Case Law Details
Tvl. AP Foundries Private Limited Vs Assistant Commissioner (ST)(FAC) (Madras High Court)
In a recent legal battle, Tvl. AP Foundries Private Limited took on the Assistant Commissioner regarding transitional credit entitlement. The Madras High Court intervened, offering the petitioner a chance to challenge the tax demand by meeting a condition of paying 10% of the disputed amount.
The crux of the matter dates back to an order issued on 25th April 2023, contested through a writ petition. Tvl. AP Foundries Pvt Ltd, a registered dealer under the Tamil Nadu Value Added Tax Act, 2006, had previously availed transitional credit amounting to Rs.1,20,963.61. However, a show cause notice was issued concerning the eligibility of this credit, prompting the petitioner to respond on 14th February 2023, seeking clarification on the alleged ineligible Input Tax Credit.
During the legal proceedings, the petitioner’s counsel highlighted the comprehensive details of purchases, including invoice specifics such as numbers, dates, commodity codes, purchase values, and tax amounts paid. The denial of transitional credit, as per the petitioner’s argument, stemmed solely from the alleged default by the concerned supplier. Hence, the petitioner requested an opportunity to present their case regarding the tax demand.
The government’s counsel, Mr. T.N.C.Kaushik, acknowledged the receipt of the break-up details and presented a screenshot from the portal to support the claim. Subsequently, upon instructions, the petitioner’s counsel expressed their willingness to remit 10% of the tax demand, thus agreeing to a condition for remand.
Analyzing the impugned order, it surfaced that the tax demand was confirmed due to the taxpayer’s non-payment and absence at the personal hearing post the receipt of break-up details on 5th April 2023. Given the petitioner’s assertion of entitlement to transitional credit, supported by relevant supply and tax payment documentation, the court deemed it fair to grant an opportunity to contest the tax demand, albeit with conditions.
Consequently, the Madras High Court quashed the impugned order dated 26th April 2023, subject to the condition of remitting 10% of the disputed tax demand within two weeks of receiving a copy of the order. Moreover, within this period, the petitioner was permitted to submit a reply to the show cause notice, accompanied by all relevant documents. Once the reply was received, along with the payment of 10% of the disputed tax, the respondent was directed to provide a reasonable opportunity for the petitioner, including a personal hearing, and subsequently issue a fresh order within two months.
In conclusion, the writ petition (W.P.No.8489 of 2024) was disposed of under the mentioned terms, with no additional costs incurred. Consequently, W.M.P.Nos.9437 and 9439 of 2024 were closed.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An order dated 25.04.2023 is challenged in this writ petition. The petitioner was a registered dealer under the Tamil Nadu Value Added Tax Act, 2006. In relation to purchases under the said enactment, the petitioner had availed of transitional credit to the extent of Rs.1,20,963.61/-. In relation thereto, the petitioner received a show cause notice. Such show cause notice was replied to on 14.02.2023 seeking a break-up of the alleged ineligible Input Tax Credit. The impugned order was issued in the said facts and circumstances.
2. Learned counsel for the petitioner referred to the details of purchases made by the petitioner and pointed out that all relevant details such as invoice number, invoice date, commodity code, purchase value, amount of tax paid, etc is contained therein. He also submits that transitional credit was denied under the impugned order solely on account of alleged default by the supplier concerned. He seeks an opportunity to be heard in relation to the tax demand.
3. Mr. T.N.C.Kaushik, learned Additional Government Pleader, accepts notice for the respondent. He submits that the break-up was provided. In order to substantiate this contention, he has handed over a screen shot from the portal.
4. On instructions, learned counsel for the petitioner submits that the petitioner agrees to remit 10% of the tax demand as a condition for remand.
5. From the impugned order, it appears that the tax demand was confirmed solely because the tax payer neither paid the tax nor appeared at the personal hearing after receipt of break-up details on 05.04.2023. Since the petitioner has asserted that he was entitled to avail of transitional credit by enclosing details of the relevant supplies and taxes paid thereon, it is just and appropriate that the petitioner be provided an opportunity to contest the tax demand albeit by putting the petitioner on terms.
6. For reasons set out above, the impugned order dated 26.04.2023 is quashed subject to the condition that the petitioner remits 10% of the disputed tax demand as agreed to within two weeks from the date of receipt of a copy of this order. Within the aforesaid period, the petitioner is also permitted to submit a reply to the show cause notice along with all the relevant documents. Upon receipt of the reply and upon being satisfied that 10% of the disputed tax demand was received, the respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within two months from the date of receipt of the petitioner’s reply.
7. W.P.No.8489 of 2024 is disposed of on the above terms. No costs. Consequently, W.M.P.Nos.9437 and 9439 of 2024 are closed.
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