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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 ..... 07 is provisional. Such input tax credit can be denied to a dealer, if the dealer fails to discharge the burden of proof as under Section 17(2) of the Act. As long as credit was availed validly where there is not only a transaction of sale as defined in the Act but also incidence of tax being borne, input tax credit was to be allowed to be utilized as a set-off against the tax liability declared in the self assessment in the monthly/annual return under the Scheme of the Act. If tax is not paid by the seller, machinery is prescribed to recover the tax from such dealer. A close reading of the 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 TN VAT Act, 2006. However, before denying input tax credit under Section 19(13) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 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. [ 2023 (3) TMI 533 - SUPREME COURT ] Main issue decided in largely favor of Revenue. - And W.P.No.9372 of 2019 11482 to 11484, 11488 11489 of 2019 12450 of 2019 15046, 15049, 15050, 15052, 15053 15055 of 2019 And W.P.No. 1226, 1230 1239 of 2021 18761, 18766 18769 of 2021 11808, 11811, 11812, 11814, 11816 11819 of 2022 and C.M.P.Nos.17113, 17062, 17199, 17201, 17203, 17204, 17622 of 2021 906, 931, 963, 989, 7556, 7561, 7569, 7585 of 2022, etc., batch. Honourable Mr.Justice S.Vaidyanathan And Honourable Mr.Justice C.Saravanan For the Appellant in T.C.Nos.19, 20 21 of 2022 : Mr.Mahesh Raichandani for M/s.A.Saranya For the Respondents in all cases : Mr.Haja Nazirudeen, Additional Advocate Genearl for M/s.M.Venkateswaran SGP (Taxes) assisted by Mr.C.Harsharaj, Additional Government Pleader, Ms.Amirtha Poonkodi Dinakaran, Government Advocate COMMON ORDER S.VAIDYANATHAN, J. AND C.SARAVANAN, J. By this common order all these Writ Petitions, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ws by the counsel for the respective petitioners/appellants:- i. Prince Khadi Woollen Handloom Prod. Coop. Indl. Society vs. Commissioner of Central Excise, 1996 (88) ELT 637 (SC); ii. Reckitt Colman of India Limited vs. Collector of Central Excise , 1996 (88) E.L.T. 641 (S.C.); iii. Saci Allied Products Limtied vs. Commissioner of Central Excise , 2005 (183) ELT 225 (SC); iv. Commissioner of Central Excise vs. Ballarpur Industries Limtied , 2007 (215) E.L.T. 489 (S.C.); v. Commissioner of Customs, Mumbai vs. Toyo Engineering India Limtited , MANU/SC/3625/2006; vi. Bachhaj Nahar vs. Nilima Mandal and another , (2008) 17 SCC 491; vii. Warner Hindustan Limited vs. Collector of Central Excise, Hyderabad , 1999 (113) ELT 24 (SC); viii. D.Y.Beathel Enterprises vs . State Tax Office , 2021-TIOL-890-HC-MAD-GST; ix. Union of India and others vs. Dhanwanti Devi and Others , (1996) 6 SCC 44; x. Shree Bhairav Metal Corporation vs . State of Gujarat , MANU/GJ/0396/2015; xi. Althaf Shoes Private Limited vs. Assistant 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 Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Mad); xxxviii. Magadh Sugar and Energy Limited vs. State of Bihar and others, 2021 SCC OnLine SC 801; xxxix. Poppatlal Shah vs. The State of Madras , (1953) 4 STC 188 (SC); xl. The State of Kerala and Others , vs. Annam and Others, 1968 SCC OnLine Ker 103; xli. Heinz India Private Limited and another vs. State of Uttar Pradesh and Others , (2012) 5 SCC 443; xlii. Sudesh Kumar vs. State of Uttarakhand, (2008) 3 SCC 111; xliii. Oryx Fisheries Private Limited vs. Union of India and Others, (2010) 13 SCC 427; xliv. Duni Chand Rataria vs. Bhuwalka Brothers Ltd., (1955) 1 SCR 1071, AIR 1955 SC 182; xlv. BayyanaBhimayya and Sukhdevi Rathi vs. The Government of Andhra Pradesh, (1961) 12 STC 147 (SC); xlvi. Uniworth Textiles Limited vs. Commissioner of Central Excise, (2013) 9 SCC 753; xlvii. Calcutta Discount Company Limited vs. Income Tax Officer, Companies District-1, Calcutta and Another, (1961) 2 SCR 241; xlviii. State Trading Corporation of India Limited 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 Gor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax vs. Bahri Bros. Private Limited, (2007) 213 ELT 100; lxxiv. GheruLal Bal Chand vs. State of Haryana and Others, (2012) ILR 2 Punjab and Haryana 781; lxxv. Shanti Kiran India Private Limited vs. Commissioner Trade and Tax Department , MANU/DE/0058/2013; lxxvi. Assistant Commissioner (CT), Broadway Assessment Circle, Chennai vs. Bhairav Trading Company , [2015] 96 VST 315 (Mad); lxxvii. Assistant Commissioner (CT), Presently Thiruverkadu Assessment Circle, Kolathur, Chennai vs. Infiniti Wholesale Limited , [2017] 99 VST 341 (Mad); lxxviii. Jayam and Company vs. Assistant Commissioner and another , [2016] 96 VST 1 (SC); lxxix. Govardhan M. vs. State of Karnataka, 2012 SCC OnLine Karnataka 9088; lxxx. M/s.K.Sashidhar vs. Indian Overseas Bank and Others , 2019 (12) SCC 150; lxxxi. M/s.UMC Technologies vs. Food Corporation of India and another , 2021 (2) SCC 551; lxxxii. Anglo French Textiles vs. Cestat, 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 Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t order of the Appellate Deputy Commissioner (CT)(FAC) partly allowing the appeals and partly remanding the cases back to the Assessing Officer for the following Assessment Year as detailed below:- TABLE-I T.C.Nos. Assessment Year Date of the Assessment Order Order dated 31.12.2015 of the Appellate Deputy Commissioner (CT)(FAC) in Appeal Nos. I.O. Of the STAT dated 16.11.2021 of the STAT in Sales Tax Appeal Nos. 20 of 2022 2010-2011 28.05.2015 155 of 2015 91 of 2016 21 of 2022 2011-2012 28.05.2015 156 of 2015 92 of 2016 19 of 2022 2012-2013 28.05.2015 157 of 2015 93 of 2016 11. The petitioners in the above Tax Cases is a dealer. After, monthly returns were filed for the respective assessment years, the assessments were reopened and revised assessment order were passed based on the report received from inspection conducted at the place of the business of the 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 appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that were relied on both by the dealer and by the first appellate authority for the reason of which no need to repeat them. iii. In cases relating to certain specific dealers ie., Masani Industries and Senthur Murugan sunlight board, the respondent dealers had sufficient proof for the inadvertent mistake of furnishing the TIN number of their erstwhile registration numbers or the inadvertent mistake adopted by the assessing authority in taking consideration of the date of constitutional change of registration. As such there is no reasonableness in making the reversal tax credit in respect of the items referred to in point No.(b) above. 9. So. Considering the above facts, we are of the view that the first appellate authority had rightly deleted the reversal ITC of Rs.(Rs.244821-00+252492-00+93535- 00+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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dustries, Katpadi in STA No.127/2016 dated 22.06.2016 wherein it was held that In fact penalty under Section 27(4) of the Act could be invoked only in the case where there is wrong availment of input tax credit by producing false bills, vouchers, declaration certificates with a view to support his claim of input tax credit and it has to be levied on a graded scale as prescribed under sub section (4) of section 27 of the TNVAT Act . 17. In the present case of the appeal, the levy of penalty was made not on account of any reasoning of fraud, mis-statement or production of any false bills. Therefore the decision cited above squarely applies to the case. The orders of the first appellate authority in deleting the levy of penalty is therefore ordered to be up held and ordered accordingly. 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omplete violation of principle of natural justice, fair play and equity? 15. In support of the case of the petitioner in T.C.Nos.19, 20 21 of 2022 (Tvl.Sahyadri Industries Limited) , learned counsels for the petitioner Mr.Mahesh Raichandran and C.Suraj submitted as follows:- 2.1 First, the Appellate Tribunal remanded the matter back to the assessing officer on a basis/reason/ground which never formed part of the proceedings of the respondent from audit stage to the appeals filed before the Appellate Tribunal. It is well settled law that the court or tribunal cannot make a new case at tribunal stage which was never pleaded before it. In this connection reference was made to Reckitt Colman of India Ltd vs. Collector of Central Excise 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uments pertaining to the period under dispute 2010-11, 2011-12 2012-13. 2.5 Assuming whilst vehemently denying, even if the condition of delivery / movement of goods is to be taken as applicable in the facts of the present case, the same would not affect the eligibility of ITC at the hands of the petitioner in the present facts for the reasons explained infra. 2.6 First , the presumption is that any amendment is prospective and not retrospective, unless there is a specific mention or implicit indication. In the present case, there is no such mention or indication in the proviso to section 19 of the TNVAT Act, 2006. Per contra, it is clearly provided and stated that the amendment would be operative 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 retr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the Writ Appeals and Writ Petitions were argued as if the issues therein were confined to denial of input tax credit availed under Section 19(1) of the TN VAT Act, 2006, it was noticed that there were several other issues also in the assessment orders which was challenged before the Writ Court and before this Court in this connected Writ Petitions/Writ Appeals. 18. The learned counsels who appear for the Writ Petitions and Writ Appeals have made elaborate submissions on this scheme of TN VAT Act, 2006 to persuade as to held that input tax credit availed by the petitioners and the writ appellants cannot be denied. Therefore, we will reproduce important submissions of the counsels 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asad submitted as follows:- (1) Enquiry - It is most respectfully submitted, that Section 27(2) requires determination after making an enquiry . Thus,assessment must be preceded by an enquiry. The enquiry is at two stages, namely, prior to the commencement of assessment and after the commencement of assessment reference was invited to (i) 1977 39 STC page 478 (SC) (at page additional typeset Volume -I in WA No.119/2022 page 71 at page 76). (ii) 2017 99 VST page 343 (MAD) (page 45 Case Laws Volume II in WA No.119/2022, at pages 74, 77, 78, 79. It was submitted that in the second case, even while noticing that there were allegations of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchases and sales of the Appellants are make believe, yet retain the output tax paid by the Appellant. While disallowing the input tax credit at the hands of the Appellant, the output tax by the Vendors, is not refunded to the Vendors who are registered dealers and whose registration is recorded in the impugned Assessment. (9) Finally, Without prejudice submission , to the above contention, It was submitted, that, if it is found that substituted proviso is retrospective, actual delivery , includes constructive delivery. The expression actually occurs in two places of the substituted 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 actu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was vested right paragraph 19. This is under TNVAT Act. 2. 1997 (3) SCC page 472 (SC) page 66 of Respondent s case laws set It is respectfully submitted that this decision, dealt with insertion of first proviso to Section 43-B, whose insertion was to grant relief to the assessee, while avoiding unintended consequence. The amendment was beneficial vide paragraphs 10 to 14. It was not a provision creating new disability. 3. 2015 (1) SCC page 1 (SC) page 35 of Respondent s case laws compilation It is respectfully submitted that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e actually been delivered 1. Sri Vinayaga Agencies v. Assistant Commissioner (CT) and Ors. MANU/TN/1386/2013 [Page No. 69 to 72] Para 6 to 11 at Page 71 and 72. 2. Assistant Commissioner (CT), Vadapalani I Assessment Circle and Ors. v. Sri Vinayaga Agencies MANU/TN/7257/2020 [Page No. 111 to 113] Para 6 to 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 Rajastha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N/1459/2021 [Page No.114 to 117] 5. Case Law under Eu VAT :Bonik EOOD v DirektornaDirektsia Obzhalvaneiupravlenienaizpalnenieto Varna priTsentralnoupravlenienaNatsionalnataagen tsia za prihodite, Case C-285/11, 6 December 2012 Page No. 139 to 146] Page 142, Page 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 subsequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AT paid by the vendors as per the tax invoices in accordance with the provisions of the 2006 Act and the 2007 Rules. 3. The goods purchased by the petitioner were resold by it to registered dealers 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 Respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w: 10. From sub-section (10) of Section 19 onwards, provisions are made to follow the procedure and fulfil the requisite conditions for availing ITC. For the purposes of this particular 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified in the First Schedule to the Act from the other registered dealers inside the State, shall establish, whenever it is deemed necessary 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proviso inserted in Section 19(1) even for the earlier periods and they have no jurisdiction, right or authority 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sales Turnover during the month concerned and VAT thereon. d. Annexure 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 Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rns 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 on its sales turnov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and as to how even without any s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 proper submissions in the matter. The said section can nev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 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 following judgments of this Hon ble Court: a. (2012) 50 VST 179: Althaf Shoes (P) Ltd. Vs. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions 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 Fertilizers P Ltd) (Paragraph 8). 34.In so far as the Respondent s power to make enquiry is concerned, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 them to give delivery instructions for dispatch the goods to the places of the Petitioner s buyers directly. When the goods a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3: 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 order can be questioned by a writ of certiorari. The underlying principle is that by erroneously assuming the existence of such jurisdictional fact, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 extended meaning and should be strictly confined to its clearly defined limits. ii. Law relating to forum and limitation is procedural in nature , whereas law relating to right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) was introduced wherein electronic transit pass in Form LL has to be generated and carried along with the goods. v. Similarly, with effect from 29.1.2016,Rule 15(18)(a) was replaced for Rule 15(18) of the TNVAT Rules, 2006 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 reported in 60 VST 283 and affirmed by the Division Bench in the case of Infiniti Wholesale reported in 99 VST 341. iii. In view of the above submissions and the judgements of the Hon ble Supreme Court and this Hon ble Court, the petitioner respectfully prays ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sly 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 delivery would retrospectively apply for the period prior to 29/01/2016, the term actually cannot be interpreted narrowly to mean physical but should be interpreted to encompass constructive and symbolic deliveries. In this regard, reliance is placed on the decision of the Constitution B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Act No 13 of 2015, dated 14.10.2015 which is effective prospectively from 25.01.2016 ( the Amendment ). Submissions 2. ITC has been availed on satisfaction of all requirements under Section 19(1) of the TNVAT Act. In absence of any statutory requirement under Section 19(1) of the TNVAT Act requiring proof for moveme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 requirement on the buyer to establish the actual delivery of the goods. Such a fresh requirement, made for the first time, is very detrimental to buyers such as the Petitioner. 4.4 Therefore, the Amendment, if given retrospectivity effect, will be against the settled position of law. Reliance is placed on the decision of the Hon ble Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ablish 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; ----- ---- ----- ---- (i) The total value of the goods. No Amendment / Change Rule 10(2A) ----------- Rule 2-A: Every registered dealer who claims input tax credit to the extent of the tax paid on purchases of taxable goods specified in the First Schedule to the Act from the other registered dealers inside the State, shall establish, whenever it is deemed necessary by the assessing authority, that the tax due on such purchase o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 output tax was by of ITC and only marginal amount of tax was paid. i) In the above background the Assessing Authority has questioned the genuineness of the transactions (or) the existence of buyers/sellers and more importantly involvement of goods and in turn has called/sought for furnishing documents relating to movement/delivery of goods. 3. Whether the delivery of goods / actual passing of title of goods is essential attribute of sale? The section 2(33) of the TNVAT Act, 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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 real for the entitlement of ITC. The assessing authority is empowered to make such enquiry in the case transaction of bill trading to defraud revenue as per section 19(13) of the TNVAT Act, 2006 read with section 65 81 of the TNVAT Act, 2006. Such enquiry in case of bill trading empower the authority to look beyond the production of original bill and to call for proof delivery of goods. When such being the position the amendment brought in explicitly providing the condition of actual delivery of goods, by way of removal doubts that the mere produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely 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 which the Constitution came into force, the amending Act also will be part of the existing law. The above summing up is factually based on the judgments of this Court as well as English decisions. The Apex Court in Allied Motors P Ltd Vs Commissioner of ITin [1997] 3 SCC 472 held at Para -13 13. A proviso which is inserted to remedy unintended consequences and to make the provision workable, a proviso which supplies an obvious omission in the section and is required to be read into the section to give the section a reasonable interpretation, requires to be treated as retrospective in ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 keep and maintain an up-to-date, true and correct account showing full and complete particulars of his business The section 64(3) of the TNVAT Act, 2006 states that e very registered dealer or person who moves goods in pursuance of a sale or purchase or otherwise from one place to another shall send along with the goods moved a bill of sale or delivery note or such other documents, as may be prescribed. The Rule 6 (1) of the TNVAT Rules, 2007 states that every registered dealer under the Act shall maintain true, correct and complete account in ink or electronic records in any of the languages specified in the Eighth Schedule to the Constitution of Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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 dealers, no goods was supplied, etc. Therefore the decision rendered in Vinayaga Agencies case will not squarely apply to the facts of these writ petitions. 9. Whether the production of tax invoice would amount sufficient discharge of burden for the claim of ITC? The section 2(24) of the TNVAT Act, 2006 defines ITC means the tax paid under this Act by a registered dealer to another registered dealer on the purchase of goods including capital goods in the course of his business; The section 19(13) of the TNVAT Act, 2006 states that the assessing authority shall, after making such enquiry deny the benefit of input tax credit to such registered dealer who without entering into a transaction of sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the assessee pointed out that the cancellation of registration was only on 19.11.1993 and hence, exemption could be allowed in respect of sales taken place prior to the date as taken from the registered dealer, we do not find any ground to accept this reasoning. When the said dealer has not proved the genuineness of the transactions, and there being no material to substantiate the contention of the assessee that the said Raghavendra Enterprises had in fact handled the goods, even for the period prior to the date of cancellation of registration, we do not find any ground to differ from the view taken by the Tribunal. The DB of Gujarat High court in the case of Madhav Steel Corporation vs State of Gujarat [2014] 72 VST 318 - (Pl refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - (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 incidental to such movement / delivery of goods, etc. The assessing authority is empowered to make such enquiry beyond the original Tax invoice, regarding delivery of goods as provided under section in order to ensure that the transaction of sale is real. The need for calling for a movement of goods arises only to ensure that there was delivery of goods. It may be relevant to submit that the movement of goods is the most proximate fact relating to delivery of goods and is inextricably linked to delivery. Thus, proof of movement of goods is relevant to find delivery of goods or otherwise. 11. The Burden of proof in regard to claim of ITC The Section 17 (2) of the TNVAT Act, 2006 states that for the purpose of claim of input tax credit, the burden of proving such claim sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 credit . (1)......... (2) ....... (2-A) Every registered dealer who claims input tax credit to the extent of the tax paid on purchases of taxable goods specified in the First Schedule to the Act from the other registered dealers inside the State , shall establish, whenever it is deemed necessary by the assessing authority, that the tax due on such purchase of goods has actually been remitted into the Government account. 32. Under Rule 10(2-A) to TN VAT Rules, 2007 after the amendment, a registered dealer who claims ITC has to establish that the tax on purchase of goods has actually been paid in the manner prescribed by the registered dealer who sold the goods and that the goods have actually been delivered. Prior to the amendment, credit was available on the tax paid or payable under the Act. This a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 payable as is indicated in invoice, bill or, as the case may be, challan referred to in rule 9. PROVIDED that in respect of input service where whole or part of the service tax is liable to be paid by the recipient of service, credit of service tax payable by the service recipient shall be allowed after such service tax is paid 37. The provisions of CENVAT Credit Rules, 2004 which replaced the CENVAT Credit Rules, 2002 were drafted with a lot of caution and care after having gained a rich experience since the introduction of Proforma Credit under the provision of the Central Excise Rules, 1944 and under the Modvat Credit Rules under the provision of the Central Excise Rules, 1944. 38. Several provisos to Rule 4(7) of CENVAT Credit Rules, 2004 were later periodically inserted over a period of time to ensure that there was no leakage of revenue on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, 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, challan referred to in rule 9: PROVIDED ALSO that the manufacturer or the provider of output service shall not take CENVAT credit after one year of the date of issue of any of the documents specified in sub-rule (1) of rule 9, except in case of services provided by Government, local authority or any other person, by way of assignment of right to use any natural resource: PROVIDED ALSO that CENVAT Credit of Service Tax paid in a financial year, on the one-time charges payable in full upfront or in instalments, for the service of assignment of the right to use any natural resource by the Government, local authority or any other person, shall be spread evenly over a period of three years: PROVIDED ALSO that where the manufacturer of goods or provider of output service, as the case may be, further assigns such right assigned to him by the Government or any other person, in any financial year, to another ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 41. Though, Section 19 of the TN VAT Act, 2007 was inspired from the first proviso to Rule 4(7) of the CENVAT Credit Rules, 2004, Section 19 of the TN VAT Act, 2007 was not drafted properly, when TN VAT Act, 2006 was enacted in the year 2006. As per Section 19(1) of the TN VAT, 2016 and Rule 10 of TN VAT Rule, 2007 input tax credit could be availed on the strength of the original invoice alone. 42. However, under the proviso as it stood prior to amendment, a registered dealer who intended to claim input tax credit had to establish that tax due on such purchase was paid by him in the manner prescribed. During the period prior to the amendment, the Rule 10 of the TN VAT Rules.2007, also did not prescribe the manner for establishing how the tax due on such purchases was to be paid by such a dealer like the petitioners/appellants purchasing goods who availed input tax credit on the incidence of tax borne on the purchase ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom 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 Act, 2006. 49. The situation contemplated in the proviso to Section 19(1) of the TN VAT Act, 2006 as extracted in the Column - 1 to Table A was thus impossible of being complied by registered dealers like the petitioners/appellants to avail input tax credit though the very purpose of enacting TN VAT Act, 2006 was to allow input tax credit to a registered dealer on the incidence of tax borne on each purchase by such dealer who intends to either effect further sale and use the goods in the manufacture of some other taxable goods. 50. Proviso to Section 19(1) of the TN VAT Act, 2006 was rectified only in 2016 vide Second Amendment Act (13 of 2015) with effect from 29.01.2016 after realizing that the proviso to Section 19(1) of the TN VAT Act, 2006 as was not precise due to defective drafting and allowed input tax credit facility being misused and abused by unscrupulous dealers leading to a large scale leakage of revenue in the past. Thus, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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, if the seller has disappeared or was a dummy and a fly by night dealer whose endeavour for obtaining registration was merely to facilitate fraudulent availing of input tax credit to defraud the State Revenue. The credit availed which is provisional can therefore can be denied under the scheme of the Act. 57. As long as, transaction are bonafide and there are documents to establish sale coupled with actual physical movement of goods and payment of consideration to the dealer who effecting sale, input tax credit cannot be denied to the dealer who produces documents to show that the goods were delivered to it or to its consignee. 58. At the same time we make it clear, the law also does not require unnecessary crisscross movements of the goods to avail input tax credit validly. It is not necessary that the goods should be delivered to person who has placed order. Goods can also be delivered to a consignee identified by the buyer/registered dealer. Sine qua n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 long as the credit availed by them preceded a transaction of sale and incidence of tax was borne by them by making payments to their seller. 66. It is also the cases of the respective petitioner/appellants, they have indeed borne the incidence of tax as their transaction were through normal banking channel. However, it is submitted that they were not required to prove actual delivery of goods. This argument and the stand of the petitioners/appellants is unacceptable. 67. Under the scheme of the TN VAT Act, 2006, the credit that is availed on the strength of the original invoice containing the details specified in Rule 10(2) of the TN VAT Rules, 2007 is provisional. Such input tax credit can be denied to a dealer, if the dealer fails to discharge the burden of proof as under Section 17(2) of the Act. 68. As long as credit was availed validly where there is not only a transaction of sale as defined in the Act but also incidence of tax being borne, input tax credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en 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, 2006 and Rule 10 of the TN VAT Rules, 2007, it could be asked to be paid back under the circumstances specified in Section 19(13) and Section 19(15) of the TN VAT Act,2006 under the machinery provided under Section 27 of the Act for credit that is allowed is provisional under Section 19(16) of the TN VAT Act, 2006. In appropriate case, credit can be revoked. 74. The Hon ble Supreme Court further held that it should also be noted that there is no co-relation of the raw material and the final product; that is to say, it is not as if credit can be taken only on a final product that is manufactured out of the particular raw material to which the credit is related. The credit may be taken against the excise duty on a final product manufactured on the very day that it becomes available. 75. Section 19(10) of the TN VAT Act, 2006 states that a registered dealer could claim ITC only on the receipt of the original tax invoice duly filled, signed and issued by a registered dealer fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 TN VAT Act, 2006. 79. In these cases, we are not concerned with the circumstances contemplated under Section 19(10)(b) of TN VAT Act, 2006 which deals with the situation where original invoice is lost. Suffice to keep in mind that Section 19(1), Section 19(10)(a) and 19(10)(b) of the TN VAT Act, 2006 have to be read along with Rule 10(2) of the TNVAT Rules, 2007 and input tax credit avail can be denied as credit availed is provisional and the burden is always under Section 17(2) of the TN VAT Act, 2006 on such person availing input tax credit to establish that input tax credit was validly availed. 80. Section 17, Section 19(15) 19(16) of the TN VAT Act, read as under:- TABLE-D Section 17: Burden of Proof Section 19(13), 19(15) 19(16) (i) For the purpose of assessment of tax under this Act, the burden of proving that any transaction or any turnover of a dealer is not liable to tax, shall lie on such dealer. (ii) For the purpose of assessment of tax under this Act, the burden of proving that any t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 credit. 82. Thus, wide powers have been vested with the Assessing Officer to revoke the credit availed. Credit can be denied, if it appears to the assessing authority, to be i) incorrect, or ii) incomplete; or iii) otherwise not in order, in which case machinery has been provided under Section 27 of the TN VAT Act, 2006 will be attracted if an assessee/registered dealer fails to establish the same 83. Section 19(13) of the TN VAT Act, 2006 deals with specific situations 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 revenue to facilitate input tax credit being wrongly availed. 84. Under Section 19(13) of the TN VAT Act, 2006, an assessing authority can deny input tax credit availed by a registered dealer who has claimed input tax credit based on such invoice, bill or cash memorandum from such date, where such invoice, bill or cash memorandum were raised by a registered deal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 memorandum to another registered dealer, with the intention to defraud the Government revenue, the assessing authority shall, after making such enquiry as it thinks fit and giving a reasonable opportunity of being heard, deny the benefit of input tax credit to such registered dealer who has claimed input tax credit based on such invoice, bill or cash memorandum from such date. 19(15) Where a registered dealer has purchased any taxable goods from another dealer and has availed input tax credit in respect of the said goods and if the registration certificate of the selling dealer is cancelled by the appropriate registering authority, such registered dealer, who has availed by way of input tax credit, shall pay the amount availed on the date from which the order of cancellation of the registration certificate takes effect. Such dealer shall be liable to pay, in addition to the amount due, interest at the rate of two per cent, per month, on the amount of tax so payable, for the period commencing from the date of claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the date from which the order of cancellation of the registration certificate takes effect. In all these cases, without dispute, the orders cancelling the registration certificates of the selling dealers is given with retrospective effect, That is to say, after the assessment orders have been passed granting the benefit of input tax credit. 12. Insofar as the cancellation of the registration certificates of the selling dealers is concerned, it is for those selling dealers to canvas the plea as to when it will take effect either on the date of the order or with retrospective effect. Insofar as the petitioners are concerned, they have purchased the taxable goods from registered dealers who had valid registration certificates; paid the tax payable thereon; availed input tax credit; and the assessing officers have passed orders granting such benefit. Therefore, the assessment orders granting input tax credit were validly passed. There was no cancellation of the registration certificates of the selling dealers at that point of time. The petitioners/assessees have paid input tax based on the invoices issued by registered selling dealers and availed input tax credit. The retrospective can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s which were resold from a registered dealer and the obtaining from that registered dealer of a certificate in this behalf. This condition having been fulfilled, the right of the purchasing dealer to make a tax free sale accrued to him . Thereafter to hold, by reason of something that had happened subsequent to the date of the purchase, namely, the cancellation of the selling dealers registration with retrospective effect, that the tax free resales had become liable to tax, would be tantamount to levying tax on the resales with retrospective effect. 5. In our view, the High Court was right. A purchasing dealer is entitled by law to rely upon the certificate of registration of the selling dealer and to act upon it. Whatever may be the effect of a retrospective cancellation upon the selling dealer, it can have no effect upon any person who has acted upon the strength of a registration certificate when the registration was current. The argument on behalf of the department that it was the duty of persons dealing with registered dealers to find our whether a state of facts exists which would justify the cancellation of registration must be rejected. To accept it would be to notify the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s another matter if the selling dealer has not paid the collected tax and that liability has to be fastened on the selling dealer. Liability cannot be however mulcted on the purchasing dealer who had shown proof of payment of tax on the purchases made. 100. To an extent we are in agreement with the view of the learned single judge in Sri Vinayaga Agencies Vs. Assistant commissioner (CT), Vadapalani-I Asessment Circle, Chennai and Another , (2013) 60 VST 283 (Mad). However, the view cannot be applied universally where the selling dealer continued to exist where there was no transaction of sale or that the registration was obtained only for the purpose of facilitating credit of tax being availed without a transaction of sale. We cannot uphold the view in Sri Vinayaga Agencies Vs. Assistant commissioner (CT), Vadapalani-I Asessment Circle, Chennai and Another , (2013) 60 VST 283 (Mad) in all cases merely because the registration of the selling dealer was not cancelled if indeed the registration was obtained to create paper transaction without actual sale. The burden to prove that there was indeed a transaction of sales is with the registered dealer availing credit. Till such burden is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all cases of cancellation of VAT registration of the selling dealer with retrospective date, if registration itself was obtained only to facilitate bogus input tax credit being claimed availed and utilized without actual transaction of sale and supply of goods to cheat the revenue as is contemplated under Section 19(13) of the TN VAT Act, 2006. 106. Therefore a registered dealer claiming input tax credit has to discharge the burden of proof required to be discharged under Section 17(2) of the TN VAT Act, 2006 by showing documents to prove that indeed there was a transaction of sale and payment of amount was made for supply made to the dealer who supplied the goods. 107. Thus, it was incumbent on the part of a registered dealer like petitioner/appellants availing input tax credit to prove that indeed a transaction of sale had taken place. They should not only preserve but also produce collateral evidence in the form of transport documents, such lorry receipts or consignment note, etc. when called upon failing which it cannot be said they have discharged the burden of proof required to be discharged under Section 17(2) of the TN VAT Act, 2006. 108. In absence of such document, where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 31st day of October of the succeeding year: Provided that in respect of such returns submitted for the years 2006-2007, 2007-2008, 2008- 2009, 2009-2010 and 2010-2011, on which assessment order are not passed shall be deemed to have been assessed on the 30th day of June 2012. 113. The Hon ble Supreme Court has now categorically held in the case of M/s.Ecom Gill Coffee Trading Private Limited referred to supra that Mere production of the invoices or the payment made by cheques is not enough and cannot be said to be discharging the burden of proof cast under Section 70 of the KVAT Act, 2003. 114. The decision in in The State of Karnataka vs. M/s.Ecom Gill Coffee Trading Private Limited was rendered which recently was in the context of Section 70 of the Karnataka VAT Act, 2003. Section 70 is a amalgam for the Section 17(2), 19(13) and Section 27 of the TN VAT Act, 2006. It will be useful to refer to Paragraph 9.1 from the said decision reads as under:- 9.1 Thus, the provisions of Section 70, quoted hereinabove, in its plain terms clearly stipulate that the burden of proving that the ITC claim is correct lies upon the purchasing dealer claiming such ITC. Burden of proof that the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emorandum to another registered dealer, with the intention to defraud the Government revenue, the assessing authority shall, after making such enquiry as it thinks fit and giving a reasonable opportunity of being heard, deny the benefit of input tax credit to such registered dealer who has claimed input tax credit based on such invoice, bill or cash memorandum from such date. (2)Where a dealer knowingly issues or produces a false tax invoice, credit or debit note, declaration, certificate or other document with a view to support or make any claim that a transaction of sale or purchase effected by him or any other dealer, is not liable to be taxed, or liable to tax at a lower rate, or that a deduction of input tax is available the prescribed authority shall, on detecting such issue or production, direct the dealer issuing or producing such document to pay as penalty: (a)in the case of first such detection, three times the tax due in respect of such transaction or claim; and (b)in the case of second or subsequent detection, five times the tax due in respect of such transaction or claim. (3) Before issuing any direction for the payment of the penalty under this Section, the prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sequence, is on the person who has availed input tax credit wrongly on the strength of such invoice, bill or cash memorandum which issued with an intention to defraud the Government Revenue. Whereas, under Section 70 of the KVAT Act, 2003, the consequence was on the person raising such invoice. 122. If Input Tax Credit was availed on the strength of invoice of the dealers merely satisfying the requirements of the Rule10(2) of the TNVAT Rules, 2007 without a corresponding transaction of sale with the intention to defraud the Government revenue, the assessing officer can certainly after making such enquiry and after giving a reasonable opportunity of being heard deny the input tax credit to such registered dealer under Section 19(13) of the TN VAT Act, 2006 to such a dealer who has availed Input Tax Credit based on such invoice, bill or cash memorandum under the machinery prescribed under Section 27(2) of the TNVAT Act, 2006. 123. Section 19(15) of the TN VAT Act, 2006 is an innovation as compared to other VAT enactments in the rest of the states in the country as it also contemplates revocation of credit availed even in the event of cancellation of Registration of the dealer who iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve the genuineness of transaction as per Section 70 of the KVAT Act, 2003 (Karnataka Value Added Tax Act, 2003) would be upon the purchasing dealer. 129. The ratio of the Hon ble Supreme Court in M/s.Ecom Gill Coffee Trading Private Limited will apply in a full vigor even in the context of TN VAT Act, 2006. It is not open for the dealer to merely claim that they are bonafide purchasers of goods who have discharged the burden by merely paying the amounts to their selling dealers in view of the above decision of the Hon ble Supreme Court. 130. As far as mismatch between the credit availed on the strength of the invoice issued and the tax paid at the registered dealers end is concerned, a circular has been issued on 24.02.2021 by the Office of the Principal Secretary Commissioner of Commercial Taxes, Chepauk, Chennai 600 005 in the light of the direction of a learned Single Judge of this Court in the case of M/s.JKM Graphics Solutions Private Limited vs. The Commercial Tax Officer, Vepery Assessment Circle, Chennai in W.P.No.105 of 2016 vide order dated 01.03.2017 and another order dated 12.02.2021 in Review Petition No.173 of 2018 in W.P.No.5007 of 2016 dated 12.02.2021.Following gui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r hand that if the whole or part of the transactions are not reported by the seller, then shall initiate assessment proceedings against the seller and shall pass appropriate orders in accordance with provisions of the TNVAT Act, 2006. The result of such action shall be reported to the Original Assessing Authority. 3.3.5 The Assessing Authority should issue show cause notice along with all the connected to the assessment seeking objections. On receipt of objections, the Assessing Authority shall fix a date and time of personal hearing (either physical or virtual hearing). The assessing officer shall grant adequate opportunity to the dealer to put forth their objections by duly following the principles of natural justice. During the course of enquiry, either on a request made by the assessee or suomotu, the Assessing Authority can summon the other end dealer and on request, a cross examination may be provided to the assessee if such dealer is available. However, if the dealer is non-existent the Assessing Officer may proceed to make an assessment on the basis of material on record in accordance with law. The entire process involving issue of show cause notice till final order may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Considering the fact that there is no challenge by the Commercial Tax Department insofar as the benefit of decision of this Court in Jinsasan Distributors case referred to supra has been conferred the rights that have already crystallized in favour of the assessees/petitioners in T.C.Nos.19 to 21 of 2022 alone are not disturbed. Since the cases have been remitted back, these petitioners shall file their reply within 30 days. The authority shall pass orders in the light of the observation contained herein. 136. Having dealt with main issues arising out of denial of input tax credit and in the background of the amendment to Section 19 of TN VAT Act, 2006 vide Tamil Nadu Act, 13 of 2015 with effect from 29.01.2016. We now proceed to deal with the cases of the respective appellants and writ petitioners and answer the issue. Writ Appeals (W.A.): 137. The Writ Appeals have been filed against the separate common order dated 15.06.2021 in W.P.No.23200 of 2016 etc. batch and W.P.No.7517 of 2015 etc. batch. 138. The details of the assessment orders and the corresponding Writ Petitions corresponding to Writ Appeals are detailed as under:- TABLE:II Sl.No. W.A.No. Name W.P.No. Impugned/ Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be cautious, while granting exoneration of liability merely on the ground of jurisdictional errors, if any committed by the authorities competent. On some occasions, jurisdictional errors are committed wantonly or in collusion with the assessees, knowingly that there is a possibility of escaping from the clutches of law. Thus, the higher authorities of the Department are expected to be watchful and review the orders passed by the subordinate authorities and in the event of any negligence, dereliction of duty, collusion or corrupt activities, then such officials are liable to be prosecuted apart from initiation of departmental disciplinary proceedings. The procedures to be followed in the department for assessment are well settled. Thus, the authorities competent are not expected to commit such jurisdictional errors in a routine manner. In these circumstances, review of such orders by the higher authorities are imminent to form an opinion that there is willful or intentional act for commission of such jurisdictional errors, enabling the assesses to get exonerated from the liability. Liability and jurisdictional errors are distinct factors, and therefore, Courts are expected to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remedy before the Appellate Authority against the Assessment Orders impugned under TN VAT Act, 2006. 141. A reading of the above table would indicate that in the case of Writ Appeals in Sl.Nos.1,14 17, predate amendment to Section 19 of the TN VAT Act, 2006 and Rule 10 of the TN VAT Rules, 2007vide Tamil Nadu Act, 13 of 2015 with effect from 29.01.2016. 142. The view to be taken in the above Tax Cases has to be followed as rest of the cases deal with the orders passed subsequent to the amendment though for the period prior to the aforesaid amendment. 143. We shall however give details of the cases and the order passed by the Assessing officers which were subject matter of the Writ Petitions. W.A.No.2714 of 2021 M/s.Sameera Timber Plywoods Table-II Sl.No.1 Assessment Year : 2011 - 2012 144. This Writ Appeal has 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 petition of the appellant challenging the assessment order dated 27.02.2015 for the assessment year 2011-2012. 145. The appellant had earlier suffered an assessment order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set against the tax liability. The purchase and the sale have been found to be bogus in the impugned order. 151. That apart the issue also involved sales suppression and etc. as detailed below: TABLE:II A Particulars 2011-2012 2012-2013 2013-2014 2014-2015 Sales suppression estimated on the basis of excess payments Rs.3,36,58,889 Rs.6,71,62,531 Sales suppression proposed on the basis Rs.1,16,16,175 Rs.5,25,02,540 of excess receipts Sales suppression determined on the basis of excess payments and determined under Section 27(1) Rs.97,27,496 at 14.5% Rs.1,65,62,291 Rs.4,52,75,064 taxable at 14.5% Rs.11,96,65,071 at 14.5% Tax due levied at 14.5% Rs.14,10,487 Rs.24,01,532 - Taxable turnover proposed under Section 27(1) Tax Proposed Rs.97,27,496 at 14.5% Rs.42,63,346 - Total Tax turn over determined under Section 27 (1) - Rs.2,08,25,637 - Total Tax determined under Section 27 (1) - Rs.30,19,717 - Tax levied 14,10,487 Rs.30,19,717 Rs.65,64,884 Rs.1,73,51,435 Reversal of Input Tax Credit determined under Section 27 (2) Rs.36,88,954 Rs.1,26,60,4378 Rs.31,58,544 Rs.1,04,45,462 Penalty under Section 27(3): It is also levied at 150% of Rs.21,15,731 Rs.45,29,576 Rs.98,47,326 Rs.2,60,27,153 Pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 51 Rs.4,40,36,100 Rs.12,22,00,495 Penalty under Section 27 (4) levied at 50% Rs.20,46,881 Rs.3,20,57,234 Rs.4,55,11,445 Rs.1,91,49,060 156. Here also there are several disputed questions of facts which are involved apart from denial of input tax credit availed and utilized. Therefore, the order passed by the learned Single Judge cannot be interfered. 157. We are therefore of the view, the Writ Appeals are liable to be dismissed. However, we give liberty to the appellant to file a statutory appeal before the Appellate Authority. The Appellate Authority shall dispose such appeal in the light of the law declared by us. W.A.Nos.1194, 1195, 1197 1201 of 2022 M/s.Amman Industries Table-II Sl.Nos.10 to 13 Assessment Year : 2011-2012 to 2014-2015 158. These Writ Appeals have been filed 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 dated 25.07.2016 passed by the Commercial Tax Officer for the respective assessment years 2011-2012 to 2014-2015. 159. The Assessment Orders not only deal w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : 2010 to 2011 164. This Writ Appeal has 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 dated 06.07.2015 passed by the Commercial Tax Officer for the respective assessment years 2010 to 2011. 165. The appellant herein had purchased goods from three dealers whose registrations were cancelled prior to the date of purchase of the goods. Thus, a notice was issued to the appellant on 08.12.2014 and on 22.05.2014. 166. The appellant replied to the same stating that the registration of the dealers who supplied the goods were active at the time of purchase and had also enclosed copies of Bank Statement to substantiate the payments. The appellant was called upon to furnish the documents. The appellant was unable to substantiate movement of goods to the worksite and freight and transportation charges. 167. It was observed that on verification of purchase that each and every consignment consisted of more than 4000cement bags which would require proper transportation documen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods (other than by way of a mortgage, hypothecation, charge or pledge) by one person to another in the course of business for cash, deferred payment or other valuable consideration and includes A transfer, otherwise than in pursuance of a contract of property in any goods for cash, deferred payment or other valuable consideration. Sec. 2(29): Place of business means any place in the State where a dealer purchases or sells goods and includes i. a warehouse, godown or other place where a dealer stores his goods; ii. a place where the dealer processes, produces or manufactures goods; and iii. a place where the dealer keeps his accounts, registers and documents. Sec. 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 revenue, the assessing authority shall, after making such enquiry as it thinks fit and giving a reasonable opportunity of being heard, deny the benefit of input tax credit to such registered dealer who has claimed input tax credit based on such invoice, bill or cash memorandum from such date. 172. The last paragraph of the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 68/ 2013-2014 15053 of 2019 TIN:33572441268/ 2015-2016 15055 of 2019 TIN:33572441268/ 2014-2015 14. M/s.A.S.Textiles 1226 of 2021 TIN:33492404743/ 2013-2014 30.11.2020 15. 16. 1230 of 2021 TIN:33492404743/ 2014-2015 1239 of 2021 TIN:33492404743/ 2015-2016 17. Aassaan Commodity Trade 18761 of 2021 TIN:33741562791/ 2012-2013 30.07.2021 18. 19. 18766 of 2021 TIN:33741562791/ 2013-2014 18769 of 2021 TIN:33741562791/ 2014-2015 20. M/s.Sharda Motors Industries 11808 of 2022 TIN:33921661341/ 2012-2013 11.03.2022 21. 22. 11811 of 2022 TIN:33921661341/ 2012-2013 23. 11812 of 2022 TIN:33921661341/ 2010-2011 24. 25. 11814 of 2022 TIN:33921661341/ 2013-2014 11816 of 2022 TIN:33921661341/ 2014-2015 11819 of 2022 TIN:33921661341/ 2015-2016 178. In all these Writ Petitions, instead of filing a statutory appeal against the respective Impugned Orders/Assessment Orders, the respective petitioners like the writ appellants in the above cases have filed these writ petitions by placing reliance. 179. It is the case of the respective writ petitioner that the requirements in the proviso to Section 19 (1) of the TNVAT Act, 2006 as amended vide with effect from 29.01.2016 vide Tamil Nadu Act, 13 of 2015 can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the returns. 186. We have perused the impugned assessment order. We are of the view that the invocation of section 22(4) of the Act TN VAT Act,2006 was prima facie warranted as there is suppression of purchase turnover by the petitioner in the returns filed for the assessment year 2015-2016. The case was not actually confined to denial of input tax credit alone. As far as demand for ITC of Rs.3,08,110/- on purchase turnover of Rs.61,62,195/-. 187. Thus, there was no justification on the part of the learned counsel to have clubbed the present case along with the present batch as other issues were also involved. Had we taken a favourable view in favour of these petitioners in so far as denial of Input Tax Credit was concerned, we may have committed a grave injustice to the State Revenue by assuming the issue involved was confined only to denial of Input Tax Credit. We are therefore of the view, the Writ Petition is liable to be dismissed. However, we give liberty to the appellant to file a statutory appeal before the Appellate Authority. The Appellate Authority shall dispose such appeal in the light of the observation contained in this order. 188. A reading of the impugned order pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es suppression when compared with Balance Sheet Sales suppression when compared with Balance Sheet Reversal of input tax on sales to unregistere d dealers Reversal of input tax on interstate sales u/s. 19(2)(v) from 01.11.2014 Reversal of Input tax on excess claim of Input tax Disallowance of claim of purchase and sales return Input tax reversal for bogus purchases 2015- 2016 Purchase suppression and estimtaed sales omission Purchase suppression and estimated sales omission Input tax reversal for bogus purchases Mismatch on cross verification of Annexure I of buyer and Annexure II of seller Wrong claim of Input tax` 2016- 2017 Input tax reversal for bogus purchases Reversal of input tax on bogus purchases 193. As far as reversal of ITC is concerned with which we are primarily concerned in these Writ Petitions and Writ Appeals, the petitioner has availed ITC from the alleged purchase of goods from M/s.Megha Trading Corporation and M/s.South India Trading Corporation. 194. There are no documents that were filed to substantiate any transfer of goods or movements of goods. Thus, the Assessing Officer has concluded that the ITC availed on the alleged sale from these two concerns were bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wife of one of the Director and the mother of another Director. M/s.South India Trading Corporation which is owned by the Director Rajesh Goel. There are only trails of money transfers. 200. We do not wish to express any opinion on the merits of the case. Suffice to state that the petitioner has to challenge the impugned order before the Appellate authority like others. Therefore, the above writ petition is dismissed with the above observation. W.P.No.12450 of 2019 M/s.Indo Metal Press Private Limited Table-III Sl.Nos.7 Assessment Year :2012-2013 201. In the above Writ Petition, dispute pertains to the following four heads:- i. Interstate Sales against Form : Dropped ii. Sale of Asset for the Value of Rs.293715.00 : Dropped iii.Difference in sales turnover reported as per balance sheet and monthly returns of value of Rs.10838697.00 : Dropped iv. Reversal of ITC on ineligible claim of Rs.81194142.00 The Period of the order as far as Reversal of ITC on ineligible claim of Rs.81194142.00 reads as under: The reply filed by the dealer has been carefully examined. At the time of inspection the dealers even though ready to produce original bills, but they are not able to produce for move ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 67316 496800/- 24540/- 3. Sri Vaishnavi Devi Textiles Private Limited 33112504765 103606941/- 2929625/- Total 104613741/- 2979965/- For the Assessment Year 2013-2014 : Sl.No. Name of the Seller TIN No Purchase Value (Rs) ITC Claimed (Rs) 1. Latha Traders 33153785919 479520/- 23796/- 2. Sri Balaji Textiles 33362311646 1345276/- 67263/- 3. Sri Balaji Garments 33782309184 494215/- 24710/- 4. Annapoorna Yarns 33972502643 772737/- 38636/- Total 3091748/- 154585/- For the Assessment Year 2014-2015 : Sl.No. Name of the Seller TIN No Purchase Value (Rs) ITC Claimed (Rs) 1. Balaji Tex 33362311646 1000980/- 50049/- 2. RR Tex 33633786722 13428176 671409/- Total 14429156/- 721458/- For the Assessment Year 2015-2016 : Sl.No. Name of the Seller TIN No Purchase Value (Rs) ITC Claimed (Rs) 1. Sree Sakthi Tex 33826278208 14007240/- 700362/- 2. RR Tex 33633786722 4942980/- 247149/- 3. Murugappa Cottons 33242444893 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redo the assessment once again after giving an opportunity to personal hearing to the petitioner. Thus, the impugned assessment orders for the respective assessment years have been passed. TABLE-III D: Sl.No. W.P.No. A.Y. ITC Penalty 1. 1226 of 2021 2013-2014 Rs.50,430/- Rs.75,645/- 2. 1239 of 2021 2015-2016 Rs.3,95,823/- Rs.11,87,469/- 3. 1230 of 2021 2014-2015 Rs.19,42,396/- Rs.29,13,594/- 212. The Assessing Officer has concluded that the petitioner has not discharged the burden of proof. The petitioner had purchased the goods from genuine dealers and thus, it has been concluded that credit availed on the strength of bogus invoices cannot be allowed. 213. The petitioner has also not produced the purchase bill. Thus, the credit has been denied. 214. In our view, the petitioner has not made out a case for interference. 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 Commo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06) 3 SCC 1, wherein it held as under: 43. Transactions which are mutant sales are limited to the clauses of Article 366 (29-A). All other transactions would have to qualify as sales within the meaning of the Sales of Goods Act, 1930, for the purpose of levy of sales tax. 223. It is further stated that there is a deem sale between the petitioner and the two concerns and therefore the petitioner was justified incorrect and utilizing the same for discharging the lax liability on the sales effected under the provisions of the TNVAT Act, 2006. 224. In our view, the petitioner has not made out a case for interference. The petitioner has no documents to substantiate 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.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 pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the respective years are similar.The Department s contention was that the petitioner had wrongly availed credit in excess and therefore issued notices to the petitioner for the respective assessment years. Apart from the above, there are several other issues also in the above proceedings that were initiated against the petitioner. 230. Barring the above two issues all the issues have attained finality. There is no further challenge in so far as above two mentioned issues i.e. regarding mismatch between the credit availed in Annexure I of the petitioner and Annexure II filed by the respective selling dealers, the demand has been confirmed 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is not fulfilled. In the absence of compliance of statutory provisions, the assessing authority finds no room to consider the transaction as physically occurred and genuine. Moreover, as per the amended provisions of the Act, the paid position of sufferance of tax is not at all established when it is not found reported at the other end. In fine, the concern transactions are not established in a genuine way to be considered. Hence, the proposal to the extent of Rs.33,16,213.00 is hereby confirmed as their contention is not sustainable with the statutory stipulation. However, the narrative result 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 sel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... components of a genuine transaction. 1) The valid original purchase invoice, issued by the selling dealer to establish the transfer of title of goods. 2) The proof for bank or cash payment of the proceed, made against the consideration to establish the rights on transfer of title of goods. 3) proof of transportation to establish the transfer of possession of goods. In the above contention of the dealer, they have not established the right on the transfer of title, by way of not filing any bank payment proof and not established the transfer of possession of goods, by way of not filing 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 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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