2018 (4) TMI 209 - HC - VAT and Sales Tax

High Court affirms Tribunal decision on Tamilnadu Sales Tax Case, emphasizing evidence-based assessments

The High Court of Madras upheld the Tamilnadu Sales Tax Appellate Tribunal's decision in the Tax Case Revision Petitions, dismissing the State's appeals. ... Reversal of input tax credit - sale of scrap which is sold to some consideration - Held that: - A reading of the Section 19(9)(i) of the TNVAT Act makes it evident that no input tax credit shall be availed by a registered dealer for purchase of goods, if such goods are not sold because of any theft, loss or destruction, for any reason, including natural calamity, and if the dealer has already availed input tax credit against purchase of such goods, there shall be reversal of tax credit - Reversal of input tax credit has been done by the Original Authority, based on the surprise inspection conducted by the Enforcement Wing officials, that there is difference in the value of purchase and sales of scrap. The dealer had sold utensils and scrap, as first sale and paid tax to the department, after adjusting input credit. Upon analysing the evidence, there is a concurrent finding of fact, in favour of the dealer, which does not warrant reversal on the grounds raised. Revision dismissed - decided against Revenue. Issues:1. Revision of assessment order by the Sales Tax Appellate Tribunal2. Claim of Input Tax Credit (ITC) on sale of scrap by the dealer3. Allegations of purchase suppression and sales suppression4. Interpretation of Section 19(9) of the Tamil Nadu Value Added Tax Act, 2006Revision of Assessment Order:The Tax Case Revision Petitions were filed to challenge the order passed by the Tamilnadu Sales Tax Appellate Tribunal regarding the assessment of a dealer in manufacturing SS Utensils. The Tribunal dismissed the State's appeals, upholding the order of the Appellate Assistant Commissioner (CT) that there was no reason to interfere with the assessment. The Tribunal found that the Assessing Officer's method was unacceptable, and the dealer had not suppressed any purchases or sales, leading to the dismissal of the appeals.Claim of Input Tax Credit (ITC) on Sale of Scrap:The Tribunal determined that the dealer, being a manufacturer of SS Utensils, was entitled to claim ITC on the sale of scrap as they had sold both utensils and scrap as the first seller, remitting tax to the department. The Tribunal emphasized that the dealer had not sold the scrap at zero value, and there was no justification for reversing the ITC on the sale of scrap, especially since no purchase or sales suppression was identified during the audit.Allegations of Purchase Suppression and Sales Suppression:The State contended that the dealer had accumulated more ITC by reporting lesser sale values under the guise of scrap sales. However, the Tribunal found no evidence of purchase or sales suppression, noting a negligible stock discrepancy. The Tribunal highlighted that the dealer had sold both finished goods and scrap, paying tax and submitting monthly returns without discrepancies, which the Assessing Officer's method failed to consider.Interpretation of Section 19(9) of the TNVAT Act:Section 19(9) of the Tamil Nadu Value Added Tax Act, 2006 deals with input tax credit and specifies conditions for availing credit. The Tribunal's decision was based on a thorough analysis of the provisions, evidence, and statements, concluding that the dealer had not violated any provisions warranting a reversal of ITC. The Tribunal's findings aligned with the appellate authority's decision, leading to the dismissal of the Tax Case Revision Petitions.In conclusion, the High Court of Madras upheld the Tribunal's decision, dismissing the State's appeals as no substantial questions of law arose from the revisions. The judgment emphasized the importance of evidence and factual analysis in tax assessments, ensuring fair treatment for dealers under the VAT Act.