2025 (1) TMI 1434 - HC - VAT / Sales Tax

Petition allowed challenging denial of input tax credit under Section 84 TNVAT Act despite earlier dismissals

M/s. Shree Ganesh Ventures, Represented by its Partner, Mr. Raghav Kumar Saraf Versus The Assistant Commissioner (ST), Chennai

The Madras HC allowed a petition challenging denial of input tax credit under TNVAT Act, 2006. The court held that the petitioner's application under ... Denial of input tax credit in terms of Section 19(5)(c) and 19(2)(V) of the TNVAT Act, 2006 - whether the petitioner was entitled to file a petition under Section 84 of the TNVAT Act, 2006 which is pari materia to Section 55 of the TNGST Act, 1959? - HELD THAT:- The application that was filed by the petitioner under Section 84 of the TNVAT Act, 2006 is in time. Even if the writ petition that were filed by the petitioner earlier challenging the Recovery Notice and the Assessment order dated 24.06.2016 were to be dismissed on account of latches, it cannot be construed that the application under Section 84 of the TNVAT Act, 2006 were barred. Even if the Appellate remedy is not available under Section 51 of the TNVAT Act, 2006, the remedy under Section 84 of the Act cannot be denied particularly when the law has been settled in favour of the assessee. The impugned order dated 11.05.2022 stands quashed and the case stands remitted back to the respondent to pass a fresh order on merits - Petition allowed by way of remand. ISSUES PRESENTED and CONSIDEREDThe primary issue considered was whether the petitioner was entitled to file a petition under Section 84 of the Tamil Nadu Value Added Tax (TNVAT) Act, 2006, seeking rectification of an assessment order dated 24.06.2016, in light of a subsequent favorable Division Bench decision. The Court also examined whether the petitioner's failure to file a statutory appeal under Section 51 of the TNVAT Act precluded them from seeking rectification under Section 84.ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and PrecedentsThe legal framework primarily involved Sections 19(5)(c), 19(2)(V), 51, and 84 of the TNVAT Act, 2006. Section 84 is akin to Section 55 of the Tamil Nadu General Sales Tax (TNGST) Act, 1959, allowing rectification of any error apparent on the face of the record. The petitioner relied on the precedent set by the Division Bench in the case of State of Tamilnadu v. M/s. Everest Industries Limited, which was favorable to their position.Court's Interpretation and ReasoningThe Court reasoned that the petitioner had the right to file an application under Section 84 despite not pursuing an appeal under Section 51. The Court noted that the rectification application was filed within the permissible time frame and that the subsequent Division Bench decision clarified the legal position in favor of the petitioner.Key Evidence and FindingsThe Court acknowledged the petitioner's failure to appeal the assessment order initially but recognized the Division Bench's decision as a significant development that justified reconsideration of the assessment under Section 84. The Court found that the petitioner's application for rectification was timely and supported by the legal precedent.Application of Law to FactsThe Court applied the legal principles from the Division Bench decision to the facts of the case, determining that the petitioner's request for rectification was valid. The Court emphasized that the availability of a rectification remedy under Section 84 was not negated by the petitioner's earlier inaction.Treatment of Competing ArgumentsThe respondent argued that the petitioner's failure to appeal the initial assessment order barred them from seeking rectification. However, the Court rejected this argument, noting that the Division Bench's decision provided a new legal context that warranted reconsideration of the assessment. The Court also dismissed the notion that the rectification application was barred by latches, as it was filed within the statutory period.ConclusionsThe Court concluded that the petitioner was entitled to seek rectification under Section 84 of the TNVAT Act, 2006. The impugned order rejecting the rectification application was quashed, and the matter was remitted back to the respondent for a fresh decision on merits.SIGNIFICANT HOLDINGSThe Court held that the petitioner's application under Section 84 was valid and timely. The judgment emphasized that subsequent favorable legal developments could justify the invocation of rectification provisions, even if initial appellate remedies were not pursued. The Court underscored the principle that rectification under Section 84 is available for errors apparent on the face of the record, and new legal interpretations can constitute such errors.Core Principles EstablishedThe judgment reinforced the principle that rectification provisions are intended to address errors in light of new legal interpretations. It established that the failure to appeal an assessment order does not preclude rectification if the legal context changes favorably for the assessee.Final Determinations on Each IssueThe Court determined that the petitioner's rectification application was justified and quashed the impugned order, directing the respondent to reconsider the case on its merits. The decision highlighted the importance of timely rectification applications and the impact of subsequent legal developments on existing assessments.