2014 (8) TMI 22 - HC - VAT and Sales Tax

Madras High Court Upholds Input Tax Credit Benefit Despite Retrospective Registration Cancellation

The Madras High Court ruled in favor of the petitioner, holding that denying input-tax credit due to the retrospective cancellation of registration ... Input tax credit denied - registration certificates of the selling dealers have been cancelled with retrospective effect - TNVAT Act, 2006 - Held that:- Following decision of JINSASAN DISTRIBUTORS V. COMMERCIAL TAX OFFICER (CT), CHINTADRIPET ASSESSMENT CIRCLE, CHENNAI, reported in [2013 (4) TMI 615 - MADRAS HIGH COURT] - registration certificates of the selling dealers have been cancelled with retrospective effect and, therefore, to reverse the input-tax credit on the plea that registration certificates have been cancelled with retrospective effect cannot be countenanced. Whatever benefits that has accrued to the petitioners based on valid documents in the course of sale and purchase of goods, for which tax has been paid cannot be declined. The transaction that took place when the registration certificates of the selling dealer were in force cannot be denied to the petitioners/assessees on the above plea. This is contrary to the law laid down by the Supreme Court in the State of Maharashtra Versus Suresh Trading Company [1996 (2) TMI 451 - SUPREME COURT OF INDIA]. Notices, revised assessment orders and the provisional assessment order, insofar as it seeks to deny the benefit of input-tax credit to the petitioners/ assessees only on the ground that the registration certificates of the selling dealers have been cancelled with retrospective effect are set aside. Issues:1. Denial of input-tax credit due to cancellation of registration certificates with retrospective effect.Analysis:The judgment delivered by the Madras High Court addressed the issue of denying input-tax credit based on the cancellation of registration certificates with retrospective effect. The petitioner relied on a previous case where a similar prayer was allowed by the court. The court emphasized that reversing input-tax credit due to retrospective cancellation of registration certificates is not justified. It was highlighted that benefits accrued to the petitioner based on valid documents during the sale and purchase of goods, where taxes were paid, cannot be denied. The court referred to the law laid down by the Supreme Court in a previous case to support its decision. Consequently, the court set aside the notices, revised assessment orders, and provisional assessment order that sought to deny input-tax credit based on the cancellation of registration certificates. The writ petitions were allowed, and no costs were imposed, leading to the closure of connected miscellaneous petitions. The Additional Government Pleader agreed that the matter was covered by the court's judgment, leading to the allowance of the writ petition on similar terms without any costs, resulting in the closure of the connected miscellaneous petition.