Madras High Court
The Assistant Commissioner (Ct) vs Sri.Vinayaga Agencies on 4 March, 2020
Author: Vineet Kothari
Bench: Vineet Kothari, R.Suresh Kumar
W.A.No.4292 of 2019 & CMP.No.26910 of 2019
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 04.03.2020
CORAM
THE HON'BLE DR.JUSTICE VINEET KOTHARI
AND
THE HON'BLE MR.JUSTICE R.SURESH KUMAR
W.A.No.4292 of 2019 &
CMP.No.26910 of 2019
1. The Assistant Commissioner (CT)
Vadapalani I Assessment Circle,
Chennai 600 106.
2. The Assistant commissioner (CT),
Palayamkottai Assessment Circle,
Palayamkottai. ... Petitioner
Vs.
Sri.Vinayaga Agencies
No.4/4B, Nergundram Pathai,
100 Feet Road Vadapalani ... Respondent
Writ Appeal filed under Clause 15 of Letters Patent against the
common order passed by His Lordship Mr.Justice R.Sudhakar in
W.P.Nos.2037 of 2013 dated 29.01.2013.
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For appellants : M/s. Mohammed Shafiq
Special Govt. Pleader
For Respondent : M/s.Aparna Nandakumar
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ORDER
[Order of the Court was made by DR.VINEET KOTHARI,J] The State has filed the present Writ Appeal aggrieved by the common order passed by the learned Single Judge, dated 29.1.2013, by which, the learned Single Judge has allowed the W.P.No.2036 to 2038 of 2013 filed by the assessee Tvl.Vinayaga Agencies and in the order impugned, it was held that the assessee, the purchaser is entitled to claim input tax credit under the provisions of Section 19(1) of the Tamil Nadu Value Added Tax Act, 2006 having proved the fact that they have paid the due tax to his selling dealer in view of the proviso to section 19(1) of the Act, as it was stood prior to the amendment, with effect from 29.1.2016, which was substituted by the 2nd Amendment Act 13 of 2015, in Section 19 of the Act.
The relevant observations of the learned Single Judge in the order impugned before us are quoted below for ready reference.
'7. The provision of section 19(1) clearly states that input tax credit can be claimed by the registered dealer, provided if the registered dealer establishes that the tax due on such purchase has been paid by him in the manner prescribed. The pre-revision notices and the orders clearly state in paragraph-3 that the petitioner herein had paid the tax to the selling dealer. If that be the case, the 2/8 http://www.judis.nic.in W.A.No.4292 of 2019 & CMP.No.26910 of 2019 petitioner's case squarely falls under the proviso to Section 19(1) of the TNVAT Act. That is availed only by following Rule 10(2). It is also not in dispute that the self- assessment has been made under Section 22(2) of the TNVAT Act and therefore the petitioner was justified in claiming the input tax credit.
8. It is another matter that the selling dealer has not paid the collected tax and that liability has to be fastened on the selling dealer. It cannot be mulcted on the petitioner-purchasing dealer, which had shown proof of payment of tax on purchases made.
9. Sub-section (16) of Section 19 states that the input tax credit availed is provisional. It, however, does not empower the authority to revoke the input tax credit availed on a plea that the selling dealer has not paid the tax. It only relates to incorrect, incomplete or improper claim of input tax credit by the dealer. It is not so in these cases. In the present case, the petitioner-dealer, admittedly, had paid the tax to the selling dealer and claimed input tax credit and that was accepted at the time when the self-assessment was made. Even the pre-revision notices and the orders under challenge fairly state that the petitioner-dealer had paid tax to the dealer. It is, therefore, for the department to proceed against the selling dealer for recovery of tax in the manner known to law. The provision under which the present action has been initiated, namely invoking sub-section (16) of Section 19, does not appear to be correct on the admitted facts as above. All the revision orders revising the input tax credit on the admitted case of tax having been paid to the selling dealer, therefore, are found to be totally incorrect, erroneous and contrary to the provisions of the TNVAT Act and Rules. As a result, all the orders are liable to be set aside.'
10. For all the above reasons, the impugned orders are set aside and the writ petitions are allowed. ' 3/8 http://www.judis.nic.in W.A.No.4292 of 2019 & CMP.No.26910 of 2019
2. The assessing authority himself has noted the fact in the impugned assessment order dated 11.1.2013 for the assessment year 2009-2010, that the petitioner assessee Tvl. Vinayaga Agency had duly paid the tax in question to its seller Tvl.Classic Enterprises, from whom, it had purchased the lubricants during the period in question. The relevant findings recorded by the assessing authority in the impugned assessment order are also quoted below ' They have purchased Lubricants from Tvl.Classic Enterprises, who is an assessees in the books of the Assistant Commissioner (CT), Palayamkottai Assessment Circle with TIN.3383556355. On verification of the returns, it was found that the dealers at Palayamkottai Assessment Circle had not filed the monthly returns in Form I and also not paid tax to Department for the year 2009-10. The dealer at this end has also paid tax to the dealer. Hence the dealers at this end called on to pay tax on the purchase he made, as follows:-
SL.No. Year Purchase Value Tax Due (Rs.)
(Rs.)
1 2009-10 34,75,133.00 4,34,391.00
For the above tax liability, the dealers Tvt. Sri Vinayaga Agencies at this end informed that they had already paid taxes regularly on the purchases, in time and the purchases are also correctly accounted for by them. Further they stated that they had not received any notice from the Assessment Circle and also promised to pay tax after consulting their Consultants. But they had not paid the above tax due so far.
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4. Mr. Mohamed Shafiq, learned Special Govt. Pleader appearing for the Revenue feebly tried to submit that in case, the selling dealer does not deposit the due tax with the Treasury or he is non existent dealer, the interest of the Revenue deserves to be safeguarded in this regard and no input tax credit can be allowed unless the selling dealer has deposited the due tax collected from the purchasing dealer with the State Treasury. He also drew the attention of this Court to the amendment in the provisions of Section 19(1) of the TNVAT Act with effect from 29.1.2016 and submitted that, that should be treated as amendment of clarificatory in nature.
5. Learned counsel for the assessee, supporting the impugned order of the learned Single Judge, would submit that in view of the admitted position that the purchaser had duly paid the tax to its selling dealer, he could not be deprived of the right to claim input tax credit against his out put tax credit under the provisions of 19(1) of the Act.
6. We have heard the learned counsel appearing for both sides.
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7. We are satisfied that prior to amendment and substitution of proviso under Section 19(1) of the Act, with effect from 29.1.2016, the period in question before us, is covered by the pre-amendment position of law and since the proviso (1) to section 19, which is prior to 29.1.2016, only requires the registered dealer namely, the purchasing dealer to establish that the tax due on such purchase has been paid by him in the manner prescribes, this fact was duly proved by the purchasing dealer in the present case and the assessing authority himself has noted the said fact, therefore, there was no question of denying the input tax credit in the hands of the purchasing dealer against out put dealer, in terms of 19(1) of the Act, as it stood for the period in question 2009-2010. Such giving of input tax credit in the hands of purchasing dealer, however does not deprive Revenue authorities to proceed against the selling dealer M/s Tvl.Classic Enterprises, to recover the tax paid by the Purchasing dealer.
8. In the present case, for non-deposit of due tax collected form the purchasing dealer M/s.Vinayaga Agencies, the Revenue is therefore free to hold enquiry against the selling dealer and collect the Revenue from the 6/8 http://www.judis.nic.in W.A.No.4292 of 2019 & CMP.No.26910 of 2019 selling dealer, which money in the hands of selling dealer, is held in trust for the State by the selling dealer. It is not the case of the Revenue before us that the selling dealer in the present case is a non- existent or a ghost dealer. The identity and registration of the selling dealer and the fact that he collected the tax from the purchasing dealer in question are duly proved on record and are not disputed.
9. In view of this legal position, we do not have any doubt that the learned Single Judge was perfectly justified in allowing the writ petition filed by the Assessee directing the respondent to allow the ITC in the hands of purchasing dealer under Section 19(1) of the Act.
10. With these observations, the appeal is dismissed. No costs.
Consequently, the connected CMP.No.26910 of 2019 is closed.
[V.K.,J.] [R.S.K.,J.]
04.03.2020
msr
Index:Yes/No
Internet: Yes/No
speaking order/non-speaking order.
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W.A.No.4292 of 2019 & CMP.No.26910 of 2019
DR.VINEET KOTHARI, J.
&
R. SURESH KUMAR, J.
msr
W.A.No.4292 of 2019 &
CMP.No.26910 of 2019
04.03.2020
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