Commercial Tax Officer Vs Mudhra Fine Blanc Private Limited (Madras High Court)
The Madras High Court recently addressed the issue of Input Tax Credit (ITC) reversal under Section 19(2)(v) of the Tamil Nadu Value Added Tax (TNVAT) Act, 2006. In Commercial Tax Officer v. Mudhra Fine Blanc Private Limited, the court dismissed a writ appeal filed by the Commercial Tax Officer, affirming a single judge’s decision to quash the assessment order against the company.
The court’s ruling was based on the binding precedent set by a prior Division Bench decision in The State of Tamil Nadu v. M/s.Everest Industries Limited. The bench acknowledged that this precedent, which dealt with the same issue of ITC reversal, was still under challenge by the state before the Supreme Court. However, since the Supreme Court had not yet issued a ruling, the Madras High Court found no fault in the single judge’s decision to follow the existing High Court precedent.
While upholding the quashing of the assessment, the court granted the Commercial Tax Officer the liberty to revive the assessment against Mudhra Fine Blanc Private Limited. This revival is conditional and can only occur if and when the Supreme Court reverses the Division Bench’s judgment in the Everest Industries Limited case. The court specified that this liberty must be exercised within four weeks of the Supreme Court’s judgment, or it will be forfeited. This conditional order provides a path for the tax authority to act if the legal landscape changes, while ensuring the current assessment remains quashed based on existing judicial precedent.
