Xomox Sanmar Ltd vs The Assistant Commissioner (C.T) on 1 August, 2016
9. After elaborately hearing the learned counsel for the parties and perusing the materials available on record, the undisputed position is that the Section 18 of the TNVAT Act does not prescribe the method of preference of Set-off of ITC. Therefore, in the absence of any statutory provision with regard to method of preference, it has to be seen as to whether the procedure adopted by the petitioner is just and proper and sub serves the object behind the Act or whether the action of the respondent is justified. At this juncture, it would be beneficial to refer to the decision of the MAXWROTH PLYWOODS P. LTD. Vs. ASST. COMMR. reported in (2013) 62 VST 573 (AP). In the said case, the petitioner claimed Input Tax Credit, relatable to the Assessment years 2005-06 and 2006-07 and, as in the instant case, adjusted Input-Tax Credit against Output payable on its trading activity, and the remaining Input-Tax Credit against the output tax payable by its manufacturing unit. The petitioner's (therein) case was that adopting any other method would result in they not being able to avail of the tax deferment benefits, as the period stipulated for tax deferment came to an end by March, 2007. However, the Assessing Officer issued a notice proposing that Input-Tax Credit should be adjusted first against the output tax payable by the petitioner's (therein) manufacturing unit, and the balance alone should be utilized for adjustment against the output tax payable on their trading activity. The petitioner raised their objections to the said proposal and ultimately, the Assessing Officer did not accept the objections raised by the petitioner and confirmed the proposal. This was put to challenge before the Andhra Pradesh High Court and the Court after considering the submissions, held as follows:-