Reversal of ITC under TNVAT

[Raam Srinivasan Swaminathan Kalpathi]

My client with export turnover constituting about 75% of the aggregate turnover, has received a Notice on 22-02-24 from the TNVAT department seeking reversal of ITC u/s.19(5)(c) of TNVAT Act, 2006 for failure to produce 'C' Forms on inter-state sales from registered dealers for the financial year 2013-14. Although we had remitted the CST at the rate prevailing for local sales (i.e. higher rate) this anachronistic provision in the TNVAT Act continued till 31-03-2015. The SC in the case TVS Motor Company Ltd had passed judgment validating the vires of Sec.19(5)(c).

Even though all the dealers (customers) are registered, none of them issued 'C' Forms and this violates provisions of Sec.8(4) of CST Act.

Further the amount involved is not significant - around Rs.2.10 lakhs and the client wants resolution without knocking at the doors of higher judicial forums.

Further-more, we had uploaded TRAN-1 ITC in December 2017 of around Rs.6.50 lakhs and GST audit for the period 2017 to 2020 was conducted and stands resolved as on date. The month on month, SGST credit ledger balance has consistently been hovering around Rs.50 lakhs till date.

My query can I suggest reversal of SGST balance of Rs.2.10 lakhs in February 2023 3B Returns and seek resolution with the TNVAT department or is there any approach to be adopted?

Profuse thanks and regret the lengthy narrative.

AI Summary

Exporting Client Faces ITC Reversal Under TNVAT Act for Missing 'C' Forms; Exploring Non-Litigation Solutions A client, whose export turnover is 75% of their total turnover, received a notice from the TNVAT department to reverse Input Tax Credit (ITC) under Section 19(5)(c) of the TNVAT Act, 2006, due to failure to produce 'C' Forms for inter-state sales for the financial year 2013-14. The notice is not time-barred as it falls within the six-year limit from the 2019 assessment. The client seeks resolution without litigation, considering the amount involved is Rs. 2.10 lakhs. The forum discusses whether ITC can be used to settle this demand, referencing relevant circulars and legal precedents.