Input Tax Credit Claims Reassessed: Orders Quashed & Case Remanded for Reconsideration of Dealer Registrations.

The HC quashed the impugned assessment orders under Section 27 of the TNVAT Act, 2006, concerning input tax credit claims on canceled dealer registrations. The case was remanded to the respondent for reconsideration, with instructions to provide registration cancellation orders and allow the petitioner to respond. The Assessing Officer must issue new orders within 30 days, and the process should be completed within six months. The Writ Petitions were allowed without costs, and related miscellaneous petitions were closed.

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Issues:
Challenge to Assessment orders under Section 27 of TNVAT Act, 2006 regarding input tax credit availed on cancelled dealer registrations.

Analysis:
In a series of Writ Petitions, the petitioner contested Assessment orders issued under Section 27 of the TNVAT Act, 2006, dated 23.09.2021, based on notices from 05.07.2016. The petitioner was accused of claiming input tax credit on dealers whose registrations were canceled, with the Department alleging the transactions were bogus. The petitioner argued that the registration cancellations were retrospective and that the selling dealers held valid registrations at the time of the transactions, citing provisions of the Foreign Trade and Development Act, 1992. Additionally, the respondent failed to provide the actual dates of registration cancellations for the dealers involved.

The petitioner relied on precedents such as Althaf Shoes P Ltd, Sri Vinayaga Agencies, Deputy Commissioner (CT) Trichy, and Sales Service Company, while the Government Advocate contended that these precedents were weakened by a later Division Bench ruling in Tvl.Sahyadri Industries Ltd v. The State of Tamil Nadu. After considering the arguments and reviewing the notices, replies, and impugned orders, the Court decided to quash the impugned orders and remand the case to the respondent for fresh consideration. The respondent was directed to provide copies of the orders canceling the dealers' registrations, and the petitioner was given an opportunity to respond. The Assessing Officer was instructed to issue new orders considering the Division Bench ruling within 30 days. The entire process was to be completed within six months.

Ultimately, the Writ Petitions were allowed, with no costs imposed, and connected miscellaneous petitions were closed.

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