2020 (5) TMI 497 - HC - VAT and Sales Tax

Court upholds writ petitions despite alternate remedy; VAT cancellation doesn't bar credit. Burden of proof not met. Remanded for fresh orders.

M/s. Bharat Steels Versus The Commercial Tax Officer

The court found the writ petitions maintainable despite the availability of an alternate remedy. Input tax credit cannot be denied if the supplier's VAT ... Maintainability of petition - recovery of input tax credit availed by the petitioner on the strength of invoices issued by dealers whose registrations were retrospectively cancelled - discharge of burden to prove - TNVAT Act - HELD THAT:- The issue with regard to maintainability of petition is answered in favour of the petitioner even though the petitioner has an alternate remedy before the Appellate Deputy Commissioner by way of appeal under section 51 of the Tamil Nadu Value-Added Tax Act, 2006 as it would be unfair to dismiss the writ petition straightaway after having admitted it in 2016 - this is a fit case for making certain observations on merits. Recovery of input tax credit availed by the petitioner on the strength of invoices issued by dealers whose registrations were retrospectively cancelled - HELD THAT:- The issue is no more res-integra - the court in ASSISTANT COMMISSIONER (CT) , PRESENTLY THIRUVERKADU ASSESSMENT CIRCLE, KOLATHUR, CHENNAI VERSUS INFINITI WHOLESALE LTD. [2016 (9) TMI 1431 - MADRAS HIGH COURT] has taken a categorical view in the following cases that input tax credit cannot be denied to a purchasing dealer if the VAT registration of the supplier dealer who supplied the goods is cancelled retrospectively after the sale was affected to such a purchasing dealer - the issue is answered in favour of the petitioner. Burden to prove - HELD THAT:- Since the volume of purchase covered by each is invoice is not mentioned and since the petitioner has also not explained the details invoice wise in the objections filed by the petitioner, the petitioner has not sufficiently discharged the burden of proof so as to regularise the input tax credit availed by the petitioner - These details can be furnished by the petitioner. If indeed the quantity of individual purchases through each of the invoices were of comparatively smaller quantity which could be easily transported through bullock cart and/or tricycle, the petitioner could have produced the details with a proper explanation and tabulation. The case is remitted back to the respondent to pass fresh orders preferably within a period of 3 months from date of receipt of this order - Petitioner is required to file a consolidated final reply to all the notices for the respective assessment years together with such evidence as may be available with the petitioner to substantiate the claim for input tax credit - petition disposed off by way of remand. Issues:1. Maintainability of the writ petitions.2. Justification of ordering recovery of input tax credit.3. Burden of proof under the Tamil Nadu Value-Added Tax Act, 2006.Issue 1: The court found the writ petitions maintainable despite the availability of an alternate remedy before the Appellate Deputy Commissioner. The court noted that it would be unfair to dismiss the writ petitions outright after admitting them in 2016.Issue 2: The court referenced previous cases to establish that input tax credit cannot be denied if the supplier's VAT registration is cancelled retrospectively after the sale. However, the court highlighted that the input tax credit availed by the petitioner was provisional, and the respondent had the power to revoke it if wrongly availed.Issue 3: The petitioner failed to sufficiently discharge the burden of proof required under the Act. The court noted that the petitioner did not provide documents to substantiate the movement of goods and failed to explain details invoice-wise. The court emphasized the importance of producing necessary documents to regularize the input tax credit.The court set aside the impugned order and remitted the case back to the respondent for fresh orders within three months. The petitioner was directed to file a consolidated final reply with evidence to substantiate the claim for input tax credit. The respondent was instructed to consider the evidence and arrive at a fair conclusion based on the principle of preponderance of probability. The petitioner was given one month to file evidence and objections, with the respondent required to pass appropriate orders within three months. Video conferencing was allowed for case conduct if necessary due to the ongoing pandemic. The writ petitions were disposed of by way of remand with these observations, and all miscellaneous petitions were closed without any cost implications.