Writ maintainability and transitional tax credit depend on Covid-related delay and correct TDS adjustment sequence.

A writ petition challenging an assessment was entertained despite an available statutory appeal because the delay was credibly explained by the Covid-19 period, and the alternate-remedy bar did not prevent judicial review on those facts. On the tax merits, the Court distinguished works-contract tax deducted at source from input tax credit and indicated that TDS had to be adjusted first against the earlier tax liability, with any remaining unutilised input tax credit then carried forward under the transitional provisions. As the assessment did not apply that sequence correctly, the assessment orders were set aside and the matter was remanded for fresh consideration.

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Issues: (i) Whether the writ petition could be entertained despite the availability of the statutory appeal and the delay in approaching the Court. (ii) Whether the petitioner was entitled to transitional credit and whether the assessment had to be redone after adjusting works-contract tax deducted at source and the remaining input tax credit.

Issue (i): Whether the writ petition could be entertained despite the availability of the statutory appeal and the delay in approaching the Court.

Analysis: The impugned assessment was challenged after the appellate period had expired, but the Court accepted the petitioner's explanation that the order was passed during the Covid-19 pandemic period, when effective remedial steps were impeded. The Court treated this as a sufficient reason to examine the writ on merits and held that the bar of alternate remedy did not, in the facts of the case, prevent judicial review.

Conclusion: The writ petition was held maintainable and the Court proceeded to examine the merits.

Issue (ii): Whether the petitioner was entitled to transitional credit and whether the assessment had to be redone after adjusting works-contract tax deducted at source and the remaining input tax credit.

Analysis: The Court distinguished between tax deducted at source under the Tamil Nadu Value Added Tax regime and input tax credit. It held that works-contract TDS had to be first adjusted towards the petitioner's tax liability under the earlier regime, and any surplus input tax credit remaining unutilized could then be carried forward under the transitional provisions. Since the impugned assessment had not properly applied this sequence, the matter required reconsideration.

Conclusion: The assessment orders were quashed and the matter was remanded for fresh consideration with directions to rework the adjustment and transitional credit claim.

Final Conclusion: The Court granted relief in part by setting aside the assessment and sending the matter back for a fresh decision on the petitioner's transitional credit and TDS adjustment claim.

Ratio Decidendi: In a tax matter, where the explanation for delay is credible and the assessment requires verification of the statutory sequence for adjusting TDS and unutilized input tax credit, the writ court may entertain the petition, set aside the assessment, and remand the matter for fresh adjudication.

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