Assistant Commissioner (CT) Vs Vinayaga Agencies (Madras High Court)
The Madras High Court examined a case involving Vinayaga Agencies, which sought input tax credit (ITC) under the Tamil Nadu Value Added Tax (TNVAT) Act, 2006. The issue arose when the purchasing dealer, Vinayaga Agencies, was denied ITC for the tax paid on purchases made from a seller, Classic Enterprises, due to the latter’s failure to deposit the collected tax with the authorities. The case centered on the application of Section 19(1) of the TNVAT Act, which allows registered dealers to claim ITC if they can prove that the tax on their purchases has been paid to the selling dealer.
The Assistant Commissioner initially upheld the denial of ITC, arguing that since the selling dealer did not remit the collected tax, the purchasing dealer could not claim the credit. However, the learned Single Judge of the Madras High Court, in a judgment passed on January 29, 2013, ruled that Vinayaga Agencies was entitled to claim ITC. The court noted that the purchasing dealer had duly paid the tax to the selling dealer, which was sufficient to fulfill the conditions under Section 19(1) of the TNVAT Act as it stood before the 2016 amendment. The court further clarified that while the purchasing dealer was entitled to ITC, the Revenue authorities were still free to proceed against the selling dealer to recover the tax that was due.
