Actually" is in reference to a fact which has actually occurred and does not refer to the quality of delivery. Kindly see AIR 1969 KER page 38 (page 77 Volume IV in WA No.2637/2021 at page 82 (para 14). (10)It is most respectfully submitted that actual delivery will include constructive delivery - (i) AIR 1955 SC page 182 - page 170 Volume IV - WA No.2637/2021 at page 174 (para 14). (ii) 1961-12 STC Page 147Page 176 - Vol. IV - WA 2637 of 2021 at Page 179 - VOL IV. (11) It was submitted that if the substituted proviso to Section 19(1) is construed as applicable only for actual physical delivery and not actual constructive delivery, then, the substituted proviso to Section 19(1) will be in conflict with Section 3(3) which allows set off for every category of sale and delivery. Also, while there will be charge or liability on every type of sale and delivery under Section 3(2) credit will stand denied in cases involving constructive delivery. (12) It was submitted that that even if the amended proviso to section 19(1) is found to apply to the period prior to 29.01.2016 the terms of the proviso may be found satisfied if the assessee produces "proof of delivery" thoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision only held that while subsequent legislation imposing new disability, will be treated as prospective, fresh legislation granting relief will be retrospective. Kindly see paragraphs 28 to 30. It was also held that when there is no ambiguity in the prior law, subsequent law will not be treated as declaratory - vide paragraph 32. 4. 2008 (9) SCC page 622 (SC) - vide page 75 of Respondent's case laws compilation It is respectfully submitted that the background to the amendment to the Income Tax Act was an uncertainty in legal position. Kindly see paragraph 5 of the judgment which parliament sought to put at rest. Again, it was found that when the prior law was unambiguous a statute cannot be treated as declaratory - vide paragraph 19. 5. 2003 (5) SCC page 461 (SC) - vide page 164 of Respondent's case laws compilation It is respectfully submitted that, it was found that the amendment was intended to clarify doubts which existed on account of conflicting decisions - vide paragraph 38. On the contrary, as regards, the input credit under Section 19(1) the law prior to TN Act 13 of 2015 was unambiguous and only required production of tax invoice from registered seller. E. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 at Page No.113. 3. The requirement in similar provisions of Delhi VAT Act that the purchaser has to establish that the tax has been actually paid by the selling dealer has been held to be ultra vires and violative of Article 14 of the Constitution of India. SLP filed by the department against this Judgment is dismissed. On Quest Merchandising India Pvt. Ltd. and Ors. v. Government of NCT of Delhi and Ors. MANU/DE/3276/2017; [Page 73 to 91] Para 19 at Page 77 and Para 54 at Page 91. 4. Commissioner Of Trade and Taxes Delhi V. Arise India Limited Special Leave to Appeal (C) No(s). 36750/2017 Dated 10.01.2018 [Page 92 to 93]. 5. Gheru Lal Bal Chand v. State of Haryana and Ors. (2012)ILR 2Punjab and Haryana781. Challenge to validity of similar provisions of Haryana VAT Act. [Page 24 to 36] Para 18 at Page 30, Para 34 at Page 36. 6. R.S. Infra-Transmission Ltd. v. State of Rajasthan D.B. Civil Writ Petition No. 12445 / 2016 dated 11.04.2018 [Page 94 to 110] Page 110. 7. Mahalaxmi Cotton Ginning Pressing and Oil Industries, Kolhapur v. The State of Maharashtra and Ors. MANU/MH/0620/2012 [Page No. 37 to 62] Para 6 at Page 41 and 42, Para 38 at Page 55. Proposition III : The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 144 Paras 25 to 28, Page 145 and 145 Paras 39 to 43. 6. Maks Pen EOOD v DirektornaDirektsia 'Obzhalvaneidanachno-osiguritelnapraktika' Sofia Case C-18/13 dated 13 February 2014 [Page No. 147 to 158] Page 156 22. In support of the petitioner in W.P.No.12450 of 2019 (M/s.Indo Metal Press Private Limited), learned counsel Mr.S.Rajasekar, submitted as follows:- "In the present case, the following substantial questions of law arise for consideration of this Hon'ble Court: (1)Whether Input Tax Credit (in short ITC) availed by a Registered Dealer (Petitioner herein) after complying with the statutory requirements of Section 19(1) of the Tamil Nadu Value Added Tax Act, 2006 (in short the 2006 Act), read with Rule 10(2) of the Tamil Nadu Value Added Tax Rules, 2007 (in short the 2007 Rules) can be denied by the Respondent and whether at all Respondent had any jurisdiction to do so? (2)Whether the conditions and restrictions subsequently inserted in the statutory provisions prospectively w.e.f. 29.01.2016 can be indirectly insisted for the earlier periods and whether in that guise, the VAT authorities can apply the amended law retrospectively? (3)Whether the VAT authorities can im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Tamil Nadu. On all sales made by the Petitioner within the State of Tamil Nadu, it paid VAT at the applicable rates under the 2006 Act. All the said sales were made by the petitioner under cover of proper tax invoices containing all prescribed particulars about the buyers' names, addresses, TIN number, VAT paid etc. 4. For the assessment year 2012-2013 the petitioner had duly filed the monthly return in Form I reporting a total and taxable turnover under TNVAT Act, 2006.The petitioner's place of business was inspected by the Enforcement Wing Officials on 05.12.2013 wherein certain defects have been noticed. 5. Leaving apart various other defects which have been resolved, the present writ petition focuses only on the reversal of ITC on the pretext that proof regarding the actual movement of goods were not furnished. 6. To the various Notices issued, replies were filed by the petitioner which was ignored and the present impugned proceedings dated 27.03.2019 was issued by the Respondent. Whether ITC availed by a Registered Dealer after complying with the statutory requirements of Section 19(1) of the 2006 Act read with Rule 10(2) of the 2007 Rules can be denied by the V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticular issue, sub-section (10) is the material provision. This provision, which is couched in negative terms, categorically stipulates that such ITC would be admissible to the registered dealer and he would not be entitled to claim this credit "until the dealer receives an original tax invoice duly filled, signed and issued by a registered dealer from where the goods are purchased...". Further, such original tax invoice should evidence the amount of input tax. So much so, even if the original tax invoice is lost, the obligation cast on the registered dealer is to obtain duplicate or carbon copy of such tax invoice from the selling dealer and only then input tax is allowed. 11. From the aforesaid scheme of Section 19 following significant aspects emerge: (a)ITC is a form of concession provided by the legislature. It is not admissible to all kinds of sales and certain specified sales are specifically excluded. (b)Concession of ITC is available on certain conditions mentioned in this section. (c)One of the most important condition is that in order to enable the dealer to claim ITC it has to produce original tax invoice, completed in all respect, evidencing the amount of input ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessary by the assessing authority, that the tax due on such purchase of goods has actually been remitted into the Government account. (2-B) For the removal of doubts, it is hereby declared that, in no case, the amount of set-off or refund on any purchase of goods shall exceed the amount of tax in respect of the same goods, actually paid, if any, under the Act or any other Act referred to in section 88 of the Act, into the Government treasury except to the extent where purchase tax is payable by the claimant dealer on the purchase of the said goods effected by him."; 10. The aforesaid amendments in the Act and the Rules were specifically made effective from 29.01.2016 and the same were prospective in operation and were not retrospective. The said amendments were substantive in nature and imposed new conditions and restrictions for the first time. Claiming of ITC was restricted to "tax paid" instead of "tax paid or payable" as earlier. Under the earlier Proviso to Section 19(1), the dealer claiming ITC was required to establish that the tax due on such purchases has been paid by him i.e., the recipient Registered Dealer. This provision was completely changed and under the amendm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity to do so. During the period prior to the said amendment, the legal obligations of Registered Dealer receiving the goods and taking ITC were those enumerated in Section 19(1), 19(10) and Rule 10(2) and as stated above, these were fully complied with by the Petitioner. Whether the VAT authorities can impose conditions and restrictions for availment of ITC beyond the statutory provisions as the same stood during the relevant period? 14. All the requirements for availing ITC are laid down in Section 19 and Rule 10. The scheme contained in Section 19 is a self-contained code covering all features of ITC. This was also so held by the Hon'ble Supreme Court in the case of Jayam & Co (supra). No new condition or restriction which is not there in the statute can be imposed by the VAT authorities. In support of this submission, reliance is placed on the following judgments of the Hon'ble Supreme Court: (a)(2008) 14 SCC 336: Sandur Micro Circuits Limited Vs. CCE (Para 6) (b)(2005) 3 SCC 363: CCE Vs. Sunder Steels Ltd. (Para 5) (c) AIR 1970 SC 755: Hansraj Gordhandas Vs. Asst. CCE (Para 5) (d)(2014) 15 SCC 625: Saraswati Sugar Mills Vs. CCE (Para 19) It is also well settle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exure I to the Return (List of purchases made) giving inter-alia following details for the entire month: * Name of the sellers * Seller's TIN Numbers * Commodity Code * Invoice Numbers and Dates * Purchase value, tax rate and VAT paid. e. Annexure II to the Return (List of sales made) giving inter-alia following details for the entire month: * Names of the buyers * Buyer's TIN Numbers * Sale value, tax rate and VAT paid. 18. Similar Returns along with their respective Annexures I and II were filed by the petitioner's vendors and by the petitioner's buyers and the entries in the returns fully tallied with the entries in the petitioner's returns. 23.2 Section 63A provides about the requirement of getting the accounts audited and Audit Report in Form WW is required be filed wherein the auditor certifies correctness of the details of purchases made, ITC allowable, sales made, VAT payable and other particulars. These provisions were also duly complied with by the petitioner and the said audit reports were also filed by it. 19. In the format of the return as substituted on 29/01/2016, Annexure 8 relates to "List of Goods Purchased in the Course of Inter State Trad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... returns tallied with the returns filed by the respective parties. In connection with the above, following are important: (a)Not a single invoice has been alleged to be fake. (b)Not even in respect of one single invoice the supplier has been alleged to be non-existent. (c) Not even in respect of one single invoice, any discrepancy has been found about the tax amount mentioned in the invoice or about any other connected matter. (d)Not even in one single case, TIN numbers and other particulars mentioned in the tax invoices have been found to be bogus. (e) In many of the tax invoices, particulars of the vehicles were also mentioned. Not even in one single case anything wrong about genuineness of the vehicles has been alleged. (f) Not even in one single case any enquiry was made or any statement was recorded of the vendors even though their full address, TIN number and other particulars were duly mentioned in the invoices already filed with the VAT authorities. 21.The aforesaid sales turnover could take place only because the goods were purchased and then resold. Unless the goods were purchased, there was no scope for making the said sales. The tax paid by the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to the invoice or the vendor for which ITC is being sought to be disallowed. 25.In the Show Cause Notice, except making general and vague allegations, not even one instance was pointed out with reference to any particular invoice or any particular vendor wherein any discrepancy was found. Without such details and particulars, it was impossible for the Petitioner to defend itself by filing proper reply along with documents and materials and evidence relating to the alleged violating instances. It is in these circumstances that in its reply dated 22.03.2017, the Petitioner inter-alia submitted as under: "We may further add that in case yourgoodself is still skeptical, you may verify the sellers retruns to evidence the fact that goods have indeed been sold and that their corresponding turnover has been duly reported to the Department vide monthly returns filed." 26.The aforesaid request was also made at the time of personal hearing and it has been specifically recorded in the impugned order. In spite of this, this aspect of the matter has been completely ignored in the impugned order and the Respondent gave no reason or details as to why the said exercise was not carried out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... language can apply only if a registered dealer without entering into a transaction of sale, issues an invoice, Bill etc to another registered dealer, with intention to defraud the government revenue and if that be so, the assessing authority has been empowered, after making such enquiry as it thinks fit and after giving a reasonable opportunity of being heard to the assessee concerned, to deny the benefit of ITC. These ingredients and conditions precedent for applicability of the said section do not at all exist in the present case. As stated above, the VAT authorities have not pointed out even a single invoice where any such irregularity was found by them nor have they pointed out even a single vendor who did not pay the input tax mentioned in its tax invoice. If at all any action is intended to be taken under the said section, these are conditions precedent have to be satisfied by the VAT authorities and the dealer concerned has to be supplied with all details and documents of the particular invoices and the particular vendors in respect whereof any such irregularity has been found by them along with the results of the enquiries made by them so that the assessee may make its pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CC 540: ParleAgroPvt. Ltd. Vs. CCT (Para 42-44). 31.It is further submitted that Monthly Returns for each month are required to be filed by the 20th day of the succeeding month. For the entire period, the Monthly VAT Returns were duly filed by the Petitioner. Throughout the period and even thereafter for several years till the issuance of Show Cause Notices, the Petitioner was never required by the VAT authorities to file any movement documents. As stated above, the Act or the Rules do not require filing of any movement documents. However, if the VAT authorities so required, it was incumbent upon them to inform the Petitioner after filing of the Return for the month concerned at the earliest point of time. No such step was taken during the entire period and even thereafter for several years. Now, at this stage, it is simply not permissible for the VAT authorities to require any movement document for the entire purchase turnover. The submissions made in the preceding paragraphs are also fully supported by the following judgements of this Hon'ble Court 32.The aforesaid interpretation of the provisions of Section 19 in similar circumstances is fully supported by the followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charged by the Petitioner by producing the statutory documents required for this purpose under the provisions of Section 19 and Rule 10 as mentioned in the preceding paragraphs. No other document was mentioned in the Act or in the Rules to be filed by the assesse availing the ITC. The Respondent cannot simply allege at this stage after expiry of several years that movement documents were not filed. No such movement documents were required to be filed under the Act or the Rules. As stated in the foregoing paragraphs, save and except alleging baseless suspicion, the Respondent has not relied upon or mentioned in the show cause notice or in the impugned order any document or enquiry report or particulars or details relating to even one single case where any irregularity was found. In fact in the show cause notice or in order, there was no reference to even a single invoice are single vendor where any irregularity was found as stated above. It is well settled that suspicion, however strong, cannot be a substitute for proof. Reliance is placed in this regard on the following judgments: a. (1980) 3 SCC 110 (Abdulla Muhammad Vs. State) (Paragraph 20). b. (1993) 3 SCC 564 (UoI Vs. Brij ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... howed the payment of tax as well as the consideration charged for the goods by the seller. There was no other statutory requirement. Even Section 64(3) of the 2006 Act provides three documents, namely, Bill of Sale or Delivery Note or other prescribed document. Thus, Bill of Sale, namely, Invoice, is a document mentioned in the Statute itself. There is no question of the Petitioner having discharged only the "initial burden" and not "rest of the burden". The burden was fully discharged by producing the required statutory documents. 37.In so far as the provisions of the CST Act are concerned, the very basis of application of CST Act is movement of goods from one State to another and admittedly the present case does not relate to CST. 38.Even though in the present case there was delivery of all the goods purchased by the Petitioner as mentioned above, the legal position under the Sale of Goods Act, 1930 is inter-alia to the effect that a contract of sale may be made in writing or by word of mouth or may even be implied from the conduct of the parties. In the trade, it is quite normal to receive oral orders on telephones and then to buy the goods from registered dealers and direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. Registrar of Trade Marks (Para 14-21) (b)AIR 1963 SC 548: State Trade Corporation of India Vs. State of Mysore (c) (1973) 1 SCC 633: Raza Textiles Vs. Income Tax Officer (d)AIR 1967 SC 1401: TELCO Vs. Assistant Commissioner of Commercial Taxes (e) AIR 1961 SC 372: Calcutta Discount Co. Ltd. Vs. Income Tax Officer 41.1 respectfully submit that application of a wrong law results in a jurisdictional error committed and therefore the discretion vested in this Hon'ble Court to exercise powers under Art. 226 of the Constitution is not ousted. In the reported judgment of the Hon'ble Apex Court in [2006] 286 ITR 89 (SC) Arun Kumar V Union of India it has been held as follows: "A Jurisdictional fact' is a fact which must exist before a court, Tribunal or an authority assume jurisdiction over a particular matter. A Jurisdiction fact is one on the existence or non - existence of which depends the jurisdiction of a court, a tribunal or an authority. It is the fact upon which an administrative agency's power to act depends if the jurisdictional fact does not exist, the court, authority or officer cannot act. If a court or authority wrongly assumes the existence of such fact, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itution and so it would be retrospective in nature. 4. If according to the Department, the Amendment made to section 19(1) of the TNVAT Act,2006 by Amendment Act 13 of 2015 is retrospective in nature, then it would create new disabilities or obligations or impose new duties in respect of transactions already accomplished. Therefore the above said amendment made to section 19(1) of the TNVAT Act is a substantive amendment which would have only a prospective effect and cannot be applied for transactions already accomplished. 5. The Hon'ble Supreme Court in the case of M/s.Hitendra Vishnu Thakur &Ors Vs State of Maharastra reported in 1994(4) SCC 602(Para 26) and also in the case of Shyam Sunder and Others Vs Ram Kumar and Another reported in (2001) 8 SCC 24 (Copy of these judgements submitted at the time of hearing) have held that held as : i. A Statute which affects substantive rights is presumed to be prospective in operation unless made retrospective , either expressly or by necessary intendment, whereas a statute which merely affects procedure , unless such a construction is textually impossible, is presumed to be retrospective in its application, should not be given an ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ALSO TRANSPORTER'S WAY BILL IN FORM MM ------------------------------------------------------------------------------------------------ i. Rule 10(2-A) of the TNVAT Rules was inserted as per G.O.Ms. No.18 dated 29.1.2016 ii. Rule 15(3)(a) of the TNVAT Rules and its proviso were substituted for Rule 15(3) as per GO.Ms.No.18 dated 29.1.2019. iii. The insistence for proof of payment of tax by the earlier seller as per Rule 10(2-A) of the TNVAT Rules and carrying the electronic way bill in Form MM along with sale bill or delivery note while moving the goods for sale or purchase as provided in Rule 15(3)(a) were introduced only from 29.1.2016 and therefore it is evident that the above said amendments that these amendments are substantive in nature and would have only prospective effect. In other words, the transactions already completed prior to 29.1.2016, the proof of movements of goods along with electronic way bill in Form MM cannot be demanded. iv. Similarly with effect from 29.1.2016, Rule 15(14) & 15(15) of the TNVAT Rules were replaced wherein electronic Form KK has to be generated by clearing and forwarding agent.Similarly with effect from 29.1.2016 , Rule 15(17)(bb) w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reversal of ITC is clearly contrary to the provisions of the TNVAT Act,2006. 3. ENQUIRY ALREADY CONDUCTED WITH THE SELLING DEALERS AND REVISION NOTICES TO MAKE ASSESSMENTS ON THEM ALREADY ISSUED i. The Commercial Taxes Department has already made enquiry as contemplated under section 19(13) of the TNVAT Act with the selling dealers, M/s.Latha Traders and M/s.R.Mani Traders and pursuant to such enquiries, revision notices dated 13.1.2017 have been issued by CTO, Karur(East) Asst Circle to R.Mani Traders for the years 2013- 2014 and 2014-2015 and a revision notice dated 12.1.2017 has been issued for the year 2015-2016. Similarly revision notices dated 6.1.2017 have been issued by the CTO, Karur(West) Asst Circles for the years 2012- 2013,2013-2014 and 2014-2015 to M/s.Latha Traders. ii. So having taken steps to make assessments in the hands of the selling dealers, passing the impugned assessment orders on the petitioner stating that the earlier sellers have not reported and paid the tax on the sales transactions effected to the petitioner is contrary to the provisions of the TNVAT Act,2006 and the law laid down by the Hon'ble Madras High Court in the case of Vinayaga Agencies r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , (2014) 4 SCC 657 - See para Nos. of the report 45-54. E. Section 2(d) of the Contract Act, 1872, and Section 33 of the Sale of Goods Act, 1930, recognize the paramountcy of party autonomy in matters of consideration and delivery. Section 33 of the Sale of Goods Act expressly recognizes that the delivery of goods which are sold may be per the agreement between the parties - the delivery could be actual, symbolic, notional, physical or. A constructive delivery would also result in the transfer of property in goods. There is nothing in law which does not permit two sales simultaneously. In this regard, reliance is placed on the decision CIT v. High Energy Batteries India Ltd, [2012] 348 ITR 574 (Mad) - See para Nos. of the report ¶9. F. In a chain of transactions, there could be one physical delivery and multiple constructive deliveries which result in transfer of property in goods throughout the chain eoinstanti. In this regard, reliance is placed on the decision of the Constitution Bench of the Supreme Court in Duni Chand Rataria v. Bhuwalka Brothers, AIR 1955 SC 182, See para Nos. of the report 15. G. Even assuming for the sake of argument that the condition of actual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of Rs.14,99,489/- has been reversed as ITC towards which there was neither any proposal in the notice nor was the petitioner afforded an opportunity to show-cause. E. The Respondent had prejudged the issue in the notice dated 15/03/2021 by recording his remarks after the Petitioner's reply date 30/03/2016. F. The Petitioner relied upon the following case laws in its challenge to the violation of principles of natural justice of the impugned order: I. Oryx Fisheries Private Ltd v. UOI, 2010 (12) SCC 427; II. MC Technologies v. Food Corporation of India, 2021 (2) SCC 551; 25. In support of the case of the petitioner in W.P. No.11808, 11814, 11816, 11811,11812 and 11819 of 2022(M/s Sharda Motors Industries Limited), learned Counsel Mr.Rama Badran for M/s. Lakshmi Kumaran and Sridharan, Advocates, submitted as follows:- 1. The only ground on which the Input Tax Credit ('ITC') is denied is that the Petitioner has failed to prove the physical movement of goods from the place of the vendor to the place of the Petitioner. The Impugned Orders record that reversal of the ITC is demanded in light of the amendment carried out in Section 19(1) of the TNVAT Act vide Gazette No 217 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw. Reliance in this regard is placed on the decisions of Eicher Motors Ltd. vs Union of India &Ors 1999 (106) E.L.T. 3 (S.C.) and CCE vs. Dai IchiKarkaria Limited1999 (112) E.L.T. 353 (S.C.). Therefore, when there is no onus cast on the buying dealer to establish physical movement of goods under Section 19(1) of the TNVAT Act, ITC cannot be denied 4. Without prejudice, the Amendment cannot be applied retrospectively. 4.1 It issubmitted that the Amendment to Section 19(1) of the TNVAT Act, being substantive in nature, cannot be interpreted to have retrospective operation as the Amendment does not explicitly provide for the same. 4.2 It is a settled law that unless the Statute expressly provides it, retrospective operation should not be given to a Statute so as to take away or impair an existing right or create a new obligation or impose a new liability otherwise than as regards matters of procedure. Reliance is placed on the decision of the Hon'ble Apex Court in the case of Commissioner of Income Tax (Central) - I, New Delhi v. Vatika Township Private Limited [2015] 1 SCC 1. 4.3 It is submitted that if the Amendment is given retrospective operation, it will mandate a fresh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leunder this Act, by the registered dealer to the seller on his purchases of taxable goods specified in the First Schedule : There shall be input tax credit of the amount of tax paid under this Act, by the registered dealer to the seller on his purchases of taxable goods specified in the First Schedule : Provided that the registered dealer, who claims input tax credit, shall establish that the tax due on such purchases has been paid by him in the manner prescribed. Provided that the registered dealer, who claims input tax credit, shall establish that the tax due on purchase of goods has actually been paid in the manner prescribed by the registered dealer who sold such goods and that the goods have actually been delivered Provided further that the tax deferred under section 32 shall be deemed to have been paid under this Act for the purpose of this subsection Rule 10(2) Rule 10(2):- Every registered dealer who claims input tax credit under sub-section (1) of section 19 shall, produce the original tax invoice, in support of his claim of the input tax credit, containing the following details, namely:- (a) A consecutive serial number; ----- ---- ----- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NVAT Act, 2006. (d) Allowing input tax credit only to the extend of the tax paid to the exchequer by a registered dealer to another registered dealer on the purchase of goods including capital goods in the course of his business, only when such tax has actually been paid by the registered dealer who sold such goods, so as to curb under claims towards input tax credit resulting in tax evasion; 2. The general facts of the case in all these writ petitions. a) The place of business was inspected by the enforcement wing on suspicious bill trading activities; b) Business was carried on in a large scale without proper infrastructure and even no godown for storing the goods in many cases ; c) No stock or very minimum stock was available at the time of inspection; d) The sellers were not non-existent or related parties; e) In some cases, the buyer and seller are located in the same premises; f) No proper records were not maintained for the transfer of goods in pursuance to the sale; g) No transport document and incidental charges connected with the purchase and sales of goods were maintained; h) The transaction with minimum value addition and the entire discharge of outp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as per conditions * The Apex Court in the case of Jayam & Co Vs Assistant Commissioner - [2016] 15 SCC 125has held at para 11 & 12. " 11.From the aforesaid scheme of Section 19 following significant aspects emerge: (a)ITC is a form of concession provided by the legislature. It is not admissible to all kinds of sales and certain specified sales are specifically excluded. (b)Concession of ITC is available on certain conditions mentioned in this section. (c)One of the most important condition is that in order to enable the dealer to claim ITC it has to produce original tax invoice, completed in all respect, evidencing the amount of input tax. 12.It is a trite law that whenever concession is given by statute or notification, etc. the conditions thereof are to be strictly complied with in order to avail such concession. Thus, it is not the right of the "dealers" to get the benefit of ITC but it is a concession granted by virtue of Section 19". 5.Whether the substituted proviso to section 19(2), which provides actual delivery of goods is prospective or retrospective? * Even prior to the amendment, the duty cast on the petitioner is prove to the transaction of sale is r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is declaratory for these words may, at times, be used to introduced new rules of law and the Act in the latter case will only be amending the law and will not necessarily be retrospective. In determining, therefore, the nature of the Act, regard must be had to the substance rather than to the form. If a new Act is 'to explain' an earlier Act, it would be without object unless construed retrospective. An explanatory Act is generally passed to supply an obvious omission or to clear up doubts as to the meaning of the previous Act. It is well settled that if a statute is curative or merely declaratory of the previous law retrospective operation is generally intended. The language 'shall be deemed always to have meant' is declaratory, and is in plain terms retrospective. In the absence of clear words indicating that the amending Act is declaratory, it would not be so construed when the pre- amended provision was clear and unambiguous. An amending Act may be purely clarificatory to clear a meaning of a provision of the principal Act which was already implicit. A clarificatory amendment of this nature will have retrospective effect and, therefore, if the principal Act was existing law wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vilege which did not amount to accrued right. (p. 392)" 6. The scope of proviso * The Apex Court has explained the scope of proviso as below in the case S.Sundaram Pillai & others vs- V R Pattabiraman& others- [1985] 1 SCC 591- Para 43 "43.We need not multiply authorities after authorities on this point because the legal position seems to be clearly and manifestly well established. To sum up, a proviso may serve four different purposes: (1)qualifying or excepting certain provisions from the main enactment: (2)it may entirely change the very concept of the intendment of the enactment by insisting on certain mandatory conditions to be fulfilled in order to make the enactment workable: (3)it may be so embedded in the Act itself as to become an integral part of the enactment and thus acquire the tenor and colour of the substantive enactment itself; and (4)it may be used merely to act as an optional addenda to the enactment with the sole object of explaining the real intendment of the statutory provision." 7. Whether the substantive right of the petitioners affected ? * The Section 64(1) of the TNVAT Act, 2006 states that every person registered under this Act, shall k ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion Bench has held that ITC claimed by the buyer cannot be reversed. At Para 8 the Hon'ble Division Bench held as follows: " In the present case, for non-deposit of due tax collected form the purchasing dealer M/s.Vinayaga Agencies, the Revenue is therefore free to hold enquiry against the selling dealer and collect the Revenue from the 6/8 http://www.judis.nic.in W.A.No.4292 of 2019 & CMP.No.26910 of 2019 selling dealer, which money in the hands of selling dealer, is held in trust for the State by the selling dealer. It is not the case of the Revenue before us that the selling dealer in the present case is a nonexistent or a ghost dealer. The identity and registration of the selling dealer and the fact that he collected the tax from the purchasing dealer in question are duly proved on record and are not disputed" * The Division Bench in the case of Vinayaga Agencies has not considered the scope of proviso in regard " goods have actually been delivered". * In all these cases, the very factum of sale is questioned. The transactions and the invoices are treated as bogus and make believe for a variety of reasons ranging from non-existent dealers, transaction between same set of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te, who is the registered dealer who sold the goods to him. The provision of Section 3 sub-section (3) is a provision which entitled a registered dealer to obtain a tax credit which has been explained in Section 19. The submission that Section 19 is inconsistent to Section 3(3) is wholly misconceived. What is envisaged in Section 3 sub-section (3) is amplified and explained in Section 19. The reduction in the tax as contemplated in Section 3 subsection (3) has to be in the manner and as provided in Section 19. Section 19(11) contains a condition for claiming the input tax credit. As noticed above, there are other various provisions in Section 19 itself where it contains provisions where no input tax credit is allowable e.g. Section 19(6) to Section 19(10) 24. When the input tax credit is to be allowed and when it is to be disallowed is elaborated in Section 19 which is a self-contained scheme and benefit under Section 3 subsection (3) can be claimed only when conditions as enumerated in Section 19 are fulfilled. * The DB of Madras High Court in the case of Rattan Steel V The State of Tamil Nadu [2013 SCC Online Mad 1873] has held at Para 5 " Even though learned counsel for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 authorises the authority for making such enquiry in such cases, the claim of ITC by issuing mere invoice without entering into a transaction of sale, with the intention to defraud the Government revenue * The Section 65 of TNVAT Act, 2006 grants power to any officer prescribed by the Government, for the purposes of this Act, require any dealer to produce before him the accounts, registers, records and other documents, and to furnish any other information relating to his business * The section 81 of TNVAT Act, 2006 empowers the an assessing authority not below the rank of an Deputy Commercial Tax Officer shall, for the purposes of this Act, have all the powers conferred on a court by the Code of Civil Procedure, 1908 (Central Act V of 1908), for the purpose of - (a) summoning and enforcing the attendance of any person and examining him on oath or affirmation; and (b) compelling the production of any document. * By virtue of the above provisions, the assessing authority is empowered to call for production of any documents or any other information relating to the business, which certain includes the records such as transport of the goods, delivery of goods, payments incurred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit of the amount of tax paid or payable under this Act, by the registered dealer to the seller on his purchases of taxable goods specified in the First Schedule: Provided that the registered dealer, who claims input tax credit, shall establish that the tax due on such purchase has been paid by him in the manner prescribed 19(1): There shall be input tax credit of the amount of tax paid under this Act, by the registered dealer to the seller on his purchases of taxable goods specified in the First Schedule: Provided that the registered dealer, who claims input tax credit, shall establish that the tax due on purchase of goods has actually been paid in the manner prescribed by the registered dealer who sold such goods and that the goods have actually been delivered. Provided further that the tax deferred under Section 32 shall be deemed to have been paid under this Act for the purpose of this sub-section. 31. The amendment to Section 19(1) of the TN VAT Act, 2006 vide Second Amendment Act (13 of 2015) with effect from 29.01.2016 led to a corresponding insertion of Rule 10(2-A) to TN VAT Rules, 2007. Rule 10(2-A) of the TN VAT Rules, 2007 reads as under:- 10. Input tax credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06 (ii) which shall be in the case of second or subsequent detections, one hundred percent of the tax due in respect of such claim. Provided that no penalty shall be levied without giving the dealer a reasonable opportunity of showing cause against such imposition. 34. Section 19 of the TN VAT Act, 2006 is inspired from Rule 4(7) of the CENVAT Credit Rules, 2004. Both the proviso to Section 19(1) of the TN VAT Act, 2006 before the amendment and after the amendment are somewhat similar to Rule 4(7) of the CENVAT Credit Rules, 2004. 35. As per Rule 4(7) of the CENVAT Credit Rules, 2004, CENVAT Credit in respect of input service shall be allowed, on or after the day on which payment is made of the value of input service and the service tax paid or payable as indicated in invoice, bill or, as the case may be, challan referred to in Rule 9. 36. At the time of inception, Rule 4(7) of the CENVAT Credit Rules, 2004 reads as under:- 4. Conditions for allowing CENVAT credit.- (1) ....... ............ (7) The CENVAT credit in respect of input service shall be allowed, on or after the day which payment is made of the value of input service and the service tax paid or payab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reed to be provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India where service tax is paid by the manufacturer or the provider of output service being importer of goods, as the person liable for paying service tax for the said taxable services, credit of service tax paid by the person liable for paying service tax shall be allowed after such service tax is paid: PROVIDED ALSO that if any payment or part thereof, made towards an input service is refunded or a credit note is received by the manufacturer or the service provider who has taken credit on such input service, he shall pay an amount equal to the CENVAT credit availed in respect of the amount so refunded or credited: PROVIDED ALSO that CENVAT credit in respect of an invoice, bill or, as the case may be, challan referred to in rule 9, issued before the 1st day of April, 2011 shall be allowed, on or after the day on which payment is made of the value of input service and the service tax paid or payable as indicated in invoice, bill or, as the case may be, chal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the month of March". Explanation IV:"unavailed CENVAT Credit" means the amount that remains after subtracting the amount of CENVAT credit already availed in respect of any service from the aggregate amount of CENVAT credit to which the recipient of such service was entitled to in respect of such service. Explanation V: "appointed day" means the date on which the provisions of the Central Goods and Service Tax Act, 2017 (12 of 2017) shall come into force. 39. Modvat Credit allowed a manufacturer to avail input tax credit on the excise duty paid and on the additional duty of customs paid on the import equivalent to the excise duty paid on the like goods manufactured in India for being availed as credit and utilized at the time of removal of goods for payment of excise duty under Section 3 of the Central Excise Act, 1994. 40. In 2004, there was further liberalization. Not only input tax credit on inputs but also on input services as input tax credit were allowed for being utilized for discharging not only the duty liability under the Section 3 of the Central Excise Act, 1944 and also service tax liability under the provisions of the Finance Act, 1994 on the service provided. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of tax paid/ payable by the dealer who effected such sale to them on purchase made by them. It is the registered dealer who sold the goods to them who was liable to pay tax under the scheme of TN VAT Act, 2006. Likewise, the petitioners/appellants, while effecting further sale would have charged tax on their buyers in their tax invoice on the value addition made by them on the goods and would have only passed on the incidence of tax "payable" or "paid" by them to their customers/buyers. 47. The responsibility to pay tax (VAT) was on the registered dealer who effects sale within State under the scheme of TN VAT Act, 2006. This crucial aspect which is so fundamental to any indirect tax was missed out by the draftsmen who drafted proviso to Section 19(1) of the TN VAT Act, 2006. 48. Proviso to Section 19(1) of the TN VAT Act, 2006 as it stood with effect from 1.1.2007, the day on which it came into force thus had a congenital defect from the time of its birth. The defect continued till the defect was removed in 2016. Strictly, this defect disabled a dealer to avail input tax credit on the incidence of tax borne on the purchase unless tax was paid under Section 12 of the TN VAT A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... each stage of sale on the value addition by allowing input tax credit on the incidence of tax borne at each stage of purchase for being set-off. It was intended to reduce the outflow of cash from the hands of the purchaser dealer while effecting subsequent sale. 55. It is also not our intention to deny credit although a strict reading of Section 19(1) of TN VAT Act, 2006 and Rule 10 of TN VAT Rules, 2007, as it stood prior to the amendment would not have allowed them to avail input tax credit in the manner in which proviso was drafted. There is also no doubt in our mind that the petitioners/appellants were indeed entitled to input tax credit on the incidence of tax borne by them, provided the transactions were bonafide and legitimate and there was a transaction of "sale" and not a mere paper transaction of sale without movement of goods. 56. There has to be delivery of possession of the goods. There should be proof of such delivery of possession either the dealer purchasing the goods or to the consignee. Mere paper transaction coupled with rotation of money through banking channel to a so called supplier/seller is not sufficient to establish that the credit was validly availed, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g any one to one co-relation with between the purchase and the sale. 63. This is and was the philosophy behind all the value added tax enactment. TN VAT Act, 2006 is no exception to the above philosophy. Input Tax Credit under the Modvat Credit Scheme was indented to reduce the cascading effect of the tax, although it has been euphemistically stated by few Courts that it was intended to reduce the cascading effect of the tax for the benefit of ultimate consumer. 64. In a free economy, where demand and supply determine the price and the price is charged on the value addition, there is hardly any scope to draw an inference that the input credit system was intended to benefit the consumers. Rather, it allowed the dealer and manufacturers to restrict the cash outflow at the time of payment of tax at the time specified in the Rules to the State Exchequer. 65. Suffice to state the petitioner/appellants were entitled to avail input tax credit on the incidence of tax borne by them on the purchase made for being utilized and being debited against their tax ultimate liability in their monthly/annual returns as the case may be on further sale of goods effected by them to their consumers as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r under the TN VAT Act,2006 also did not have an indefeasible right. It was contingent on the dealer establishing a transaction of sale and movement of goods. Mere cash transaction was not sufficient. 71. The Hon'ble Supreme Court further held that once the credit was validly taken and its benefit was available to the manufacturer without any limitation in time or otherwise unless the manufacturer itself chooses not to use the raw material in its excisable product. The credit is, therefore, indefeasible. 72. The Hon'ble Supreme Court further also held that once the credit was validly taken, it was indefeasible. The Court further observed that there was no provision in the Central Excise Rules, 1944 which provided for a reversal of the credit by the Excise Authorities except where it has been illegally or irregularly taken, in which event it stands cancelled or, if utilized, has to be paid for. This ratio is equally applicable. If the dealers fails to discharge the burden of proof cast on them under Section 17(2) of the TN VAT, Act, 2006, credit can be denied. 73. Therefore, even if credit was availed after complying with the requirement of Section 19(1) & (10)(a) of TN VAT Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e selling dealer subject to such conditions as may be prescribed. (a) A consecutive serial number; (b) The date on which the invoice is issued; (c) The name, address and the Taxpayer Identification Number of the seller; (d) The name, address and the Taxpayer Identification Number of the buyer; (e) The description of the goods; (f) The quantity or volume of the goods; (g) The Value of the goods; (h) The rate and amount of tax charged; and (i) The total value of the goods. 77. As mentioned above, Rule 10(2A) was inserted after proviso to Section 19(1) was amended vide Second Amendment Act (13 of 2015) with effect from 29.01.2016. 78. A close reading of the above provisions indicates that for a dealer to validly avail Input Tax Credit, the dealer should be in possession of the original invoice containing the details prescribed under Rule 10(2) of the TN VAT Rules, 2007. However, credit availed was always provisional under Section 19(16) of the TN VAT Act, 2006 and could be denied under any of the circumstances specified and situations contemplated in Section 19(13), 19(15) and 19(16) of the TN VAT Act, 2006 and recovered under the machinery provided under Section 27(2) of T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hased 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 two 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. 81. Section 19(16) of TN VAT Act, 2006 also makes it clear, that input tax credit availed by any registered dealer shall be only provisional. Section 19(16) of TN VAT Act, 2006 empowers an Assessing Officer to revoke input tax credit, if it appears to the Assessing Authority that such credit availed was incorrect, incomplete or otherwise not in order. Further under Section 17(2) of the TNVAT Act, 2006, the burden to prove that the dealer was entitled to avail input tax credit lies with the dealer claiming such input tax cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 2006, a dealer who has availed input tax credit is required to pay the amount of credit availed on the date from the date on which cancellation of the registration certificate takes effect by an order. Such a dealer is also liable to pay, in addition to the amount due, interest at two per cent, per month, on 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. Section 17(2), Section 19(3), Section 19(15) and Section 19(16), Section 27(2) and Section 27(4) of TN VAT Act, 2006 forms a code when read along with Rule 10 of TN VAT Rules, 2007. Following chart explains the position. Thus, Credit availed under Section 19(1) can be denied. Section 17(2) For the purpose of claim of input tax credit, the burden of proving such claim shall lie on such dealer. 19(16)The input tax credit availed by any registered dealer shall be only provisional and the assessing authority is empowered to revoke the same if it appears to the assessing authority to be incorrect, incomplete or otherwise not in order. 19(13)Where a registered dealer without entering into a transaction of sale, issues an invoice, bill or cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such claim. 88. Prior to the Second Amendment Act (13 of 2013), 2013, with effect from 28.5.2013, the rate of interest was one and one quarter precent per month, on 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. 89. In the case of Jinsasan Distributors vs. Commercial Tax Officer, Chennai, (2013) 59 VST 256, which was rendered in the context of Section 19(15) of TN VAT Act, 2006, a learned Single Judge of this Court held that the retrospective cancellation of registration certificate of the selling dealers cannot affect the right of the petitioners/assesses therein who have paid the tax on the basis of invoices and thereafter claimed ITC under Section 19 of TNVAT Act, 2006. 90. In Jinsasan Distributors vs. Commercial Tax Officer, Chennai, a Single Judge of this Court (2013) 59 VST 256, held as follow:- 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 cancell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e how there could have been a cancellation of registration with effect from a date that preceded the dates of the transactions and how, accordingly, the respondents could be made liable to pay tax." 92. While allowing the case of the dealers under a somewhat similar circumstances under Section 19(15) of the TN VAT Act, 2006, the learned Single Judge of this Court in Jinsasan Distributors Vs. Commercial Tax Officer, Chennai, (2013) 59 VST 256, appears to have been influenced by the ratio of the Hon'ble Supreme Court in State of Maharastra Vs. Suresh Trading Company, (1997) 11 SCC 378. 93. Paras. 4 & 5 of State of Maharastra Vs. Suresh Trading Company, (1997) 11 SCC 378 are reproduced as under:- "4. The High Court answered the question in the negative in favour of the respondents. The High Court noted that the effect of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase which dealt with cancellation of registration or where registration was obtained to defraud the revenue by issuing invoices to wrongly avail ineligible input tax credit. This was a case when tax was not paid by the selling dealer. 97. Interpreting Section 19(1) read with Section 19(16) of TN VAV Act, 2006 as it stood then, the learned Single Judge went on to hold that Section 19(1) clearly states that input tax credit can be claimed by the registered dealer, provided if the registered dealer establishes that the tax due on such purchase has been paid by him in the manner prescribed. 98. As mentioned in the beginning of the discussion in this order, a registered dealer selling goods merely passes on the incidence of tax to the buyer. The buyer merely bears the incidence of tax charged and reflected in the sales invoice. The buyer never pays tax to the exchequer unless the buyer is liable to pay purchase tax under Section 12 of the TN VAV Act, 2006 otherwise. It is the seller who pays the tax. 99. The learned Single Judge however observed that it is another matter if the selling dealer has not paid the collected tax and that liability has to be fastened on the selling dealer. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Officer, Chennai, (2013) 59 VST 256, failed to note the expression in Section 19(15) of the TNVAT Act, 2006 which specifically deals with the situation. Section 19(15) in the TN VAT Act, 2006 is an innovation which was not contemplated under Section 70 of the Karnataka Value Added Tax, 2003. The said decision of a learned Single Judge of this Court, has been followed in the past. 104. If there is a cancellation of registration, the assessing officer can call upon the dealer to repay to the input tax credit availed and utilized if indeed there was no evidence of sale. It may result in denial in the credit. However, it cannot be helped, where registration itself was obtained by such dealer to facilitate input tax credit being availed on such bogus invoice without a corresponding transaction of sale. 105. Therefore, the decision of the learned Single Judge in Jinsasan Distributors Vs. Commercial Tax Officer, Chennai, placing reliance on State of Maharastra vs. Suresh Trading Company, (1997) 11 SCC 378 cannot be held to have an universal application in all cases of cancellation of VAT registration of the selling dealer with retrospective date, if registration itself was obtained o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TN VAT Act, 2006 in view of Fifth Amendment Act (23 of 2012), 2012. Section 22(1) & (2) of the TN VAT Act, 2006 are reproduced below:- TABLE -E Section 22(1) & (2) of the TN VAT Act, 2006 before amendment, i.e. 19.06.2012 Section 22(1) & (2) of the TN VAT Act, 2006 after amendment, w.e.f. 19.06.2012 22.Deemed Assessment and procedure to be followed by the assessing authority.- (1)The assessment in respect of the dealer shall be on the basis of return relating to his turnover submitted in the prescribed manner within the prescribed period. (2)The assessing authority shall accept the returns submitted for the year, by the dealer, if the returns are accompanied by the proof of payment of tax and the documents prescribed, and on such acceptance, the assessing authority shall pass an assessment order. (2)The assessing authority shall accept the returns submitted for the year, by the dealer, if the returns are in the prescribed form and accompanied with the prescribed documents and proof of payment of tax. Every such dealer shall be deemed to have been assessed for the year on the 31st day of October of the succeeding year: Provided that in respect of such returns submitted for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the KVAT Act, 2003 would be upon the purchasing dealer. At the cost of repetition, it is observed and held that mere production of the invoices and/or payment by cheque is not sufficient and cannot be said to be proving the burden as per Section 70 of the Act, 2003." 115. Section 70 of the K VAT Act, 213 is pari materia to the provisions of the TNVAT Act, 2006. For illustration Section 70 of the KVAT Act, 2013 and Section 17(2), 19(3) and 19(15) of the TNVAT Act, 2006 is reproduced below:- TABLE-F Tamil Nadu Value Added Tax Act, 2006 Karnataka Value Added Tax Act, 2003 Burden of Proof:- "17(2) For the purpose of claim of input tax credit, the burden of proving such claim shall lie on such dealer." 70. Burden of proof- (1)For the purposes of payment or assessment of tax or any claim to input tax under this Act, the burden of proving that any transaction of a dealer is not liable to tax, or any claim to deduction of input tax is correct, shall lie on such dealer. Bogus Invoice:- 19(13) Where a registered dealer without entering into a transaction of sale, issues an invoice, bill or cash memorandum to another registered dealer, with the intention to defraud the Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 19(6) of the TN VAT Act, 2006. 119. We are of the view that what was implicit in proviso to Section 19(1) of the TN VAT Act, 2006 at the time of inception was made explicit in the year 2016 with effect from 29.01.2016. The amendments are merely clarificatory in nature.Rule 10(2-A) of the TN VAT Rules, 2007 was incorporated vide G.O.Ms.No.18, dated 29.01.2016 with effect from 29.01.2016 which shifted the burden on the dealer purchasing the taxable goods to prove that the tax due on such purchase of goods have actually been remitted in the Government Account is unnecessary if there is sufficient proof of movement of goods and payment of amount. 120. It is only under those circumstances mentioned in Section 19(13), 19(15) or where credit is availed contrary to Section 19(1) of the TN VAT Act, 2006, the machinery provided to recover the amount, Section 27(2) of the TNVAT Act, 2006 can be pressed where Input Tax Credit has been either wrongly availed or where a dealer produced a bogus invoice bills, vouchers etc. with a view to wrongly claim input tax credit can be pressed into. 121. Under Section 19(13), consequence, is on the person who has availed input tax credit wrongly on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances, credit availed can be recovered under Section 27(2) of the Act. 126. Similarly, if tax was paid at the sellers end, the input tax credit cannot be denied merely because registration is cancelled subsequently with retrospective effect. Similarly, as long as there is sufficient proof of delivery goods showing a transaction of sale, input tax credit cannot be denied as the very purpose of enacting the TN VAT Act, 2006 was to allow input tax credit to reduce the cascading effect of the tax. 127. If there was indeed a sale but the registered dealer who had sold goods but had failed to pay the tax from his end, notwithstanding cancellation of registration of such dealer, a dealer who has availed input tax credit on the strength of the original invoice and has documents to establish the transaction of sale, credit cannot be denied. The remedy that is available to the authorities under the Act is only to recover the tax not paid under Section 27(1) of the TN VAT Act, 2006 from such dealer. 128. The Hon'ble Supreme Court in M/s.Ecom Gill Coffee Trading Private Limited referred to supra also held that the burden to prove the genuineness of transaction as per Section 70 of the KVAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of reply and after due enquiry, the Original Assessing Authority finds that the sing has effected the transaction shall make a request to Other End Assessing Authority through email (zimbra mail) marking copy to concerned DC and JC and seek for the requisite details of verification. If on enquiry Original Assessing Authority is of the view buyer has made bogus claim / wrong claim, by being involved in bill trading by producing bogus invoice, etc., the buyer shall be assessed to tax/reversal of ITC, as the case may be, then the Original Assessing Authority shall pass appropriate orders in accordance with provisions of the TNVAT Act, 2006. 3.3.4 The Other End Assessing Authority shall verify the details provided to him / her with reference to the manually filed original / revised returns or by issuing show cause notice and calling for the details from the dealer. After the receipt of reply and after due enquiry, the Other End Assessing Authority finds that the seller has reported the transaction and paid the tax due shall report the same to original Assessing authority and both of them shall drop further proceedings and on the other hand that if the whole or part of the transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n available for the authorities is to recover tax not paid by such dealer by invoking the machinery under TN VAT Act, 2007. 133. If a dealer claims input tax credit on purchases, such dealer/purchaser will have to prove and establish the actual physical movement of goods, genuineness of transactions by furnishing the details referred above and mere production of tax original invoices would not be sufficient to claim ITC in the light of the decision of the Hon'ble Supreme Court in M/s.Ecom Gill Coffee Trading Private Limited. 134. Therefore a dealer claiming ITC has to prove the actual transaction of sale by furnishing the name and address of the selling dealer, details of the vehicle which was/were used for delivery of the goods, tax invoices and payment particulars etc. The above information would be in addition to tax invoices, particulars of payment etc., as held by the Hon'ble Supreme Court in M/s.Ecom Gill Coffee Trading Private Limited. 135. In the light of the above decision of the Hon'ble Supreme Court and in the light of the above discussion, we hold that the challenge to the impugned orders in T.C.Nos.19 to 21 of 2022 has to fail. Considering the fact that there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 611701330/ 2011-2012 14.01.2015 16. 2607 of 2021 6808 of 2015 TIN:33611701330/ 2012-2013 139. The operative portion in the impugned order in these Writ Petitions are almost identical. Relevant portion of the common order dated 15.06.2021 passed in one of the batch are reproduced below:- 15.Jurisdictional error should not result in exoneration of liability. Jurisdictional error, if any committed, is technical, and thus, rectifiable. In such circumstances, the Courts are expected to quash the order passed by an incompetent authority and remand the matter back for fresh adjudication. Contrarily, if an assessee is exonerated from liability, undoubtedly, the purpose and object of the Act is defeated. 16.The growing practice in the High Court is to file writ petitions under Article 226 of the Constitution of India without exhausting the statutory remedies provided under the Act. The points raised in this regard are statutory violations. However, even such statutory violations can be dealt with by the Appellate authorities or the Appellate Tribunals. This apart, in a writ petition, if such orders are passed with jurisdictional errors and quashed without any r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of deciding the matter on merits, as the High Court cannot conduct a trial or examine the original records in the writ proceedings under Article 226 of the Constitution of India. Thus, the Courts shall not provide unnecessary opportunities to the assessee to escape from the liability merely on the ground of jurisdictional error, which is rectifiable. 18.These being the principles to be followed, this Court has no hesitation in arriving a conclusion that the petitioners are bound to exhaust the statutory appellate remedy as contemplated under the provisions of the TNVAT Act. Thus, the petitioners are at liberty to approach the appellate authority by filing appeal/revision and by following the procedures contemplated. The delay, if any occurred, for filing the appeal, shall be condoned by the appellate authority and the appeal shall be taken on file to be adjudicated on merits and in accordance with law and by affording opportunity to all the parties concerned. 19.With the above observations and directions, these writ petitions stand disposed of. No costs. Consequently, connected miscellaneous petitions are closed." 140. The learned Single Judge has not dismissed the Writ Peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order came to be passed by the Assessing Officer on 27.02.2015. The appellant however was unable to produce necessary documents to substantiate movement of goods such as lorry receipts. It was held that mere payment of amounts to the supplier/dealer was not sufficient to prove the transactions were genuine to claim input tax credit. 148. Since the appellant had failed to furnish the required documents, we see no merits in the present Writ Appeal. We leave it open to the appellant to file statutory appeal before the appellate authority to be decided in the light of the observation in this order. W.A.No.2637 to 2640 of 2021 M/s.Selva Furnitures Table-II Sl.Nos.2 to 5 Assessment Year : 2011-2012 to 2014-2015 149. The above Writ Appeals have been filed by the appellant against the Common Order dated 15.06.2021 passed by the learned Single Judge of this Court in W.P.No.23200 of 2016 etc., batch & W.P.No.7517 of 2015 etc., batch, dismissing the writ petitions of the appellants challenging the assessment order passed by the Commercial Tax Officer dated 27.05.2016 for the assessment years 2011-2012 to 2014 to 2015. 150. The allegation of the petitioner is that the petitioner wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in W.P.No.23200 of 2016 etc., batch & W.P.No.7517 of 2015 etc., batch, dismissing the writ petitions of the appellants challenging the impugned assessment order passed by the Commercial Tax Officer dated 23.05.2016 for the assessment years 2011-2012 to 2014-2015. 154. The issue involved in the respective assessment orders dated 23.05.2016 deals with Input Tax Credit Adjustment Register not maintained at the place of business of the petitioner. The place of business was found empty and that the petitioner was indulging in bill trading and raising fictitious bills to facilitate fraudulent input tax credit being availed by their purchasers. 155. Apart from the above, the assessment orders also deals with sales suppression determined in the light of bank statement etc., as detailed below: TABLE:II B Particulars 2011-2012 2012-2013 2013-2014 2014-2015 Sales suppression estimated on the basis of excess payments and proposed Rs.59,40,000 Rs.9,64,30,697 Rs.12,33,72,422 Rs.30,00,74,473 Sales suppression proposed on the basis of excess receipts Rs.45,43,326 Rs.1,07,30,000 Rs.6,99,91,865 Rs.26,17,66,888 Total Sales suppression proposed U/s.27(1) & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 894 taxable at 14.5% Tax levied - - Rs.3,81,30,182 Rs.11,33,85,054 Taxable turnover proposed under Section 27(1) Tax Proposed Rs.1,10,46,934 at 14.5% Rs.2,34,03,909 at 14.5% - Tax determined Rs.16,01,805 Rs.33,93,567 - Reversal of Input Tax Credit determined under Section 27 (2) Rs.28,53,948 Rs.28,53,948 Rs.3,10,13,965 Rs.62,84,609 Penalty under Section 27(3): It is also levied at 150% of Rs.24,02,707 Rs.50,90,350 Rs.5,71,95,273 Rs.17,00,77,581 Penalty under Section 27 (4) levied at 50% Rs.14,26,974 Rs.28,53,948 Rs.3,10,13,965 Rs.62,84,609 160. The place of business of the appellant was inspected by the enforcement wing on various dates, wherein it was found that a place of business was empty and no books of account were maintained and that the appellant was found indulging in bill trading by making fictitious bill to legitimize bogus purchase and sales in the chain transactions. 161. The allegations against the appellant is that the appellant has made name sake purchases and effected immediate name sake to another and thereby creating a trial of claim of input claim of input to be used by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty to file a statutory appeal before the Appellate Authority. W.A.No. 2607 & 2618 of 2021 M/s.Sri Ganga Steel Enterprises Private Limited Table-II Sl.Nos.15 to 17 Assessment Year : 2011-2012 & 2012-2013 169. These Writ Appeals have been filed by the appellant against the Common Order dated 15.06.2021 passed by the learned single Judge of this Court in W.P.No.6807-609 of 2015. By the impugned Order, the learned Single Judge dismissed these writ petitions of the appellants against the assessment order dated 14.01.2015 passed by the Commercial Tax Officer for the assessment years 2011-2012 to 2013-2014. 170. The appellant herein had availed Input Tax Credit for the respective Assessment Years as detailed below: TABLE: II D: Assessment Years ITC amount claimed 2011-2012 Rs.31,66,78,653/- 2012-2013 Rs.40,24,48,724/- 171. The purchases were allegedly made from a dealer who evaded tax from the bill traders and effected circular transaction among themselves to evade tax. Relevant portion of the orders dated 14.01.2015 of the Commercial Tax Officer for the three years read identically. They read as under:- "Objections filed by the dealers have been carefully examined. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... W.A.No.2618/21 (A.Y.2011-2012) W.A.No.2607/21 (A.Y.2012-2013) Disallowance of ITC: Rs.31,66,78,653/- Rs.40,24,48,724/- Reversal of ITC Paid: Nil Nil Balance Rs.31,66,78,653/- Rs.40,24,48,724/- Penalty levied under Sec. 27(3)(c) at 150% Due Rs.47,50,17,979/- Rs.60,36,73,086/- Paid Nil Nil Balance Rs.47,50,17,979/- Rs.60,36,73,086/- 173. In the impugned order of the Commercial Tax Officer, there is a mere reproduction of the reply of the appellant. If what was stated in the notices which preceded the Assessment order dated 14.01.2015 passed by the Commercial Tax Officer, are true, the demand has to be confirmed. 174. However, the above extracted portion of the impugned Orders of the Commercial Tax Officer indicates that the respective orders passed are non speaking order. There is no discussion in it. 175. We are therefore, inclined to set aside the impugned order and remit the case back to the Commercial Tax Officer or such other officer authorized in their behalf to pass a speaking order on merits in the light of the observation and the position of law that is clarified by us in this detailed order. Writ Petitions (W.P): 176. We shall now deal with the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the cases individually though these cases were argued as if common issue arises for consideration before us. W.P.No.9372 of 2019 Tvl.Lathika Oil Trading Table-III Sl.No.1 Assessment Year :2015-2016 181. In the above Writ Petition, the petitioner has challenged the impugned assessment order dated 24.1.2019 passed by the respondent Commercial Tax Officer for the assessment year 2015-2016. 182. The impugned order invokes best judgment assessment notice under section 22(4) of the Tamil Nadu Value Added Tax Act, 2006 and confirms to tax liability. 183. In support of the case of the petitioner in W.P.No.9372 of 2019 (M/s.Tvl.Lathika Oil Trading,Represented by its Proprietrix, V.Juliet Prema Arputham), learned Counsel Mr.R.Seniappan submitted as follows:- "The seller and the purchaser both of them are doing business in the same complex and assess on the files of the respondent herein. As requested through reply dated 10.10.2016 in response to the notice dated 26.08.2016, the respondent fairly verified and accepted and certified in the impugned order itself page no 22 and inner page no 3 of the impugned order) that the seller has filed monthly returns with payment of dispu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oil of as Rs.62,22,482/- only transported from Krishnapattinam to Chennai by M\S.Salok Matha Transport as against Rs.3,81,44,280/- 189. Thus, there was a suppression of taxable turnover of Rs.3,19,21,798/- (Rs.3,81,44,280 - Rs.62,22,482) in the returns filed. The total purchase turnover of the petitioner should have been actually Rs.50,26,00,106/- (Rs.47,06,78,317 + Rs.3,19,21,789) instead of mere Rs.47,06,78,317/- as was declared by adding only a sum of Rs.62,22,482/- in interstate purchase to the local purchase of edible oil of Rs.47,06,78,317/-. 190. The petitioner is prima facie liable to pay differential tax of Rs.16,24,262/- on the local sales effected on the balance purchase turnover of Rs.3,19,21,798/- (Rs.3,81,44,280-Rs.62,22,482) which escaped assessment. W.P.Nos.11482, 11483, 11484, 11487 & 11489 of 2019 Tvl.Atmosfaira Impex Private Limited Table-III Sl.Nos.2 to 6 Assessment Year :2012-2013 to 2016-2017 191. These Writ Petitions pertains to the above mentioned assessment years. The petitioner has challenged the assessment orders passed by the Assessing Officer/Respondent therein on 31.01.2019. The dispute pertains to the period partly before the amendment and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer noted that these are closely connected trading concerns of the petitioner. M/s.Megha Trading Corporation is owned by none other than the mother of the Director Thiru.Ashutosh Goel and wife of another director Thiru.Rajesh Goel of Tvl.Atmosfaira Impex Private Limited. 196. Tvl.South India Trading Corporation is owned by none other than one of the Director (Thiru.Rajesh Goel) of Tvl.Atmosfaira Impex Private Limited. The residential places of the Proprietors Tmt.Deepika Goel (Tvl.Megha Trading Corporation) and Thiru.Rajesh Goel (Tvl.South India Trading Corporation) is none other than the Residential Address No.115/C-16, Nelson Chamber, Nelson Manickam Road, Aminjikarai, Chennai - 29 of the Director of Thiru.Ashutosh Goel (Tvl.Atmosfaira Impex Private Limited). 197. It has been further observed that there is no storing place for the goods purchased by Tvl.Megha Trading Corporation and Tvl.South India Trading Corporation. The sellers Tvl.Megha Trading Corporation and Tvl.South India Trading Corporation have therefore not at all handled the goods. Therefore, it has been concluded that there was only transfer of money with no corresponding transfer of goods and movement of g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to produce for movement of goods such as Lorry receipt, way bill, G.C.notes, loading and unloading expenses etc to Enforcement Officials. On receipt of notice issued and at the time of personal hearing also the dealers have not produced any records such as Lorry receipt, way bill, G.C.Notes, loading and unloading expenses etc still now. Though the dealers are in possession of original bills at the time of inspection they have not produced the bills before me for verification and for cross examination. Hence in the absence of any records and proof of the movement of the goods, the input tax credit of Rs.81194142.00 availed by the dealer hereby reversed as proposed in the notice. 202. In our view, the petitioner has not made out a case for interference. The petitioner has not produced any documents to substantiate movement of goods. Therefore we given liberty to the petitioner to challenge the impugned orders, if advised before the Appellate within the time stipulated in this order. The Appellate Authority shall dispose such appeal in the light of the observations in this order. W.P.Nos.15046, 15049, 15050, 15052, 15053, 15055 of 2019 Tvl.Murugan Garments Table-III Sl.Nos.8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 93 2808000/- 140400/- 4. KirthinithiTex 33786360971 705840/- 35292/- Total 22464060/- 35292/- 205. The reasons given in the respective assessment years are as follows:- i. Mere possession of TIN No by the unethical sellers is not a proper proof. ii. The continuous stated in their objections that they have reported the purchases in the returns and all payments were made through cheques and bank transfer but for the above transaction, no proof has been produced, and hence disallowed, Further the Lorry Vouchers were fabricated after the issue of Notice. 206. The petitioner has no documents to substantiate that the dealers to whom payments were made at that the supplies effected by them accompanied in other collateral documents to substantiate the movement of goods. 207. The petitioner has relied on the decision of this Court in the case of Althaf Shoes Private Limited vs. Assistant Commissioner (CT), Valluvarkottam Assessment Circle, Chennai, (2012) 50 VST 179 (Mad) and in the case of Sri Vinayaga Agencies vs. Assistant Commissioner (CT), Vadapalani-I Assessment Circle, Chennai and another, (2013) 60 VST 283 (Mad). 208. In our view, the petitioner has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The petitioner has no documents to establish movement of goods. Therefore, we give liberty to the petitioner to challenge the impugned orders, if advised before the Appellate Authority within the time stipulated in this order. The Appellate Authority shall dispose such appeal in the light of the law declared by us. W.P.Nos.18761, 18766 & 18769 of 2021 M/s.Aassaan Commodity Trade Table-III Sl.Nos.17 to 19 Assessment Year :2012-2013 to 2014-2015 215. In these Writ Petitions the petitioner had challenged the impugned assessment order dated 30.07.2021 passed by the respondent Sales Tax Officer for the assessment year 2012-2013 to 2014-2015. 216. The reading of the notice issued to the petitioner on 10.03.2016 and the reply filed indicates that the petitioner is a partnership concern which is a Registered dealer under the provisions of the TNVAT Act, 2006 read with TNVAT Rules, 2007. 217. The petitioner has an office in T.Nagar and obtained a registration for dealing in Food Processor (mixie), Wet Grinder and Cotton Yarn.The petitioner claims to have purchased cotton yarn from six different dealers as detailed below:- Sl.No. Name of the dealer TIN Number 1. SKS Enginee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellate Authority within the time stipulated in this order. The Appellate Authority shall dispose such appeal in the light of the law declared by us. W.P.Nos.11808, 11811, 11812, 11814, 11816 & 11819 of 2022 M/s.Sharda Motors Industries Table-III Sl.Nos.20 to 25 Assessment Year :2010-2011 to 2015-2016 225. The petitioner purchased automobiles as well as other raw materials required for manufacture of auto parts from some vendors located within the State and outside the State. 226. The petitioner availed ITC. Initially proceedings were initiated on various dates for the respective assessment years. The Department had issued notices to deny ITC to the petitioner on account of mismatch of ITC between Annexure I of the petitioner and Annexure II filed by the respective selling dealers who sold the goods during the period in dispute and on account of cancellation of the Registration. 227. The details of the demand proposed in the respective notices issued to the petitioner for the respective assessment years and the demand confirmed in all the writ petitions are as under: Sl. No Financial Year Mismatch Cancellation Total Proposed demand Penalty confirm Total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irmed in the light of Circular dated 18.01.2019 bearing reference Circular No.3/2019/Q1/39643/2018, Relevant portion of the order for Assessment Year 2011-2012 as far as Mismatch reads as under: Conclusion of the Assessing Authority: The above readings were carefully examined. The total transactions are analysedwith two major categories. 1] Reported by the seller at the other end, settling the mismatching on some or other reason. 2] Not established with reference to the reporting at other end. As far as the reconciled turnover with reporting at the other end, it works out to the input tax credit value of Rs.1,00,54,203.00. The entries have been reflecting the concern transactions and the mismatching has been crept out due to technical and administrative differences. Otherwise the transactions are established and the concern turnover is bonafide with documentary evidence. Hence, the proposal to the extent of Rs.1,00,54,203.00 is hereby dropped. As far as the turnover of Rs.33,16,213.00, it seems to be not established with the verification of reporting at the other end. In supporting the argument of the dealer in the absence of reporting at the other end, the Court verd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the examination is furnished in Annexure to the order." 231. As far as retrospective cancellation of registration, the Assessment Order has held as under: "Conclusion of the Assessing Authority: On this issue, it is clarified that the Registration Certificates of the selling dealers have been cancelled with retrospective effect. When a proceeding is passed, the content of the proceeding is legal stand, not mere the date of proceedings. Even though the date of proceedings are subsequent to the dates of their purchase, the effective date of cancellation is prior to that. Hence, the selling dealers have turned into unregistered dealers from the date mentioned in the proceeding itself. Then the issue is whether the buying dealers, who have made the tax payment to them in the intermittent time, are eligible on the tax sufferance or not. In this issue, it is clarified that many High Court verdicts have approved and upheld the decision of Government, passing an retrospective effect orders. Hence, the cancellation of Registration on retrospective effect is has legal approval and thereby the date of effect mentioned in the proceedings also has legal approval. On the other hand, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng transportation proof. In the absence of fulfillment of the legal stand, the transaction happened in between the parties has not constituted the purchase or sale. Hence, their purchase transactions are not valid and qualified in accordance with the law and resultant credit on their tax sufferance of tax at the purchase point is also not legal credit on their part to claim. In view of the above facts, their contention that the selling dealers have been alive on the date of purchase is not sustainable and untenable. 232. In the result:- i. T.C.Nos.19, 20 & 21 of 2022 are dismissed. ii. W.A.Nos.451 of 2022 & 2714 of 2021 & 2637 to 2640 of 2021 & 119, 125, 131 & 135 of 2022 & 1194, 1195, 1197 & 1201 of 2022 & W.P.No.9372 of 2019 &11482 to 11484, 11488 & 11489 of 2019 & 12450 of 2019 & 15046, 15049, 15050, 15052, 15053 & 15055 of 2019 & 1226, 1230 & 1239 of 2021 & 18761, 18766 & 18769 of 2021 & 11808, 11811, 11812, 11814, 11816 & 11819 of 2022, are dismissed with liberty to the appellants/petitioners to file their respective statutory appeals before the Appellate Authority within thirty days of this order. iii. In W.A.No. 2607 and 2618 of 2021, the impugned orders are set aside ..... X X X X Extracts X X X X X X X X Extracts X X X X
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