Tax assessment stayed pending Supreme Court challenge to input tax credit validity under the Tamil Nadu VAT Act.

Section 23(1) of the Tamil Nadu Value Added Tax Act, 2006 permits deferment where an identical question of law is pending before the High Court or Supreme Court. Because the validity of Section 19(11) was already under challenge before the Supreme Court in proceedings initiated by the petitioner, and that outcome could affect entitlement to tax credit, the assessment proceedings had to wait for the Supreme Court's decision. Quashing of the assessment order was declined, but the order was directed to remain in abeyance and no recovery action could be taken until disposal of the pending special leave petition.

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Issues: Whether the assessment proceedings and recovery action should be kept in abeyance pending the Supreme Court's decision on the challenge to Section 19(11) of the Tamil Nadu Value Added Tax Act, 2006.

Analysis: Section 23(1) of the Tamil Nadu Value Added Tax Act, 2006 enables an assessee to seek deferment where an identical question of law is pending before the High Court or the Supreme Court. The validity of Section 19(11) was already under challenge before the Supreme Court in proceedings initiated by the petitioner, and the outcome of that challenge would directly affect the petitioner's entitlement to tax credits under the provision. In these circumstances, the assessment proceedings were required to await the Supreme Court's decision, though the Court declined to quash the assessment order itself.

Conclusion: The request for quashing was declined, but the impugned assessment order was directed to remain in abeyance and no recovery action was to be taken until the Supreme Court disposed of the pending special leave petition.

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