ITC Reversal

[Yogesh Narashiman]

I have received a two notices from commercial tax department, that they have proposed to revise ITC for the period 2006-07 & 2007-08 for delay filling of returns after the stipulated time. (the returns was filled on 05.06.2008). The reason for ITC reversal as said in the notice as follows:

You are registered dealer and reported taxable sales turnover of Rs.578377 for the year 2006-07 and   Rs.28,82,230 for the year 2007-08 in monthly form-I returns filed on 05.06.2008, which was accepted and assessed U/s. 22(2) on 31.10.2012. On further perusal of assessment records, it is seen that the form I returns were filled beyond the prescribed due date.

Thus, you have filled the monthly returns after a delay of dated on 05.06.2008 1 1/4 year and availed ITC. according to the provisions of sec. 19(11) of the TNVAT act ITC for the month could be availed within 90 days from the date of purchase or before the end of the financial year whichever is later. the delay caused by you is abnormal and you are not eligible for ITC for the above said months (12 months 01.04.2007-31.03.2008). its therefore proposed to reverse the ITC u/s. 27(2) Rs. 118325.00 for 2007-08 & Rs. 21337/- for 2006-07

Besides penalty U/s. 27(4) of the TNVAT act 2006 will be considered.

Objections if any may be filled within 10 days from the date of receipt of this notice.

Note:

1. the annual turnover for the year 06-07 is Rs. 578377/-

2. i have not received any notice for non-filling for returns during the FY 2007-08 or 2006-07.

3. After voluntary disclosure of returns on 05.06.2008, they never issued any assessment orders til date. 

 

Kindly suggest me how to tackle this thing and do the needful at the earliest.

 

Yogesh

 

[MANDAVILLI RAMAKRISHNA]

Mr. yogesh,

my opinion is that the time limit is for AVAILING only.

it means the ITC in respect of purchases to be claimed before end of the FY or before 90 days and not later. it means the input invoice can not be used to set off the tax liability of other months beyond the financial year unless the input is requested to be set off against the respective month only.

this may be the spirit of law. recheck.

[MANDAVILLI RAMAKRISHNA]

reply to them: the ITC was claimed in respect of the respective months only and requested to be set off against the tax payable for the respective month or year only

prima facie the returns were accepted

there is no wilful mistake but only due to lack of accountant during that period

please do not impose interest or penalty since it is not wilful mistake.

[MANDAVILLI RAMAKRISHNA]

since this is technical mistake, request the assessing officer to condone the delay and argue that the input is now claimed is not for the current months/ year but only in respect of the purchase month/ year and the return could not be filed at that time due to unavailability of the accountant. with genuine and bonafide intention now the returns are filed.

[Ramanujam Varadarajan]

Madras High Court has recently upheld the provision of Sec.19 of TNVAT Act including restriction on availing  credit which is not availed within 90 days or end of the year whichever is later.  On that basis, TN VAT authority is supported with the position adopted.

[CA.S Ganesh]

Dear friend, As per TNVAT Act, the VAT, the input tax credit can be claimed, within 90 days of the date of invoice or before 31st March of the FY which ever is later. that means, if ur purchase invoice dated 31.03.2012, you can take credit of the same on or before 30.06.2013 for fy 2012-13. If VAT wrongly taken, then the ITC has to be reversed and to pay the same. Int and penalty clauses will apply.

AI Summary

Input Tax Credit limitation: late returns can trigger reversal and penalties under TNVAT provisions for delayed filings. Proposed reversal of Input Tax Credit arises from late filing of monthly returns beyond the statutory cut-off; the tax department asserts credit must be availed within 90 days or by the end of the financial year, and therefore ITC claimed after that period is ineligible and subject to reversal with possible penalty and interest. Respondent submissions stress a bona fide technical delay, claim that credits were applied to the purchase months, and seek condonation of delay.