CA Bimal Jain
Infiniti Wholesale Ltd. (“the Petitioner”) is registered as a ‘dealer’ under the provisions of the Tamil Nadu Value Added Tax Act, 2006 (“TN VAT Act”). The Petitioner is involved in trading of consumer items and wholesalers for various enterprises. The Petitioner usually purchased goods directly from the manufacturers of consumer durables and other goods who are registered dealers and raise Tax Invoices as contemplated under Rule 10(2) of the Tamil Nadu Value Added Tax Rules, 2007 (“VAT Rules”).
The Assessing Authority on verification of the returns filed by the petitioner for the Assessment Year 2011-12 issued a SCN dated July 20, 2012 proposing to reverse the input tax credit availed by the Petitioner in terms of Section 19(13) of the TN VAT Act on the four grounds i.e., the selling dealers had not filed returns or not paid taxes or they were unregistered dealers or their registrations were retrospectively cancelled.
The Petitioner on August 5, 2012 has submitted reply stating that credit was availed on local purchase on the basis of tax invoices (which they possess) issued by local registered dealers and hence Section 19(13) of the TN VAT Act is not applicable. Albeit there is no statutory requirement under Section 19(1) of the TN VAT Act, the Petitioner will provide documentary evidence to the Department before availing input credit, though the Petitioner bona fidely stated that they may obtaining confirmation from the vendors that the tax has been paid as well as returns are being filed as per the TN VAT Act.
In spite the Petitioner submitted the confirmation of Rs. 2,60,92,645/-, which was based on the confirmations furnished by its vendors, the Respondent passed the impugned assessment order, dated February 25, 2013. Being aggrieved, the Petitioner filed a writ petition before the Hon’ble Madras High Court.
The Hon’ble Madras High Court allowed the writ petition and set aside the impugned order in favour of the Petitioner and held that input tax credit availed by the petitioner could not be denied and there is no need to reverse the input tax credit availed by the purchaser of the goods on the grounds that the selling dealer has not filed returns or not paid taxes or they were unregistered dealers or their registrations were retrospectively cancelled.
(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email: email@example.com)