Input tax credit to be paid back on cancellation of dealer’s registration if evidence of sale not furnished

State Tax Officer Vs Arunachala Impex Pvt Ltd (Madras High Court)

Madras High Court held that input tax credit availed and utilised is required to be repaid back on cancellation of registration in case was no evidence of sale. Accordingly, order set aside and remitted back to the file of AO.

Facts- The respondent have filed monthly returns for the month of February -2015 under TNVAT Act and CST Acts in Form I and Form 1 respectively .

A scrutiny of the returns for the month of February-15, it was found that they have availed ITC to a tune of Rs.98,30,251/- on a purchase turnover of Rs.6,77,94,700/- from Tvl. Quality Industries whose Registration Certificate has been cancelled by the Registering Authority since the dealers have not filed their returns along with the tax due .

A notice was issued to the dealers proposing reversal of ITC under Sec19(13) of the TNVAT Act-2006 calling for their objections. The dealers have filed their reply in which they have enclosed a copy of the manual returns said to have been filed by Tvl. Quality Industries. But, there is no evidence of proof of payment of tax to the Department by way of signature obtained in the respective circle for having received the payment due nor have they filed any Bank statement to substantiate their claim of payment of tax. Hence, the proposal of reversal is confirmed.