Tvl. Sahyadri Industries Ltd. Vs State of Tamil Nadu (Madras High Court)
In a landmark judgment, the Madras High Court addressed a critical concern for taxpayers under the Goods and Services Tax (GST) regime, specifically relating to the conditions for availing Input Tax Credit (ITC). Drawing parallels from the erstwhile Tamil Nadu VAT (TNVAT) laws, the court’s decision sheds light on the practical challenges buyers face in ensuring sellers’ compliance with tax payments.
The Case Overview: The crux of the case, “Tvl. Sahyadri Industries Ltd vs State of TN,” revolved around the conditions precedent for availing ITC. Traditionally, ITC claims were contingent upon a trio of stipulations: the transfer of title (validated by a proper invoice), payment to the vendor (through any legitimate means), and the transfer of possession (evidenced by an E-way bill).
Legal Precedent and Judgment: Referencing the Supreme Court’s decision in “CCE vs Dai Ichi Karkaria Ltd,” the High Court highlighted that once ITC is availed validly, it should not be denied merely because the supplier failed to remit the tax. Labeling the requirement for buyers to verify sellers’ tax payments as “condition impossibilia” (an impossible condition), the court ruled that satisfying the aforementioned three conditions should suffice for ITC eligibility.
Implications for GST Law: While the judgment directly pertains to TNVAT laws, its principles resonate with the GST framework, offering relief and clarity to taxpayers nationwide. The decision implicitly criticizes the erstwhile section 43A of the CGST Act, which held recipients jointly liable for ITC claims, a section now omitted, reinforcing the court’s stance on simplifying ITC claims.
Conclusion: The Madras High Court’s ruling marks a significant milestone in tax jurisprudence, ensuring that the procedural aspects of ITC claims under GST are grounded in practicality and fairness. By removing the onus on buyers to verify sellers’ tax payments, the judgment paves the way for a more streamlined and less burdensome process for availing ITC, aligning with the GST regime’s overarching objectives of transparency and ease of doing business.
This decision underscores the judiciary’s role in interpreting tax laws in a manner that balances legal compliance with operational feasibility, providing a precedent that could influence future deliberations and rulings on similar matters.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
By this common order all these Writ Petitions, Writ Appeals and Tax Cases, are being disposed.
2. In these cases following issue arises for our consideration:-
(a) Whether input tax credit availed under Section 19 of the Tamil Nadu Value Added Tax Act, 2006(herein after referred to as TN VAT Act, 2006) by these petitioners/ appellants can be denied retrospectively on account of cancellation of the VAT registration of the dealers who are said to have effected sale of the goods to these petitioners/appellants?
(b) Whether, the input tax credit availed by them can be denied in absence of transport documents and other documents to prove movement of goods to these petitioners/appellants from the dealers who effected sale of goods to these petitioners/appellants?
(c) Whether amendment to Section 19(1) of TN VAT Act, 2006 vide Tamil Nadu Act, 13 of 2015 with effect from 29.01.2016 is prospective or retrospective?
3. For the sake of convenience, we shall deal with the cases in three parts. The petitioners have challenged the Assessment Orders in Writ Petitions. Writ Appeals pertain to challenge to the Orders passed by a learned Single Judge of this Court. By the impugned order the learned Single Judge of this Court dismissed the Writ Petitions filed by them. In the Writ Petitions, before the Single Judge of this Court, the appellants had challenged the Assessment Orders passed by the Assessing Officers.
4. Tax Cases arise out of a common order passed by the Tamil Nadu Sales Tax Appellate Tribunal (STAT), Additional Branch, Coimbatore – 18 in Coimbatore Tribunal Sales Tax Appeal Nos.91 to 93 of 2016.
5. The petitioners in the Writ Appeals (WA) and in the Writ Petitions (WP) have an alternate remedy against the impugned assessment order under the provisions of the aforesaid Act before the Appellate Assistant Commissioner. Ordinarily, we would have straight away dismissed the Writ Petitions and the Writ Appeals filed with liberty to file statutory appeals before the aforesaid appellate authority and confined this order on merits in the Tax Cases alone.
6. However, since this Court has earlier admitted these Writ Appeals/Writ Petitions long back, we shall endeavour to give a finality to the issues by giving our decision on the legal position for the assessing officers/appellate authorities as the case may be to adjudicate and decide the appeals.
7. In support of their cases, reliance was placed on the following case laws by the counsel for the respective petitioners/appellants:-
i. Prince Khadi Woollen Handloom Prod. Coop. Indl. Society Commissioner of Central Excise, 1996 (88) ELT 637 (SC);
ii. Reckitt & Colman of India Limited Collector of Central Excise, 1996 (88) E.L.T. 641 (S.C.);
iii. Saci Allied Products Limited Commissioner of Central Excise, 2005 (183) ELT 225 (SC);
iv. Commissioner of Central Excise Ballarpur Industries Limited, 2007 (215) E.L.T. 489 (S.C.);
v. Commissioner of Customs, Mumbai Toyo Engineering India Limited, MANU/SC/3625/2006;
vi. Bachhaj Nahar Nilam Mandal and another, (2008) 17 SCC 491;
vii. Warner Hindustan Limited Collector of Central Excise, Hyderabad, 1999 (113) ELT 24 (SC);
viii. Y. Beathel Enterprises vs. State Tax Office, 2021-TIOL-890-HC-MAD-GST;
ix. Union of India and others Dhanwanti Devi and Others, (1996) 6 SCC 44;
x. Shree Bhairav Metal Corporation vs. State of Gujarat, MANU/GJ/0396/2015;
xi.Altaf Shoes Private Limited Assistant Commissioner (CT), MANU/TN/5302/2011;
xii. Infiniti Wholesale Limited The Assistant Commissioner (CT), W.P.No.9265 of 2013;
xiii. Eicher Motors Limited and Ors Union of India, 1999 (106) ELT 3 (S.C.);
xiv. Collector of Central Excise, Pune and others Dai Ichikarkaria Limited and Others, 1999(112)ELT353(S.C.);
xv. Additional Commissioner of Income Tax Bahri Bros. Private Limited, 154 ITR 244 (1985), MANU/BH/0136/1984;
xvi. Commissioner of Central Excise Chandigarh Neepaz Steels (India), (2007) 213 ELT 100;
xvii. Commissioner of Central Excise, Chandigarh Neepaz Steels (India), (2008) 230 ELT 218;
xviii. Gheru Lal Bal Chand State of Haryana and Others, (2012) ILR 2Punjab and Haryana781;
xix. Mahalaxmi Cotton Ginning Pressing and Oil Industries, Kolhapur The State of Maharashtra and Ors, MANU/MH/0620/2012;
xx. Shanti Kiran India Private Limited Commissioner Trade and Tax Department, MANU/DE/0058/2013;
xxi. On Quest Merchandising India Private Limited and Ors., Government of NCT of Delhi and Ors., MANU/DE/3276/2017;
xxii. Duni Chond Rataria Bhuwalka Brothers Ltd., MANU/SC/0038/1954;
xxiii. Kalwa Devadatta and Others The Union of India and Others, (1964) 3 SCR 191, AIR 1964 SC 880;
xxiv. Addagada Raghavamma and another Addagada Chenchamma and another, (1964) 2 SCR 933, AIR 1964 SC 136;
xxv. Debi Prasad (Dead) By L.R.S. Smt. Tribeni Devi and Others, 1970 (1) SCC 677;
xxvi. Union of India vs. M/s. Chaturbhai M. Patel& Co., (1976) 1 SCC 747;
xxvii. State of Kerala vs. K. T. ShaduliYusuff,
xxviii. State of U.P. and Others M/s. Indian Hume Pipe Company Limited, (1977) 2 SCC 724;
xxix. Deputy Commissioner (CT), Coimbatore Division, Coimbatore-2 Sivakumar and Company, 1979 SCC OnLine Mad 411;
xxx. Lakshmi Steel Traders Board of Revenue (Commercial Taxes), (1991) 82 STC 406 (MAD);
xxxi. Madras Granites Private Limited Commercial Tax Officer, Arisipalayam Circle, Salem and Another, (2006) 146 STC 642 (MAD);
xxxii. Godrej Sara Lee Limited Assistant Commissioner and another, (2009) 14 SCC 338;
xxxiii. State of Tamil Nadu A.N.S.Guptha and Sons, (2011) 38 VST 45 (MAD);
xxxiv. Reliance Jute and Industries Limited C.I.T. West Bengal, Calcutta, (1980) 1 SCC 139;
xxxv. M/s. Bharat Barrel and Drum Mfg. Co. Ltd and another The Employees State Insurance Corporation, 1971 (2) SCC 860;
xxxvi. State of Maharastra Suresh Trading Company, (1997) 11 SCC 378;
xxxvii. Tarun Creation Commercial Tax Officer, Bazaar Circle, Tirupur, (2020) 82 GSTR 449 (Mad);
xxxviii. Magadh Sugar and Energy Limited State of Bihar and others, 2021 SCC OnLine SC 801;
xxxix. Poppatlal Shah The State of Madras, (1953) 4 STC 188 (SC);
xl. The State of Kerala and Others, vs. Annam and Others, 1968 SCC OnLine Ker 103;
xli. Heinz India Private Limited and another State of Uttar Pradesh and Others, (2012) 5 SCC 443;
xlii. Sudesh Kumar State of Uttarakhand, (2008) 3 SCC 111;
xliii. Oryx Fisheries Private Limited Union of India and Others, (2010) 13 SCC 427;
xliv. Duni Chand Rataria Bhuwalka Brothers Ltd., (1955) 1 SCR 1071, AIR 1955 SC 182;
xlv. BayyanaBhimayya and Sukhdevi Rathi The Government of Andhra Pradesh, (1961) 12 STC 147 (SC);
xliv. Uniworth Textiles Limited Commissioner of Central Excise, (2013) 9 SCC 753;
xlvii. Calcutta Discount Company Limited Income Tax Officer, Companies District-1, Calcutta and Another, (1961) 2 SCR 241;
xlviii. State Trading Corporation of India Limited and another State of Mysore and another, (1963) 3 SCR 792, AIR 1963 SC 548;
xlix. Tata Engineering and Locomotive Company Limited Assistant Commissioner of Commercial Taxes, (1967) 2 SCR 751, AIR 1967 SC 1401;
l. Hansraj Gordhandas H.H.Dave, Assistant Collector of Central Excise and Customs, Surat and Others, (1969) 2 SCR 253;
li. Raza Textiles Limited Income Tax Officer, Rampur, (1973) 1 SCC 633;
lii. Controller of Estate Duty, Madras Smt. Parvathi Ammal, (1975) 4 SCC 176;
liii. Gopinath Nair and others vs. State of Kerala, (1997) 10 SCC 1;
liv. Commissioner of Central Excise, Chandigarh vs. Pepsi Foods Limited, (2011) 1 SCC 601;
lv. Whirlpool Corporation Registrar of Trade Marks, Mumbai and Others, (1998) 8 SCC 1;
lvi. State Government Houseless Harijan Employees Association State of Karnataka and Others, (2001) 1 SCC 610;
lvii. Collector of Central Excise, Bombay Maharashtra Fur Fabrics Limited, (2002) 7 SCC 444;
lviii. Commissioner of Central Excise, Hyderabad Sunder Steels Limited, (2005) 3 SCC 363;
lix. Sandur Micro Circuits Limited Commissioner of Central Excise, Belgaum, (2008) 14 SCC 336;
lx. Meera Sahni Lieutenant Governor of Delhi and Others, (2008) 9 SCC 177;
lxi. Commissioner of Central Excise, Bhubaneshwar-I Champdany Industries Limited,(2009) 9 SCC 466;
lxii. Jayalalithaa and Others vs. State of Karnataka and Others, (2014) 2 SCC 401;
lxiii. Commissioner of Income Tax (Central)-I, New Delhi vs. Vatika Township Private Limited, (2015) 1 SCC 1;
lxiv. Union of India and another IndusInd Bank Limited and another, (2016) 9 SCC 720;
lxv. Jayam and Company Assistant Commissioner and another, (2016) 15 SCC 125;
lxvi. Parle Agro Private Limited Commissioner of Commercial Taxes, Trivandrum, (2017) 7 SCC 540;
lxvii. Shanti Kiran India Private Limited Commissioner Trade and Tax Department, [2013] 57 VST 405 (Delhi);
lxviii. Infiniti Wholesale Limited Assistant Commissioner (CT), Koyambedu Assessment Circle, Koyambedu, Chennai, [2015] 82 VST (Mad);
lxix. Sri Lakshmi Textiles Commissioner of Commercial Taxes, Ezhilagam, Chepauk, Chennai and another, [2016] 93 VST 202 (Mad);
lxx. Computer Consultants Assistant Commissioner (CT), Hosur (South) Assessment Circle, Hosur and another, [2017] 97 VST 391 (Mad);
lxxi. Faiveley Transport Rail Technologies India Limited Assistant Commissioner (CT), Hosur (South), Hosur, [2017] 97 VST 395 (Mad);
lxxii. Collector of Central Excise, Pune and Others Dai Ichikarkaria Limited and others, 1999 (112) ELT 353 (S.C.);
lxxiii. Additional Commissioner of Income Tax Bahri Bros. Private Limited, (2007) 213 ELT 100;
lxxiv. GheruLal Bal Chand State of Haryana and Others, (2012) ILR 2 Punjab and Haryana 781;
lxxv. Shanti Kiran India Private Limited Commissioner Trade and Tax Department, MANU/DE/0058/2013;
lxxvi. Assistant Commissioner (CT), Broadway Assessment Circle, Chennai Bhairav Trading Company, [2015] 96 VST 315 (Mad);
lxxvii. Assistant Commissioner (CT), Presently Thiruverkadu Assessment Circle, Kothur, Chennai Infiniti Wholesale Limited, [2017] 99 VST 341 (Mad);
lxxviii. Jayam and Company Assistant Commissioner and another, [2016] 96 VST 1 (SC);
lxxix. Govardhan M. State of Karnataka, 2012 SCC OnLine Karnataka 9088;
lxxx. M/s. K. Sashidhar Indian Overseas Bank and Others, 2019 (12) SCC 150;
lxxxi. M/s. UMC Technologies Food Corporation of India and another, 2021 (2) SCC 551;
lxxxi. Anglo French Textiles Cestat, Chennai, 2018 (362) E.L.T. 576 (Mad.);
lxxxiii. Madan Lal Arora The Excise and Taxation Officer, Amritsar, [1961] 12 STC 387 (SC)
lxxxiv. Transworld Shipping Services Private Limited Government of India, 2018 (361) E.L.T. 176 (Mad.);
lxxxv. Mr. J. Sheikparith vs. The Commissioner of Customs (Sea port-Exports) Chennai, The Additional Director General Directorate of Revenue Intelligence South Zonal Unit, Chennai, 2020 (9) TMI 311.
8. On behalf of the respondents CTD (Commercial Tax Department), following cases were cited:-
(a) Commissioner of Income Tax (Central) – I, New Delhi vs. Vatika Township Private Limited, (2015) 1 SCC 1;
(b)Allied Motors Private Limited vs. Commissioner of Income Tax, Delhi (1997) 3 SCC 472;
(c) Commissioner of Income Tax – I, Ahmedabad vs Gold Coin Health Food Private Limited, (2008) 9 SCC 622;
(d) Zile Singh vs. State of Haryana and Others, (2004) 8 SCC 1;
(e) Jayam and Company Assistant Commissioner and Another, (2016) 15 SCC 125;
(f) ALD Automotive Private Limited Commercial Tax Officer Now upgraded as Assistant Commissioner (CT) and Others, (2019) 13 SCC 225;
(g) Bright, Managing Trustee, K.S.M.Educational& Charitable Trust vs. District Collector and others, (2019) SCC Online Mad 2460;
(h)Union of India and Others vs. A.K.Pandey (2009) 10 SCC 552;
(i) Commissioner of Income Tax, Bhopal vs. Shelly Products and another, (2003) 5 SCC 461;
(j) State Bank of India V. Ramakrishnan and another, (2018) 17 SCC 394;
(k) Sundaram Pillai and Others vs. V.R.Pattabiraman and others, (1985) 1 SCC 591;
(i) Madhav Steel Corporation State of Gujarat (2014) 72 VST 318 (Guj);
(m) Bharat Coop. Bank (Mumbai) Ltd., vs. Cooperative Bank Employees Union, (2007) 4 SCC 685;
(n) M/s. Mahalakshmi Oil Mills State of Andhra Pradesh, (1989) 1 SCC 164;
(o) Punjab Land Development and Reclamation Corporation Limited, Chandigarh vs. Presiding Officer, Labour Court, Chandigarh and Others, (1990) 3 SCC 682;
(p) M/s. Schwing Stetter (India) Private Limited vs. The Commissioner of Commercial Taxes and another, in the High Court of Madras in W.P.Nos.37604 and 37605 of 2007 and others dated 05.04.2016;
(q)Sri Vinayaga Agencies vs. The Assistant Commissioner (CT), Vadapalani I Assessment Circle and Another, (2013) SCC Online Mad 323, (2013) 60 VST 283 (Mad);
Tax Cases (T.C.)
9. We shall first narrate the brief facts of the cases in these Tax Cases. These Tax Cases arise out of a Common Order passed by the Sales Tax Appellate Tribunal (herein after referred to as ‘STAT’) in Coimbatore in Sales Tax Appeal Nos.91 to 93 of 2016.
10. These appeals were filed by the Commercial Tax Department before STAT against order of the Appellate Deputy Commissioner (CT)(FAC) partly allowing the appeals and partly remanding the cases back to the Assessing Officer for the following Assessment Year as detailed below:-
TABLE-I
