Opal Energy Solution Private Ltd. Vs Commercial Tax Officer (Madras High Court)
The Madras High Court considered a writ petition challenging reassessment proceedings initiated under Section 27 of the Tamil Nadu Value Added Tax Act, 2006. The reassessment proposed reversal of Input Tax Credit (ITC) under Section 19(16) on the ground that the petitioner had purchased goods from three dealers whose registrations had subsequently been cancelled.
The petitioner contended that all purchases were genuine and had been made from registered dealers. It was submitted that the dealers’ registrations were active on the dates of purchase, the departmental website reflected their registration status as active, and monthly returns had also been filed by those dealers. The petitioner furnished purchase invoices and argued that its ITC claim could not be denied merely because the registrations of the selling dealers were later cancelled retrospectively.
During the hearing, the Department produced details showing that the registrations of the concerned dealers had indeed been cancelled retrospectively.
The High Court relied on the Supreme Court’s decision in State of Maharashtra v. Suresh Trading Company. The Supreme Court had held that a purchasing dealer is entitled to rely upon the registration certificate of a selling dealer when the registration is valid and current. Any retrospective cancellation may affect the selling dealer, but it cannot adversely affect a purchaser who acted on the basis of a valid registration certificate at the time of the transaction. The Supreme Court had also rejected the contention that purchasers are required to investigate whether circumstances existed that could justify future cancellation of the seller’s registration.
