TaxTMI 
TaxTMI 
2023 (4) TMI 912
X X X X Extracts X X X X
X X X X Extracts X X X X
....arsharaj, Additional Government Pleader, Ms.Amirtha Poonkodi Dinakaran, Government Advocate COMMON ORDER S.VAIDYANATHAN, J. AND C.SARAVANAN, J. By this common order all these Writ Petitions, Writ Appeals and Tax Cases, are being disposed. 2. In these cases following issue arises for our consideration:- (a)Whether input tax credit availed under Section 19 of the Tamil Nadu Value Added Tax Act, 2006(herein after referred to as TN VAT Act, 2006) by these petitioners/ appellants can be denied retrospectively on account of cancellation of the VAT registration of the dealers who are said to have effected sale of the goods to these petitioners/appellants? (b) Whether, the input tax credit availed by them can be denied in absence of transport documents and other documents to prove movement of goods to these petitioners/appellants from the dealers who effected sale of goods to these petitioners/appellants? (c) Whether amendment to Section 19(1) of TN VAT Act, 2006 vide Tamil Nadu Act, 13 of 2015 with effect from 29.01.2016 is prospective or retrospective? 3. For the sake of convenience, we shall deal with the cases in three parts. The petitioners ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....996) 6 SCC 44; x. Shree Bhairav Metal Corporation vs. State of Gujarat, MANU/GJ/0396/2015; xi. Althaf Shoes Private Limited vs. Assistant Commissioner (CT), MANU/TN/5302/2011; xii. Infiniti Wholesale Limited vs. The Assistant Commissioner (CT), W.P.No.9265 of 2013; xiii. Eicher Motors Limited and Ors vs. Union of India, 1999 (106) ELT 3 (S.C.); xiv. Collector of Central Excise, Pune and others vs. Dai Ichikarkaria Limited and Others, 1999(112)ELT353(S.C.); xv. Additional Commissioner of Income Tax vs. BahriBros.Private Limited, 154 ITR 244 (1985), MANU/BH/0136/1984; xvi. Commissioner of Central Excise Chandigarh vs. Neepaz Steels (India), (2007) 213 ELT 100; xvii. Commissioner of Central Excise, Chandigarh vs. Neepaz Steels (India), (2008) 230 ELT 218; xviii. GheruLal Bal Chand vs. State of Haryana and Others, (2012) ILR 2Punjab and Haryana781; xix. Mahalaxmi Cotton Ginning Pressing and Oil Industries, Kolhapurv vs. The State of Maharashtra and Ors,MANU/MH/0620/2012; xx. Shanti Kiran India Private Limited vs. Commissioner Trade and Tax Department, MANU/DE/0058/2013; xxi. On Q....
X X X X Extracts X X X X
X X X X Extracts X X X X
....955 SC 182; xlv. BayyanaBhimayya and Sukhdevi Rathi vs. The Government of Andhra Pradesh, (1961) 12 STC 147 (SC); xlvi. Uniworth Textiles Limited vs. Commissioner of Central Excise, (2013) 9 SCC 753; xlvii. Calcutta Discount Company Limited vs. Income Tax Officer, Companies District-1, Calcutta and Another, (1961) 2 SCR 241; xlviii. State Trading Corporation of India Limited and another vs. State of Mysore and another, (1963) 3 SCR 792, AIR 1963 SC 548; xlix. Tata Engineering and Locomotive Company Limited vs. Assistant Commissioner of Commercial Taxes, (1967) 2 SCR 751, AIR 1967 SC 1401; l. Hansraj Gordhandas vs. H.H.Dave, Assistant Collector of Central Excise and Customs, Surat and Others, (1969) 2 SCR 253; li. Raza Textiles Limited vs. Income Tax Officer, Rampur, (1973) 1 SCC 633; lii. Controller of Estate Duty, Madras vs. Smt.Parvathi Ammal, (1975) 4 SCC 176; liii. K.Gopinath Nair and others vs. State of Kerala, (1997) 10 SCC 1; liv.Commissioner of Central Excise, Chandigarh vs. Pepsi Foods Limited, (2011) 1 SCC 601; lv. Whirlpool Corporation vs. Registrar of Trade Marks, Mumbai a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ircle, Chennai vs. Bhairav Trading Company, [2015] 96 VST 315 (Mad); lxxvii. Assistant Commissioner (CT), Presently Thiruverkadu Assessment Circle, Kolathur, Chennai vs. Infiniti Wholesale Limited, [2017] 99 VST 341 (Mad); lxxviii. Jayam and Company vs. Assistant Commissioner and another, [2016] 96 VST 1 (SC); lxxix. Govardhan M. vs. State of Karnataka, 2012 SCC OnLine Karnataka 9088; lxxx. M/s.K.Sashidhar vs. Indian Overseas Bank and Others, 2019 (12) SCC 150; lxxxi. M/s.UMC Technologies vs. Food Corporation of India and another, 2021 (2) SCC 551; lxxxii. Anglo French Textiles vs. Cestat, Chennai, 2018 (362) E.L.T. 576 (Mad.); lxxxiii. Madan Lal Arora vs. The Excise and Taxation Officer, Amristar, [1961] 12 STC 387 (SC) lxxxiv. Transworld Shipping Services Private Limited vs. Government of India, 2018 (361) E.L.T. 176 (Mad.); lxxxv. Mr.J.Sheikparith vs. The Commissioner of Customs (Sea port-Exports) Chennai, The Additional Director General Directorate of Revenue Intelligence South Zonal Unit, Chennai, 2020 (9) TMI 311. 8. On behalf of the respondents CTD (Commercial Tax Department), follow....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ly remanding the cases back to the Assessing Officer for the following Assessment Year as detailed below:- TABLE-I T.C.Nos. Assessment Year Date of the Assessment Order Order dated 31.12.2015 of the Appellate Deputy Commissioner (CT)(FAC) in Appeal Nos. I.O. Of the STAT dated 16.11.2021 of the STAT in Sales Tax Appeal Nos. 20 of 2022 2010-2011 28.05.2015 155 of 2015 91 of 2016 21 of 2022 2011-2012 28.05.2015 156 of 2015 92 of 2016 19 of 2022 2012-2013 28.05.2015 157 of 2015 93 of 2016 11. The petitioners in the above Tax Cases is a dealer. After, monthly returns were filed for the respective assessment years, the assessments were reopened and revised assessment order were passed based on the report received from inspection conducted at the place of the business of the petitioner. 12. The petitioner herein had earlier filed a Writ Petition before this Court in W.P.Nos.21963 to 21965 of 2015. These Writ Petitions were disposed by directing the petitioner to file a statutory appeal against the assessment orders that came to be passed on 26.05.2015. Thus, the petitioner preferred a statutory appeal before the Ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 59 VST 256. ii. As rightly given with findings by the first appellate authority this dispute, it is a matter of issue on "covered decisions" that were relied on both by the dealer and by the first appellate authority for the reason of which no need to repeat them. iii. In cases relating to certain specific dealers ie., Masani Industries and Senthur Murugan sunlight board, the respondent dealers had sufficient proof for the inadvertent mistake of furnishing the TIN number of their erstwhile registration numbers or the inadvertent mistake adopted by the assessing authority in taking consideration of the date of constitutional change of registration. As such there is no reasonableness in making the reversal tax credit in respect of the items referred to in point No.(b) above. 9. So. Considering the above facts, we are of the view that the first appellate authority had rightly deleted the reversal ITC of Rs.(Rs.244821-00+252492-00+93535- 00+343528-00+467600-00) (for the years 2010-11, 2011-12 and 2012-13) aggregating to Rs.14,03,976-00 involved in item No.(a) and (b) above, and hence this forum find no reasons to interfere in the deletion of the reversal ITC....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(4) of the Act which warrants levy of penalty in cases of fraud, mis statement, production of false bills with intention to evade tax. the decision of the Honourable STAT (MB) in the case of State of Tamilnadu vs. Indra Industries, Katpadi in STA No.127/2016 dated 22.06.2016 wherein it was held that "In fact penalty under Section 27(4) of the Act could be invoked only in the case where there is wrong availment of input tax credit by producing false bills, vouchers, declaration certificates with a view to support his claim of input tax credit and it has to be levied on a graded scale as prescribed under sub section (4) of section 27 of the TNVAT Act". 17. In the present case of the appeal, the levy of penalty was made not on account of any reasoning of fraud, mis-statement or production of any false bills. Therefore the decision cited above squarely applies to the case. The orders of the first appellate authority in deleting the levy of penalty is therefore ordered to be up held and ordered accordingly. In fine, i. Point No. (a), (b) and (d) are decided in favour to the dealer and against the revenue. ii. Point No. (c) is remanded back to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....submissions made by the petitioner in complete violation of principle of natural justice, fair play and equity? (g)Whether in the facts and circumstances of the case, the Hon'ble Appellate Tribunal was correct in passing the impugned non-speaking order without giving any finding on the documents submitted by the petitioner in support of its claim for ITC in complete violation of principle of natural justice, fair play and equity? 15. In support of the case of the petitioner in T.C.Nos.19, 20 & 21 of 2022 (Tvl.Sahyadri Industries Limited), learned counsels for the petitioner Mr.Mahesh Raichandran and C.Suraj submitted as follows:- "2.1 First, the Appellate Tribunal remanded the matter back to the assessing officer on a basis/reason/ground which never formed part of the proceedings of the respondent from audit stage to the appeals filed before the Appellate Tribunal. It is well settled law that the court or tribunal cannot make a new case at tribunal stage which was never pleaded before it. In this connection reference was made to Reckitt & Colman of India Ltd vs. Collector of Central Excise - 1996 (88) ELT (SC) - Para 3 refers; Warner Hindustan Limited vs. CCE -....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t may, Rule 6(11) of the TN VAT Rules, 2007, inter alia, provides that accounts maintained by a registered dealer shall be preserved by him for a period of six years from the date of assessment (previously five years - six years effective from 2012). Therefore,the so called purported fresh investigation in terms of Circular No. 5/2021 dated 24.02.2021 is an impossibility as the selling dealer may not possess the accounts / records / documents pertaining to the period under dispute - 2010-11, 2011-12 & 2012-13. 2.5 Assuming whilst vehemently denying, even if the condition of delivery / movement of goods is to be taken as applicable in the facts of the present case, the same would not affect the eligibility of ITC at the hands of the petitioner in the present facts for the reasons explained infra. 2.6 First, the presumption is that any amendment is prospective and not retrospective, unless there is a specific mention or implicit indication. In the present case, there is no such mention or indication in the proviso to section 19 of the TNVAT Act, 2006. Per contra, it is clearly provided and stated that the amendment would be operative from 14thOctober, 2015. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... has no reference to the provisions of Section 19 or vice-versa. Therefore, reliance on the same is of no relevance for the issue under dispute. 2.13 In view of the above submissions and judgments, the impugned order has no legs to stand and the same must be quashed and set aside." 16. There is no final determination on the issue which has been remanded back. The assessment orders pre-date the amendment to Section 19(1) of TNVAT Act, 2006 with effect from 29.01.2016 vide Tamil Nadu Act, 13 of 2015. 17. Although the Writ Appeals and Writ Petitions were argued as if the issues therein were confined to denial of input tax credit availed under Section 19(1) of the TN VAT Act, 2006, it was noticed that there were several other issues also in the assessment orders which was challenged before the Writ Court and before this Court in this connected Writ Petitions/Writ Appeals. 18. The learned counsels who appear for the Writ Petitions and Writ Appeals have made elaborate submissions on this scheme of TN VAT Act, 2006 to persuade as to held that input tax credit availed by the petitioners and the writ appellants cannot be denied. Therefore, we will reproduce important submi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....) of the act, penalty to be levied is at 50% if it is first detection and as per section 27 (4) (ii) penalty to be levied is at 100%, if it is second and subsequent detection. There is no provision to levy penalty at 150% before amendment. No show cause notice was also issued proposing to levy penalty at 150% of tax. This is against the provision of Section 27(4) proviso. 20. In support of the case of the appellants in W.A.Nos.2637 to 2640 of 2021 (Tvl.Selva Furnitures), W.A.Nos.119, 125, 131 & 135 of 2022 (M/s.SSB Industries) and W.A.Nos.1194, 1195, 1197 & 1201 of 2022 (M/s.Amman Industries), learned counsel Mr.N.Prasad submitted as follows:- (1)"Enquiry" - It is most respectfully submitted, that Section 27(2) requires determination "after" making an enquiry. Thus,assessment must be preceded by an enquiry. The enquiry is at two stages, namely, prior to the commencement of assessment and after the commencement of assessment - reference was invited to (i) 1977 - 39 STC page 478 (SC) (at page additional typeset - Volume -I in WA No.119/2022 - page 71 at page 76). (ii) 2017 - 99 VST page 343 (MAD) (page 45 - Case Laws Volume - II in WA No.119/2022, at pages 74, 77, 78, 79.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essment Years. (6)It is most respectfully submitted that credit is a vested right. (1999 (2) SCC page 361 - page 18 Volume IV (para 5). (7)It was further submitted that, the substituted proviso inserted by TN Act 13 of 2015, is substantive and therefore prospective, because it is restriction on existing right. A law which imposes a restriction on right is substantive law. Kindly see 1971 (2) SCC page 860 - page 4 - Volume IV Case Laws in WA No.2637/2021 (paras 6 & 10). (8)Contradictions in the Assessment. It is submitted that, the Assessments suffer from the following contradictions. It was submitted that, the impugned assessments, even while, looking to disallow, the input tax credit, on the ground that that the purchases and sales of the Appellants are make believe, yet retain the output tax paid by the Appellant. While disallowing the input tax credit at the hands of the Appellant, the output tax by the Vendors, is not refunded to the Vendors who are registered dealers and whose registration is recorded in the impugned Assessment. (9)Finally, Without prejudice submission, to the above contention, It was submitted, that, if it is found that sub....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... It is respectfully submitted that the Legislature or the Government can provide a certificate / form as condition for concession and treat the form as conclusive. Kindly see 1986 (2) SCC page 501 - page 12 - Volume II at page 22 (at para 33). iii. It was further submitted that the Revenue has placed reliance on certain decisions of the Hon'ble Supreme Court of India. The appellants respectfully wish to submit as under on the case laws cited by the Revenue. Sr. No. Citation given by the Respondent/Revenue Reply of the Appellants 1. 2016 (15)SCC page 125 (SC) page 99 of Respondent's case laws set It is respectfully submitted that the said decision emphasises tax invoice is relevant for ITC. Kindly see paragraphs 10, 11 & 12 of the judgment. Further, the retrospective operation of the amendment was struck down holding that credit was vested right - paragraph 19. This is under TNVAT Act. 2. 1997 (3) SCC page 472 (SC) page 66 of Respondent's case laws set It is respectfully submitted that this decision, dealt with insertion of first proviso to Section 43-B, whose insertion was to grant relief to the assessee, while avoiding unintended consequence. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o 5] Para 5 and 6 at Page 5. ii. 2. Collector of Central Excise, Pune and Ors. v. Dai IchiKarkaria Ltd. and Ors. 1999 (112) ELT 353 (S.C.) [Page No. 6 to 16] Para 19 at Page 13. iii. Case Law Under Eu VAT : Mahagében kft v. Nemzeti Adó-és Vámhivatal Dél-dunántúli Regionális Adó Fölgazgatósága and Péter Dávid v. Nemzeti Adó-és Vámhivatal Észak-alföldi Regionális Adó Főigazgatósága (C-80/11), (C-142/11), 21 June 2012* [Page No. 128 to 138] Para 33 at Page 133; Para 37 to 40 at Page 134. Proposition II : Extent of Burden of Proof Proviso Prior to Amendment Proviso Post Amendment Provided that the registered dealer, who claims input tax credit, shall establish that the tax due On such purchases has been paid by him in the manner prescribed Provided that the registered dealer, who claims input tax credit, shall establish that the tax due On purchase of goods has actually been paid in the manner prescribed by the registered dealer who sold such goods and that the goods have actually been del....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e doubt' to 'preponderance of probabilities' 5. Commissioner of Income Tax v. Vatika Township Private Limited (2014) 1 SCC 1 [Page No. 18 to 42 ]Para 30 to 39 at Page No.34 to 42 of the Additional Typed Set of Papers II 6. Union of India (UOI) and Ors. v. Ganpati DealcomPvt. Ltd. MANU/SC/1028/2022 [Page No. 43 to 83 ]Para 17.30 at Page No 80 of the Additional Typed Set of Papers II 7. Shanti Kiran India Pvt. Ltd. v. Commissioner Trade & Tax Deptt. [Page No. 63 to 68] Para 7 at Page 66, Para 11 at Page 67. Proposition IV : Actual Delivery The requirement of actual delivery includes a symbolic and a notional delivery. The onus of establishing and proving the allegation of tax evasion or fictitious transactions is only on the assessing authority in the absence of a proper mechanism as is found in Section 48(2) of the MVAT Act 1. Duni Chand Rataria v. Bhuwalka Brothers Ltd. AIR 1955 SC 182 [Page No.118 to 124] Page 119 and 123 Para 14. 2. Commissioner of Central Excise, Chandigarh v. Neepaz Steels (India) (2007) 213 ELT 100 MANU/CE/8487/2007 [Page No.20 to 21]. 3. Commissioner of Central Excise, Chandiga....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ailed by the petitioner during the assessment period of 2012-13 Ø without specifying or supplying details of even one single invoice or one single vendor about whom any irregularity was noticed by the Department; Ø without making any inquiries from the Supplying Vendors or from the petitioner's Buyers even though all the Vendors and all the Buyers were registered dealers under the 2006 Act having their TIN and RC Nos. duly mentioned in the respective invoices; Ø and whether such disallowance of entire ITC was arbitrary, illegal and in violation of the principles of natural justice? (6) What is the true scope and effect of sections 19 (13) and 19 (16) of the 2006 Act? (7)Whether in the facts and circumstances of the instant case, conditions precedent for levy of penalty under Section 27(3)(c) of the 2006 Act existed or were at all satisfied and whether the levy penalty was patently without jurisdiction? 2. It is submitted that the petitioner are fabricators, metal sheet fabricators at Kancheepuram and assessee on the files of the Assistant Commissioner [ST], Kelambakkam Assessment Circle, Chennai - the Re....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... particulars evidencing amount of input tax. All the invoices of the said purchases made by the Petitioner were duly filed by it and this has been admitted in the impugned order also. 3.As stated in the proviso to section 19 (1), the registered dealer claiming ITC was required to establish that the tax due on the purchases made by him has been paid and this was to be done "in the manner prescribed". The manner prescribed for this purpose was in Rule 10 and as per Sub-Rule (2), the Petitioner was required to produce the original tax invoice containing the required details. These requirements were duly and fully complied with and satisfied by the PetitionerDuring the relevant period, save as aforesaid, there was no other requirement under Section 19 or Rule 10 or any other provision of the 2006 Act or the 2007 Rules for availing the said ITC. The Petitioner having fully complied with the statutory requirements, the said ITC was lawfully allowable to it and the petitioner availed the said ITC fully in accordance with law and the VAT authorities had or have any jurisdiction to disallow the same. 4. Section 19 of the 2006 Act was considered by the Hon'ble Supreme Court....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ory provisions prospectively w.e.f. 29.01.2016 can be indirectly insisted for the earlier periods and whether in that guise, the VAT authorities can apply the amended law retrospectively? 5. Amendments made by the Tamil Nadu Value Added Tax (2nd Amendment) Act, 2015 are not retrospective or clarificatory and were specifically brought into force w.e.f. 29.01.2016 and cannot apply to the present case which relates to an earlier period. 6. The Tamil Nadu Value Added Tax (2nd Amendment) Act, 2015 received the assent of the Governor on 13.02.2015 and Section 1(2) thereof provided as under: "It shall come into force on such date as the State Government may, by notification, appoint." 7.By Notification dated 29.01.2016, the Governor of Tamil Nadu appointed 29.01.2016 as the date on which the said Amendment Act came into force. Thus, after receiving the assent of the Governor, the amendment was not brought into force for a period of about one year. The Amendment Act was specifically brought into force from 29.01.2016 and there can be no scope to apply it retrospectively. 8. By the aforesaid Amendment Act, several amendments were made to TN VAT A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d amendments created new obligations and imposed new conditions and restrictions for the first time. 11. Such amendments imposing new conditions and restrictions and/or which are particularly brought into force from a specified date cannot be said to be clarificatory or retrospective. This position of law is well settled by several judgments of the Hon'ble Supreme Court some of which are as under: (a)(2015) 1 SCC 1: CIT Vs. Vatika Township P Ltd (Para 33-35) (b)(2016) 15 SCC 125: Jayam & Co Vs. Asst Commissioner (Para 14-19) (c) (2016) 9 SCC 720: UOI Vs. Indusind Bank Ltd. (Para 18-24) (d)(1997) 10 SCC 1: K. Gopinathan Nair &Ors Vs. State of Kerala (Para 20) (e) (1997) 11 SCC 378: State of Maharashtra Vs. Suresh Trading 12. A similar issue was considered by the Hon'ble Delhi High Court in the judgment reported in (2013) 57 VST 405. In Delhi VAT Act also, after the amendment, several new conditions were incorporated including insertion of Clause (g) to Section 9(2) which required that the purchasing dealer has to establish that the tax paid by him has actually been deposited by the selling dealer. The Hon'ble High Court ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the selling registered dealer and containing the prescribed particulars as per rule 10 (2) as the relevant document for availing ITC and when such "Original Tax Invoices" are produced by the assessee, whether the VAT authorities can disallow ITC on the ground that the assessee did not produce documents showing "movement of goods"? 15. As stated above, under sections 19 (1) and 19 (10) read with rule 10 (2), original tax invoice containing the prescribed particulars is the statutory document for availment of ITC and this position was also approved by the Hon'ble Supreme Court in Jayam's case (supra). When the statute mandates original tax invoice as the statutory document, the tax authorities cannot go beyond the said mandate. 16. In so far as the documents relating to "movement of goods" are concerned, these are relevant for the Central Sales Tax Act, 1956 where movement of goods from one State to another is the very essence of chargeability. However any such document is not prescribed under the 2006 Act or the 2007 Rules for availment of ITC and the VAT authorities have no jurisdiction to disallow ITC taken by the petitioner based on original tax invoices....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g to movement were required to be produced by an assessee, it was specifically so mentioned and required in the Statute itself. However in respect of the local purchases there was never any such requirement and none can be insisted upon by the Department. As submitted above, when the statute requires a particular thing to be done in a particular manner and when the statute declares a particular document to be the statutory document for availing a particular benefit, such mandates of the statute have to be strictly followed and the VAT authorities cannot go beyond such mandate and impose any new condition or restriction not there in the statute. In any event whether VAT authorities had any jurisdiction to disallow the entire ITC aggregating to Rs. 8.11 crores availed by the petitioner during the relevant year Ø without specifying or supplying details of even one single invoice or one single vendor about whom any irregularity was noticed by the Department in spite of the petitioner's asking these details; Ø without making any inquiries from the Supplying Vendors or from the petitioner's Buyers even though all the Vendors and all the Bu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er by utilising ITC available with it and by paying the balance through banking channel as permitted under the law. Full details of all such payments were mentioned in the returns. If there would have been no purchases, there would have been no resultant sales nor there would have been any question of payment of any sales tax/VAT on the sales turnover. 22.Quite surprisingly, at the time of collection of tax on the sales turnover, the Respondents are coolly collecting the said tax and accepting the sales turnover but when the purchases connected to the same sales turnover involving ITC are considered, they are seeking to take a diametrically opposite stand and deny the ITC as if there were no purchases. Such a stand on the part of the Department is completely arbitrary and illegal 23.As stated above, in the show cause notice, only general and vague allegations were made without any details or particulars. Even though the whole of ITC availed by the petitioner on purchase turnover was being sought to be disallowed by alleging that the vendors did not pay the VAT and were indulging in circular trading, not even a single such instance was pointed out. Not even one sin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e disallowed. In the impugned order, not a single discrepancy with reference to any particular invoice or any particular vendor has been pointed out and merely vague, unsubstantiated allegations have been made without any basis or material at all. The impugned order suffers from complete perversity and non-application of mind and is a nullity. In support of the aforesaid submissions, reliance is placed on the following judgments of the Hon'ble Supreme Court: a) (2009) 2 SCC 192 (Kothari Filaments Vs. Commissioner of Customs) (Paragraphs 14 & 15): In this judgment, in paragraphs 14 and 15 it was held that a person charged with mis-declaration is entitled to "supply of documents" and only on knowing the contents of the documents he would be in a position to furnish an effective reply. b) (2015) 3 SCC 49 (Associated Builders Vs. DDA) (Paragraphs 28 & 29): In this judgment, it was inter-alia held that quasi-judicial authorities cannot act in arbitrary, capricious or whimsical manner and that their decisions must not be actuated by any extraneous considerations. It was held that nonapplication of mind is a defect that is fatal to any adjudication. c) (2009) 4 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... section can never be invoked by making such general, vague and unsubstantiated allegations without even naming even one single invoice or one single vendor which according to the VAT authorities is sought to be branded as irregular. 29.Sub-Section (16) of Section 19 reads as under: (16) The input tax credit availed by any registered dealer shall be only provisional and the assessing authority is empowered to revoke the same if it appears to the assessing authority to be incorrect, incomplete or otherwise not in order. In the present case, the said ITC was availed by the Petitioner after fully complying with the statutory provisions. The amount of VAT on the goods purchased by the petitioner was evident from the vendor's invoices which were the specified documents for this purpose as per the statute. Nothing wrong has been found by the respondents about the tax invoices. No ITC was taken by the Petitioner incorrectly or on the basis of any incomplete invoice and there was nothing which could be regarded as "otherwise not in order" in the invoices or in the said ITC taken by the Petitioner. The expression "or otherwise" can only be read ejusdem generis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e following judgments of this Hon'ble Court: a. (2012) 50 VST 179: Althaf Shoes (P) Ltd. Vs. Assistant Commissioner (CT): It was held that when the purchasing dealer has complied with Section 19(1) and Rule 10(2), its claim for ITC cannot be denied by the Revenue by any length of reasoning (Paragraphs 10 and 11). b.(2013) 60 VST 283: Sri Vinayaga Agencies Vs. Assistant Commissioner (CT) In this judgement of this Hon'ble Court, by relying on Section 19(1) and Rule 10(2), it was held that when these provisions were complied with and self-assessment was made under Section 22(2), there was no question of denying the ITC. Section 19(16) was also analysed and it was held that it does not empower the authorities to revoke the ITC on the plea of any default on the selling dealer's part. c.(2016) 93 VST 202: Lakshmi Textiles Vs. Commissioner of Commercial Taxes: In this case, following the judgment in Sri Vinayaga Agencies the Writ Petition was allowed. d. (2017) 97 VST 391 Computer Consultants Vs. Assistant Commissioner (CT): In this judgment also, the law laid down in Althaf Shoes and Sri Vinayaga Agencies was followed. e. (2017) 97 VST 395....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a Muhammad Vs. State) (Paragraph 20). b. (1993) 3 SCC 564 (UoI Vs. Brij Fertilizers P Ltd) (Paragraph 8). 34.In so far as the Respondent's power to make enquiry is concerned, firstly, the show cause notices were issued several years after end of the relevant assessment years but no details of any enquiries or enquiry reports or materials or evidence or any invoice or any vendor were mentioned in the show cause notices or even in the orders passed thereon. After passing the said orders, the respondent cannot make any grievance about its power to make enquiry. 35.Secondly, the said power under Section 27(1) and 27(2) is qualified by the expression "after making such enquiry as it may consider necessary". The said power, on the basis of the plain language of the statute itself, is to be exercised within the parameters of the Act and the Rules. However, now at this late stage after several years, the Respondent cannot require the Petitioner to produce the documents relating to movement of the goods purchased by it. There was no such statutory requirement during the entire relevant period. If at all in any particular case the VAT authorities have any reasons t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rade, it is quite normal to receive oral orders on telephones and then to buy the goods from registered dealers and direct them to give delivery instructions for dispatch the goods to the places of the Petitioner's buyers directly. When the goods are purchased, the registered dealer issues its own tax invoice on the Petitioner and when the goods are sold by the Petitioner, it issues its own tax invoice on its buyer. This is a normal trade practice which holds good not only with the Petitioner but with other traders in the State also and there is no restriction in this regard in the provisions of law. 39.Under Section 33 of the 1930 Act, delivery of goods sold may be made by doing anything which the parties agree shall be treated as delivery. The vendors from whom the goods were purchased by the Petitioner have never disputed the sales made to the Petitioner and as evidenced from the tax invoices issued by the vendors on the Petitioner. Similarly, the Petitioner's buyers have never disputed the sales made by it to the said buyers and as evidenced by the tax invoices issued by the Petitioner. All the purchase and sales transactions were duly completed between the parties con....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ive agency's power to act depends if the jurisdictional fact does not exist, the court, authority or officer cannot act. If a court or authority wrongly assumes the existence of such fact, the order can be questioned by a writ of certiorari. The underlying principle is that by erroneously assuming the existence of such jurisdictional fact, no authority can confer upon itself jurisdiction which it otherwise does not possess. The existence of jurisdiction fact is thus the sin qua non or conditional precedent for the exercise of power by a court of limited jurisdiction. If the jurisdictional fact exists, the authority can proceed with the case and take an appropriate decision in accordance with law. Once the authority has jurisdiction in the matter on existence of the jurisdictional fact it can decide the fact in issue or adjudicatory fact. A wrong decision on a fact in issue or on an adjudicatory fact would not make the decision of the authority without jurisdiction or vulnerable provided the essential or fundamental fact as to existence of jurisdiction is present." The petitioner submits that the amendment to Proviso to section 19 cannot also be held as clarificato....
X X X X Extracts X X X X
X X X X Extracts X X X X
....operation unless made retrospective , either expressly or by necessary intendment, whereas a statute which merely affects procedure , unless such a construction is textually impossible, is presumed to be retrospective in its application, should not be given an extended meaning and should be strictly confined to its clearly defined limits. ii. Law relating to forum and limitation is procedural in nature , whereas law relating to right of action and right of appeal even through remedial is substantive in nature. iii. Every litigant has a vested right in substantive law but no such right exists in procedural law. 6.A procedural statute should begenerally speaking be applied retrospectively where the result would be to create new liabilities or obligations or to impose new duties in respect of transactions already accomplished.". It is submitted that a statute which not only changes the procedure but alsocreates new rights and liabilities shall be construed to be prospective in operation, unless otherwise provided, either expressly or by necessary implication." 7. For an amended provision to have a retrospective operation, the amendment should be eit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ive effect. In other words, the transactions already completed prior to 29.1.2016, the proof of movements of goods along with electronic way bill in Form MM cannot be demanded. iv. Similarly with effect from 29.1.2016, Rule 15(14) & 15(15) of the TNVAT Rules were replaced wherein electronic Form KK has to be generated by clearing and forwarding agent.Similarly with effect from 29.1.2016 , Rule 15(17)(bb) was introduced wherein electronic transit pass in Form LL has to be generated and carried along with the goods. v. Similarly, with effect from 29.1.2016,Rule 15(18)(a) was replaced for Rule 15(18) of the TNVAT Rules, 2006 as per this new Rule for the purpose of sections 67-A,68 & 69 , the owner or other person in charge of a vehicle or boat shall carry a bill of sale or delivery note in electronic Form JJ, a transporter's declaration in Electronic Form MM and the declaration in electronic KK in the case of movement of goods by clearing and forwarding agents. 1. CERTAIN PROVISIONS OF THE SALE OF GOODS ACT,1930 DEALING WITH "DELIVERY" AND ITS RELEVANCE i. The word " delivery" or the phrase " have actually been delivered" introduced in the proviso t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Asst Circles for the years 2012- 2013,2013-2014 and 2014-2015 to M/s.Latha Traders. ii. So having taken steps to make assessments in the hands of the selling dealers, passing the impugned assessment orders on the petitioner stating that the earlier sellers have not reported and paid the tax on the sales transactions effected to the petitioner is contrary to the provisions of the TNVAT Act,2006 and the law laid down by the Hon'ble Madras High Court in the case of Vinayaga Agencies reported in 60 VST 283 and affirmed by the Division Bench in the case of Infiniti Wholesale reported in 99 VST 341. iii. In view of the above submissions and the judgements of the Hon'ble Supreme Court and this Hon'ble Court, the petitioner respectfully prays that this Hon'ble Court may be pleased to quash the impugned orders and render justice. 24. In support of the case of the petitioner in W.P No. 18761, 18766 & 18769 of 2021(Aassaan Commodity Trade)., learned Senior Counsel Mr.N.L.Raja for N.Murali -Advocate, submitted as follows:- A) During the relevant years (AY 2012-13 to AY 2014-15), neither Section 19 of the TNVAT Act, 2006, nor any other provision in the enactment st....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the decision CIT v. High Energy Batteries India Ltd, [2012] 348 ITR 574 (Mad) - See para Nos. of the report ¶9. F. In a chain of transactions, there could be one physical delivery and multiple constructive deliveries which result in transfer of property in goods throughout the chain eoinstanti. In this regard, reliance is placed on the decision of the Constitution Bench of the Supreme Court in Duni Chand Rataria v. Bhuwalka Brothers, AIR 1955 SC 182, See para Nos. of the report 15. G. Even assuming for the sake of argument that the condition of actual delivery would retrospectively apply for the period prior to 29/01/2016, the term "actually" cannot be interpreted narrowly to mean physical but should be interpreted to encompass constructive and symbolic deliveries. In this regard, reliance is placed on the decision of the Constitution Bench of the Supreme Court in Duni Chand Rataria v. Bhuwalka Brothers, AIR 1955 SC 182, See para Nos. of the report 14-16. 5. In a chain transaction, the flow of credit with respect to one party alone cannot be questioned when the ITC claims of all other parties have been accepted. A) The principal object for t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Technologies v. Food Corporation of India, 2021 (2) SCC 551; 25. In support of the case of the petitioner in W.P. No.11808, 11814, 11816, 11811,11812 and 11819 of 2022(M/s Sharda Motors Industries Limited), learned Counsel Mr.Rama Badran for M/s. Lakshmi Kumaran and Sridharan, Advocates, submitted as follows:- 1. The only ground on which the Input Tax Credit ('ITC') is denied is that the Petitioner has failed to prove the physical movement of goods from the place of the vendor to the place of the Petitioner. The Impugned Orders record that reversal of the ITC is demanded in light of the amendment carried out in Section 19(1) of the TNVAT Act vide Gazette No 217 Act No 13 of 2015, dated 14.10.2015 which is effective prospectively from 25.01.2016 ('the Amendment'). Submissions 2. ITC has been availed on satisfaction of all requirements under Section 19(1) of the TNVAT Act. In absence of any statutory requirement under Section 19(1) of the TNVAT Act requiring proof for "movement of goods", denying ITC is illegal and beyond provisions of TNVAT Act. 2.1 Section 19(1) of the TNVAT Act states that the registered purchasing dealer shall take ITC on ou....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Amendment to Section 19(1) of the TNVAT Act, being substantive in nature, cannot be interpreted to have retrospective operation as the Amendment does not explicitly provide for the same. 4.2 It is a settled law that unless the Statute expressly provides it, retrospective operation should not be given to a Statute so as to take away or impair an existing right or create a new obligation or impose a new liability otherwise than as regards matters of procedure. Reliance is placed on the decision of the Hon'ble Apex Court in the case of Commissioner of Income Tax (Central) - I, New Delhi v. Vatika Township Private Limited [2015] 1 SCC 1. 4.3 It is submitted that if the Amendment is given retrospective operation, it will mandate a fresh requirement on the buyer to establish the actual delivery of the goods. Such a fresh requirement, made for the first time, is very detrimental to buyers such as the Petitioner. 4.4 Therefore, the Amendment, if given retrospectivity effect, will be against the settled position of law. Reliance is placed on the decision of the Hon'ble Supreme Court in the case of Jayam & Co. v. Assistant Commissioner &Anr. 2016 (9) TMI 408 -....
X X X X Extracts X X X X
X X X X Extracts X X X X
....claims input tax credit, shall establish that the tax due on such purchases has been paid by him in the manner prescribed. Provided that the registered dealer, who claims input tax credit, shall establish that the tax due on purchase of goods has actually been paid in the manner prescribed by the registered dealer who sold such goods and that the goods have actually been delivered Provided further that the tax deferred under section 32 shall be deemed to have been paid under this Act for the purpose of this subsection Rule 10(2) Rule 10(2):- Every registered dealer who claims input tax credit under sub-section (1) of section 19 shall, produce the original tax invoice, in support of his claim of the input tax credit, containing the following details, namely:- (a) A consecutive serial number; ----- ---- ----- ---- (i) The total value of the goods. No Amendment / Change Rule 10(2A) ----------- Rule 2-A: Every registered dealer who claims input tax credit to the extent of the tax paid on purchases of taxable goods specified in the First Schedule to the Act from the other registered dealers inside the State, shall establish, whenever ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n such tax has actually been paid by the registered dealer who sold such goods, so as to curb under claims towards input tax credit resulting in tax evasion; 2. The general facts of the case in all these writ petitions. a) The place of business was inspected by the enforcement wing on suspicious bill trading activities; b) Business was carried on in a large scale without proper infrastructure and even no godown for storing the goods in many cases ; c) No stock or very minimum stock was available at the time of inspection; d) The sellers were not non-existent or related parties; e) In some cases, the buyer and seller are located in the same premises; f) No proper records were not maintained for the transfer of goods in pursuance to the sale; g) No transport document and incidental charges connected with the purchase and sales of goods were maintained; h) The transaction with minimum value addition and the entire discharge of output tax was by of ITC and only marginal amount of tax was paid. i) In the above background the Assessing Authority has questioned the genuineness of the transactions (or....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... [2016] 15 SCC 125has held at para 11 & 12. " 11.From the aforesaid scheme of Section 19 following significant aspects emerge: (a)ITC is a form of concession provided by the legislature. It is not admissible to all kinds of sales and certain specified sales are specifically excluded. (b)Concession of ITC is available on certain conditions mentioned in this section. (c)One of the most important condition is that in order to enable the dealer to claim ITC it has to produce original tax invoice, completed in all respect, evidencing the amount of input tax. 12.It is a trite law that whenever concession is given by statute or notification, etc. the conditions thereof are to be strictly complied with in order to avail such concession. Thus, it is not the right of the "dealers" to get the benefit of ITC but it is a concession granted by virtue of Section 19". 5.Whether the substituted proviso to section 19(2), which provides actual delivery of goods is prospective or retrospective? * Even prior to the amendment, the duty cast on the petitioner is prove to the transaction of sale is real for the entitlement of ITC. The assessin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Act is declaratory for these words may, at times, be used to introduced new rules of law and the Act in the latter case will only be amending the law and will not necessarily be retrospective. In determining, therefore, the nature of the Act, regard must be had to the substance rather than to the form. If a new Act is 'to explain' an earlier Act, it would be without object unless construed retrospective. An explanatory Act is generally passed to supply an obvious omission or to clear up doubts as to the meaning of the previous Act. It is well settled that if a statute is curative or merely declaratory of the previous law retrospective operation is generally intended. The language 'shall be deemed always to have meant' is declaratory, and is in plain terms retrospective. In the absence of clear words indicating that the amending Act is declaratory, it would not be so construed when the pre- amended provision was clear and unambiguous. An amending Act may be purely clarificatory to clear a meaning of a provision of the principal Act which was already implicit. A clarificatory amendment of this nature will have retrospective effect and, therefore, if the principal Act was existing....
X X X X Extracts X X X X
X X X X Extracts X X X X
....not extend to protect from the effect of a repeal, a privilege which did not amount to accrued right. (p. 392)" 6. The scope of proviso * The Apex Court has explained the scope of proviso as below in the case S.Sundaram Pillai & others vs- V R Pattabiraman& others- [1985] 1 SCC 591- Para 43 "43.We need not multiply authorities after authorities on this point because the legal position seems to be clearly and manifestly well established. To sum up, a proviso may serve four different purposes: (1)qualifying or excepting certain provisions from the main enactment: (2)it may entirely change the very concept of the intendment of the enactment by insisting on certain mandatory conditions to be fulfilled in order to make the enactment workable: (3)it may be so embedded in the Act itself as to become an integral part of the enactment and thus acquire the tenor and colour of the substantive enactment itself; and (4)it may be used merely to act as an optional addenda to the enactment with the sole object of explaining the real intendment of the statutory provision." 7. Whether the substantive right of the petitioners aff....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s case, the factum of sale is not questioned and ITC was disallowed for only reason that seller has not paid the tax collected by him. In these circumstances, the Hon'ble Division Bench has held that ITC claimed by the buyer cannot be reversed. At Para 8 the Hon'ble Division Bench held as follows: " In the present case, for non-deposit of due tax collected form the purchasing dealer M/s.Vinayaga Agencies, the Revenue is therefore free to hold enquiry against the selling dealer and collect the Revenue from the 6/8 http://www.judis.nic.in W.A.No.4292 of 2019 & CMP.No.26910 of 2019 selling dealer, which money in the hands of selling dealer, is held in trust for the State by the selling dealer. It is not the case of the Revenue before us that the selling dealer in the present case is a nonexistent or a ghost dealer. The identity and registration of the selling dealer and the fact that he collected the tax from the purchasing dealer in question are duly proved on record and are not disputed" * The Division Bench in the case of Vinayaga Agencies has not considered the scope of proviso in regard " goods have actually been delivered". * In all these cases, the ve....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion 3 sub-section (3) provided that tax payable under sub-section (2) by registered dealer shall be reduced, in the manner prescribed, to the extent of tax paid on his purchase of goods specified in Part B and Part C of the First Schedule inside the State, who is the registered dealer who sold the goods to him. The provision of Section 3 sub-section (3) is a provision which entitled a registered dealer to obtain a tax credit which has been explained in Section 19. The submission that Section 19 is inconsistent to Section 3(3) is wholly misconceived. What is envisaged in Section 3 sub-section (3) is amplified and explained in Section 19. The reduction in the tax as contemplated in Section 3 subsection (3) has to be in the manner and as provided in Section 19. Section 19(11) contains a condition for claiming the input tax credit. As noticed above, there are other various provisions in Section 19 itself where it contains provisions where no input tax credit is allowable e.g. Section 19(6) to Section 19(10) 24. When the input tax credit is to be allowed and when it is to be disallowed is elaborated in Section 19 which is a self-contained scheme and benefit under Section 3 sub....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f certain names as dealers with the department would not ipso facto entitle the petitioner to the exemption if the said dealers are found to be fictitious and non existing" 10. Whether it is permissible for the authority to call for proof of movement of goods? * The section 19(13) of TNVAT Act, 2006 authorises the authority for making such enquiry in such cases, the claim of ITC by issuing mere invoice without entering into a transaction of sale, with the intention to defraud the Government revenue * The Section 65 of TNVAT Act, 2006 grants power to any officer prescribed by the Government, for the purposes of this Act, require any dealer to produce before him the accounts, registers, records and other documents, and to furnish any other information relating to his business * The section 81 of TNVAT Act, 2006 empowers the an assessing authority not below the rank of an Deputy Commercial Tax Officer shall, for the purposes of this Act, have all the powers conferred on a court by the Code of Civil Procedure, 1908 (Central Act V of 1908), for the purpose of - (a) summoning and enforcing the attendance of any person and examining him on oath....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fferent from how it reads after the said amendment vide Second Amendment Act (13 of 2015) 2015 with effect from 29.01.2016. For a proper perspective, Section 19(1) of the TN VAT Act, 2006 as it read prior to 29.01.2016 and after 29.01.2016 are reproduced as under:- TABLE-A Section 19 (prior to amendment) Section 19 (w.e.f. 29.01.2016) 19(1): There shall be input tax credit of the amount of tax paid or payable under this Act, by the registered dealer to the seller on his purchases of taxable goods specified in the First Schedule: Provided that the registered dealer, who claims input tax credit, shall establish that the tax due on such purchase has been paid by him in the manner prescribed 19(1): There shall be input tax credit of the amount of tax paid under this Act, by the registered dealer to the seller on his purchases of taxable goods specified in the First Schedule: Provided that the registered dealer, who claims input tax credit, shall establish that the tax due on purchase of goods has actually been paid in the manner prescribed by the registered dealer who sold such goods and that the goods have actually been delivered. Provided further that th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ermined under sub-section(2),the assessing authority shall direct the dealer to pay as penalty a sum: (which shall be in the case of first such detection fifty percent of the tax due in respect of such claim; and In addition to the tax determined under sub-section (2), the assessing authority shall direct the dealer to pay as penalty a sum which shall be three hundred percent of the tax due in respect of such claim. 27 (2) of TNVAT Act, 2006 (ii) which shall be in the case of second or subsequent detections, one hundred percent of the tax due in respect of such claim. Provided that no penalty shall be levied without giving the dealer a reasonable opportunity of showing cause against such imposition. 34. Section 19 of the TN VAT Act, 2006 is inspired from Rule 4(7) of the CENVAT Credit Rules, 2004. Both the proviso to Section 19(1) of the TN VAT Act, 2006 before the amendment and after the amendment are somewhat similar to Rule 4(7) of the CENVAT Credit Rules, 2004. 35. As per Rule 4(7) of the CENVAT Credit Rules, 2004, CENVAT Credit in respect of input service shall be allowed, on or after the day on which payment is made of the value of input service....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t on such input service, shall pay an amount equal to the CENVAT credit availed on such input service, except an amount equal to the CENVAT credit of the tax that is paid by the manufacturer or the service provider as recipient of service, and in case the said payment is made, the manufacturer or output service provider, as the case may be, shall be entitled to take the credit of the amount equivalent to the CENVAT credit paid earlier subject to the other provisions of these rules: PROVIDED ALSO that in respect of services provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India where service tax is paid by the manufacturer or the provider of output service being importer of goods, as the person liable for paying service tax for the said taxable services, credit of service tax paid by the person liable for paying service tax shall be allowed after such service tax is paid: PROVIDED ALSO that if any payment or part thereof, made towards an input service is refunded or a credit not....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ation II: If the manufacturer of goods or the provider of output service fails to pay the amount payable under this rule, it shall be recovered, in the manner as provided in rule 14, for recovery of CENVAT credit wrongly taken. Explanation III:In case of a manufacturer who avails the exemption under a notification based on the value of clearances in a financial year and a service provider who is an individual or proprietary firm or partnership firm, the expressions, "following month" and "month of March" occurring in subrule (7) shall be read respectively as "following quarter" and "quarter ending with the month of March". Explanation IV:"unavailed CENVAT Credit" means the amount that remains after subtracting the amount of CENVAT credit already availed in respect of any service from the aggregate amount of CENVAT credit to which the recipient of such service was entitled to in respect of such service. Explanation V: "appointed day" means the date on which the provisions of the Central Goods and Service Tax Act, 2017 (12 of 2017) shall come into force. 39. Modvat Credit allowed a manufacturer to avail input tax credit on the excise duty paid and on the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the CENVAT Credit Rules, 2004. 45. The draftsmen while drafting Section 19(1) of the TN VAT Act, 2006 failed to fundamentally take note of the fact that TN VAT Act, 2006 is an indirect tax and tax is paid by the dealer who effects sale at the month end at the time of filing monthly returns and tax is not by the recipient or the purchaser of the goods on reverse charge basis unless "purchase tax" was payable by the purchaser under Section 12 of the TN VAT Act, 2006. 46. Like in the case of all indirect taxes, as dealers registered under the provisions of TN VAT Act, 2006, the petitioners/appellants would have merely borne the incidence of tax paid/ payable by the dealer who effected such sale to them on purchase made by them. It is the registered dealer who sold the goods to them who was liable to pay tax under the scheme of TN VAT Act, 2006. Likewise, the petitioners/appellants, while effecting further sale would have charged tax on their buyers in their tax invoice on the value addition made by them on the goods and would have only passed on the incidence of tax "payable" or "paid" by them to their customers/buyers. 47. The responsibility to pay tax (VAT) was on the regis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....duces false bills, vouchers, declaration certificate or any other documents to avail input tax credit [Section 19(13)]; or c) where the registration of the dealer who sold the goods was cancelled retrospectively [Section 19(15)], 53. Yet, the manner in which the proviso to Section 19(1) of the TN VAT Act, 2006 was drafted, allowed leakage of revenue in the form of credit being passed on the without a transaction of sale. 54. Although, there was a defect in the manner in which proviso to Section 19(1) of the TN VAT Act, 2006 was drafted, it should be borne in mind that the TN VAT, Act, 2006 was enacted like every other VAT enactment to levy and collect tax at each stage of sale on the value addition by allowing input tax credit on the incidence of tax borne at each stage of purchase for being set-off. It was intended to reduce the outflow of cash from the hands of the purchaser dealer while effecting subsequent sale. 55. It is also not our intention to deny credit although a strict reading of Section 19(1) of TN VAT Act, 2006 and Rule 10 of TN VAT Rules, 2007, as it stood prior to the amendment would not have allowed them to avail input tax credit in the manner in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ile effecting sale by allowing debiting the amount availed as input tax credit in the books of account. 61. The Courts, registered dealers under the TN VAT Act, 2006, as also the Tax Administration in the State, have also understood that input tax credit was to be allowed on the incidence of tax borne by the such registered dealers such as the respective petitioner/appellants on purchase made by them for being set-off against their liability tax on further sales made by them. 62. Like the CENVAT Credit under the provisions of the CENVAT Credit Rules, 2004 (formerly under Modvat Credit Scheme under the Central Excise Rules, 1944), input tax credit was made available without there being any one to one co-relation with between the purchase and the sale. 63. This is and was the philosophy behind all the value added tax enactment. TN VAT Act, 2006 is no exception to the above philosophy. Input Tax Credit under the Modvat Credit Scheme was indented to reduce the cascading effect of the tax, although it has been euphemistically stated by few Courts that it was intended to reduce the cascading effect of the tax for the benefit of ultimate consumer. 64. In a free economy, where ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t tax credit exist and operates on similar line. Therefore, the principle must be kept in mind. 70. Therefore, substantive rights under the Act cannot be whittled down merely because the dealer who had effected sale fails to pay the tax, if indeed there was an actual transaction of sale. In CCE Vs. Dai Ichi Karkaria Ltd., referred to supra, the Hon'ble Supreme Court held that the Modvat credit was a contingent credit. It could be disallowed under certain circumstances. It could not be withdrawn like a credit amount in a bank account. It held that the manufacturer did not have any indefeasible right or title to it. This view applies to input tax credit under the TN VAT Act, 2006 also. Like wise, a dealer under the TN VAT Act,2006 also did not have an indefeasible right. It was contingent on the dealer establishing a transaction of sale and movement of goods. Mere cash transaction was not sufficient. 71. The Hon'ble Supreme Court further held that once the credit was validly taken and its benefit was available to the manufacturer without any limitation in time or otherwise unless the manufacturer itself chooses not to use the raw material in its excisable product. The credit is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....NVAT Act, 2006 Rule 10(2) of the TNVAT Rules, 2007 (a) The registered dealer shall not claim input tax credit until the dealer receives an original tax invoice duly filled, signed and issued by a registered dealer from whom the goods are purchased, containing such particulars, as may be prescribed, of the sale evidencing the amount of input tax. Every registered dealer who claims input tax credit under sub-section (1) of Section 19 shall, produce the original tax invoice, in support of his claim of the input tax credit, containing the following details, namely:- (b) If the original tax invoice is lost, input tax credit shall be allowed only on the basis of duplicate or carbon copy of such tax invoice obtained from the selling dealer subject to such conditions as may be prescribed. (a) A consecutive serial number; (b) The date on which the invoice is issued; (c) The name, address and the Taxpayer Identification Number of the seller; (d) The name, address and the Taxpayer Identification Number of the buyer; (e) The description of the goods; (f) The quantity or volume of the goods; (g) The Value of the goods; (h) The rate and amount of tax charged; ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 19(13)Where a registered dealer without entering into a transaction of sale, issues an invoice, bill or cash memorandum to another registered dealer, with the intention to defraud the Government revenue, the assessing authority shall, after making such enquiry as it thinks fit and giving a reasonable opportunity of being heard, deny the benefit of input tax credit to such registered dealer who has claimed input tax credit based on such invoice, bill or cash memorandum from such date." 19(16)The input tax credit availed by any registered dealer shall be only provisional and the assessing authority is empowered to revoke the same if it appears to the assessing authority to be incorrect, incomplete or otherwise not in order. 19(15) Where a registered dealer has purchased any taxable goods from another dealer and has availed input tax credit in respect of the said goods and if the registration certificate of the selling dealer is cancelled by the appropriate registering authority, such registered dealer, who has availed by way of input tax credit, shall pay the amount availed on the date from which the order of cancellation of the registration certificate takes effect. Such dea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tax credit being denying the benefit of such input tax credit to such registered dealer. Enquiry has to be in consonance with the machinery under Section 27(2) of TN VAT Act, 2006. If on enquiry the dealer fails to discharge the proof, it has to be construed that there was jurisdictional fact to deny credit under Section 27(2) of the TN VAT Act, 2006. 86. Under Section 19(15) of the TN VAT Act, 2006, where the registration certificate of the selling dealer is cancelled by the appropriate registering authority input credit availed by a registered dealer, who has availed by way of input tax credit can be denied. This will apply to a situation where registered dealer has not paid the tax after collecting the incidence of the from his buyer. 87. As per Section 19(15) of the TN VAT Act, 2006, a dealer who has availed input tax credit is required to pay the amount of credit availed on the date from the date on which cancellation of the registration certificate takes effect by an order. Such a dealer is also liable to pay, in addition to the amount due, interest at two per cent, per month, on amount of tax so payable, for the period commencing from the date of claim of input tax cre....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat no order shall be passed under sub-sections (1) and (2) without giving the dealer a reasonable opportunity to show cause against such order. 27(4) of TN VAT Act, 2006 prior to amendment 27(4) of TN VAT Act, 2006 after amendment In addition to the tax determined under sub-section(2),the assessing authority shall direct the dealer to pay as penalty a sum: (i) which shall be in the case of first such detection fifty percent of the tax due in respect of such claim; and (ii) which shall be in the case of second or subsequent detections, one hundred percent of the tax due in respect of such claim. In addition to the tax determined under sub-section (2), the assessing authority shall direct the dealer to pay as penalty a sum which shall be three hundred percent of the tax due in respect of such claim. 88. Prior to the Second Amendment Act (13 of 2013), 2013, with effect from 28.5.2013, the rate of interest was one and one quarter precent per month, on amount of tax so payable, for the period commencing from the date of claim of input tax credit by the dealer to the date of its payment. 89. In the case of Jinsasan Distributors vs. Commercial Tax Offi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essees availed based on valid documents. 91. The learned Single Judge of this Court referred to the decision of the Hon'ble Supreme Court in State of Maharastra Vs. Suresh Trading Company, (1997) 11 SCC 378. However, the Hon'ble Supreme Court dealt with a specific situation. It was rendered in the context of a statement given by the learned Advocate General of the State. There the transaction was neither in doubt nor disputed by the State Government. Para 6 in State of Maharastra vs. Suresh Trading Company, (1997) 11 SCC 378 is useful. It reads as under:- "6. It must also be noted that the learned Advocate General, appearing for the department before the High Court, stated that the genuineness of the transactions between the registered dealer and the respondents was not in doubt and not disputed. This being so, it is difficult to see how there could have been a cancellation of registration with effect from a date that preceded the dates of the transactions and how, accordingly, the respondents could be made liable to pay tax." 92. While allowing the case of the dealers under a somewhat similar circumstances under Section 19(15) of the TN VAT Act, 2006, the learned Si....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erdict in The State of Karnataka vs. M/s.Ecom Gill Coffee Trading Private Limited, dated 13.03.2023 in Civil Appeal.No.230 of 2023. 95. In Sri Vinayaga Agencies Vs. Assistant commissioner (CT), Vadapalani-I Asessment Circle, Chennai and Another, (2013) 60 VST 283 (Mad), the allegation was that the selling dealer had not paid tax and therefore, credit availed was to be denied. The first respondent therein namely the Assistant Commissioner (CT) had however held that the said sellers was still existing and doing business at Palayamkottai. 96. There the Enforcement Wing Officials had conducted an inspection on 13.07.2010 and on verification of the returns, found that the dealer at Palayamkottai Assessment Circle, namely, M/s.Classic Enterprises, had not filed the monthly returns in Form-I and also not paid the tax to the Department for the relevant period. This was not a case which dealt with cancellation of registration or where registration was obtained to defraud the revenue by issuing invoices to wrongly avail ineligible input tax credit. This was a case when tax was not paid by the selling dealer. 97. Interpreting Section 19(1) read with Section 19(16) of TN VAV Act, 2006....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the Court in The State of Karnataka vs. M/s.Ecom Gill Coffee Trading Private Limited, dated 13.03.2023 in Civil Appeal.No.230 of 2023. We shall deal with the same in due course of discussion. 102. The ratio in Sri Vinayaga Agencies vs. Assistant commissioner (CT), Vadapalani-I Assessment Circle, Chennai and Another, (2013) 60 VST 283 (Mad) cannot be applied in all cases. Likewise, the ratio in Jinsasan Distributors Vs. Commercial Tax Officer, Chennai, (2013) 59 VST 256, cannot be applied any longer in view of the recent decision of the Hon'ble Supreme Court in The State of Karnataka vs. M/s.Ecom Gill Coffee Trading Private Limited, dated 13.03.2023 in Civil Appeal.No.230 of 2023. 103. While placing reliance on the aforesaid decision of the Hon'ble Supreme Court in State of Maharastra Vs. Suresh Trading Company, (1997) 11 SCC 378, the Court in Jinsasan Distributors vs. Commercial Tax Officer, Chennai, (2013) 59 VST 256, failed to note the expression in Section 19(15) of the TNVAT Act, 2006 which specifically deals with the situation. Section 19(15) in the TN VAT Act, 2006 is an innovation which was not contemplated under Section 70 of the Karnataka Value Added Tax, 2003. The....
X X X X Extracts X X X X
X X X X Extracts X X X X
....scharged, the credit availed has to be held to be provisional under the Scheme of Section 19(16) of the TN VAT Act, 2006 and the assessing officer is empowered to revoke the credit if a dealer fails to discharge the burden. 110. That apart, the decision in Jinsasan Distributors Vs. Commercial Tax Officer, Chennai, was rendered on 22.11.2012. It was rendered after regular assessments were completed after a thorough scrutiny of the returns by the assessing officers. 111. Whereas, in all these cases with which we are concerned, no assessment orders would have been passed. The assessments were deemed to have been completed in view of amendment to Section 22(2) of the TN VAT Act, 2006 with effect from 19.06.2012 by the Fifth Amendment Act (23 of 2012), 2012. 112. Even for the period prior to 2011-2012, the assessments would have been deemed assessments under proviso to the amended Section 22(2) of the TN VAT Act, 2006 in view of Fifth Amendment Act (23 of 2012), 2012. Section 22(1) & (2) of the TN VAT Act, 2006 are reproduced below:- TABLE -E Section 22(1) & (2) of the TN VAT Act, 2006 before amendment, i.e. 19.06.2012 Section 22(1) & (2) of the TN VAT Act, 2006 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Mere production of the invoices or the payment made by cheques is not enough and cannot be said to be discharging the burden of proof cast under Section 70 of the KVAT Act, 2003. The dealer claiming ITC has to prove beyond doubt the actual transaction which can be proved by furnishing the name and address of the selling dealer, details of the vehicle which has delivered the goods, tax invoices and payment particulars etc. The aforesaid information would be in addition to tax invoices, particulars of payment etc. In fact, if a dealer claims Input Tax Credit on purchases, such dealer/purchaser shall have to prove and establish the actual physical movement of goods, genuineness of transactions by furnishing the details referred above and mere production of tax invoices would not be sufficient to claim ITC. In fact, the genuineness of the transaction has to be proved as the burden to prove the genuineness of transaction as per Section 70 of the KVAT Act, 2003 would be upon the purchasing dealer. At the cost of repetition, it is observed and held that mere production of the invoices and/or payment by cheque is not sufficient and cannot be said to be proving the burden as per Section 70....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion 70 of the Karnataka Value Added Tax Act, 2003, the consequence was on the dealer issuing such false invoice to cheat revenue by imposing penalty. 117. A close reading of the above provisions indicate that for a dealer to avail input tax credit, the dealer should be not only in possession of the original invoice containing the details prescribed under Rule 10(2) of the TN VAT Rules, 2007 but also other documents establishing movement of goods whether to the buyer or to the consignee. However, such credit is provisional under Section 19(16) of the TN VAT Act, 2006 and could be denied under the circumstances specified in any of the situation contemplated under Section 19(13), 19(15) and 19(16) of the TN VAT Act, 2006 under the machinery provide under Section 27(2) of the Act. 118. In our view, Sections 19(13) and 19(15) of the TN VAT Act, 2006 cannot be considered in a separate compartment. They are complementary and are to be read in conjunction with each other along with Section 19(6) of the TN VAT Act, 2006. 119. We are of the view that what was implicit in proviso to Section 19(1) of the TN VAT Act, 2006 at the time of inception was made explicit in the year 2016 wit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he dealer who is stated to have supplied goods is canceled, credit can be denied under Section 19(15) of the TN VAT Act, 2006 to a dealer who has availed input tax credit based on such invoice, bill or cash memorandum with retrospective effect from the date on which such registration is cancelled. As mentioned above, a mere cancellation of registration is not sufficient. It should be proved that the said dealer who issued invoice to the purchasing dealer was a dummy dealer and a fly by night entity and was conceived and registered only to facilitate availing of input tax credit without actual transaction of sale. 125. Section 19(15) of TN VAT Act, 2006 can be pressed into services only where circumstances under Section 19(13) of TN VAT, Act, 2006 are also attracted. Even, if registration is not cancelled, credit availed on the strength of bogus invoices or without a transaction of sale can be denied if such an invoice was issued to facilitate fraudulent credit being availed. Under these circumstances, credit availed can be recovered under Section 27(2) of the Act. 126. Similarly, if tax was paid at the sellers end, the input tax credit cannot be denied merely because registra....
X X X X Extracts X X X X
X X X X Extracts X X X X
....all such pending mismatch cases in respect of his/her assessment circle and report to the DC/JC as well as in the next statistics to be furnished after this circular comes into effect, for which suitable table is being prescribed and thereafter the report the progress every month. 3.3.2 The Original Assessing Authority shall undertake verification mismatch transaction report in the department intranet website (tnvat.gov.in) with reference to the data available at both the ends i.e., buyer and seller. On verification of the data, if the Original Assessing Authority could reconcile the mismatch and finds that the mismatch is due to clerical or inadvertent error the Assessing Authority shall pass appropriate orders dropping further action. 3.3.3 If the Original Assessing Authority is unable to resolve either the whole or part of the mismatch, then the Original Assessing Authority shall issue notice to the dealer concerned indicating the discrepancy with an opportunity to show cause to reconcile the same. After the receipt of reply and after due enquiry, the Original Assessing Authority finds that the sing has effected the transaction shall make a request to Other End....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e cases are finalized without any undue delay." 131. In our view, input tax credit can be denied only if the invoices issued to the petitioners/appellants by the registered dealers were bogus invoices and/or invariance with the office copy of the invoice maintained at the registered dealers end who effected such sale to the petitioners/appellants and where there was no movement of goods for the corresponding value declared in the original copy of invoice contemplated under Rule 10(2) of TN VAT Rules, 2007. 132. However, if the petitioners/appellants have paid for value of goods reflected in the original copy of the invoice in their custody and there is no dispute on the same, mere mismatch in credit information gathered at the registered dealers end who effected sale to petitioners/appellants is of no consequence if there are collateral evidence to show the movement of goods for the value to the petitioners/appellants or their consignees directly. Under these circumstances, we are of the view that credit cannot be denied to that extent and the only option available for the authorities is to recover tax not paid by such dealer by invoking the machinery under TN VAT Act, 2007. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of 2015 TIN:33511465287/ 27.02.2015 2. 2637 of 2021 Tvl., Selva Furnitures 23769 of 2016 TIN:33784723806/ 2014-2015 27.05.2016 3 2638 of 2021 23767 of 2016 TIN:33784723806/ 2012-2013 4. 2639 of 2021 5. 2640 of 2021 23768 of 2016 TIN:33784723806/ 2013-2014 23766 of 2016 TIN:33784723806/ 2011-2012 6. 119 of 2022 M/s.SSB Industries 23201 of 2016 TIN:33694723806/ 2012-2013 23.05.2016 7. 125 of 2022 23200 of 2016 TIN:33694723806/ 2011-2012 8. 131 of 2022 9. 135 of 2022 23203 of 2016 TIN:33694723806/ 2014-2015 23202 of 2016 TIN:33694723806/ 2013-2014 10. 1194 of 2022 M/s.Amman Industries 30828 of 2016 TIN:33604723807/ 2013-2014 25.07.2016 11. 1195 of 2022 30829 of 2016 TIN:33604723807/ 2014-2015 12. 1197 of 2022 13. 1201 of 2022 30827 of 2016 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ation of departmental disciplinary proceedings. The procedures to be followed in the department for assessment are well settled. Thus, the authorities competent are not expected to commit such jurisdictional errors in a routine manner. In these circumstances, review of such orders by the higher authorities are imminent to form an opinion that there is willful or intentional act for commission of such jurisdictional errors, enabling the assesses to get exonerated from the liability. Liability and jurisdictional errors are distinct factors, and therefore, Courts are expected to provide an opportunity to the Department to decide the liability on merits and in accordance with law with reference to the provisions of the Act and Rules and guidelines issued by the Department. 17.Large number of writ petitions are filed without exhausting the statutory appeal remedies and High Court is also entertaining such writ petitions in a routine manner. Keeping such writ petitions pending for long time would cause prejudice to the interest of the assessee also. Thus, such statutory provisions regarding the appeal are to be decided at the first instance, enabling the litigants to avail the r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hall however give details of the cases and the order passed by the Assessing officers which were subject matter of the Writ Petitions. W.A.No.2714 of 2021 M/s.Sameera Timber &Plywoods Table-II Sl.No.1 Assessment Year : 2011 - 2012 144. This Writ Appeal has been filed by the appellant against the Common Order dated 15.06.2021 passed by the learned Single Judge of this Court in W.P.No.23200 of 2016 etc.,batch & W.P.No.7517 of 2015 etc., batch, dismissing the writ petition of the appellant challenging the assessment order dated 27.02.2015 for the assessment year 2011-2012. 145. The appellant had earlier suffered an assessment order for the aforesaid assessment year on 27.11.2014. On the issue relating to ITC on purchase effected from dealers whose registration were cancelled, the issue was answered against the petitioner on the ground that the appellant had not furnished any records to substantiate the inward movement of goods. The registration of the suppliers who had purportedly supplied the goods to the appellant were cancelled. Therefore, issue was answered against the petitioner. 146. The petitioner had preferred a Writ Petition before this Court in W.P.No....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Rs.1,16,16,175 Rs.5,25,02,540 of excess receipts Sales suppression determined on the basis of excess payments and determined under Section 27(1) Rs.97,27,496 at 14.5% Rs.1,65,62,291 Rs.4,52,75,064 taxable at 14.5% Rs.11,96,65,071 at 14.5% Tax due levied at 14.5% Rs.14,10,487 Rs.24,01,532 - Taxable turnover proposed under Section 27(1) Tax Proposed Rs.97,27,496 at 14.5% Rs.42,63,346 - Total Tax turn over determined under Section 27 (1) - Rs.2,08,25,637 - Total Tax determined under Section 27 (1) - Rs.30,19,717 - Tax levied 14,10,487 Rs.30,19,717 Rs.65,64,884 Rs.1,73,51,435 Reversal of Input Tax Credit determined under Section 27 (2) Rs.36,88,954 Rs.1,26,60,4378 Rs.31,58,544 Rs.1,04,45,462 Penalty under Section 27(3): It is also levied at 150% of Rs.21,15,731 Rs.4....
X X X X Extracts X X X X
X X X X Extracts X X X X
....,93,57,400 Rs.8,14,66,991 Taxable turnover proposed under Section 27(1) Tax Proposed Rs.1,04,93,326 at 14.5% - Tax determined - Reversal of Input Tax Credit determined under Section 27 (2) Rs.40,93,763 Rs.3,20,57,234 Rs.4,55,11,445 Rs.1,91,49,060 Penalty under Section 27(3): It is also levied at 150% of Rs.22,82,298 Rs.2,33,07,451 Rs.4,40,36,100 Rs.12,22,00,495 Penalty under Section 27 (4) levied at 50% Rs.20,46,881 Rs.3,20,57,234 Rs.4,55,11,445 Rs.1,91,49,060 156. Here also there are several disputed questions of facts which are involved apart from denial of input tax credit availed and utilized. Therefore, the order passed by the learned Single Judge cannot be interfered. 157. We are therefore of the view, the Writ Appeals are liable to be dismissed. However, we give liberty to the appellant to file a statutory appeal before the Appellate Authority. The Appellate Authority shall dispose such appeal in the light of the law declared by us. W.A.Nos.11....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... bill to legitimize bogus purchase and sales in the chain transactions. 161. The allegations against the appellant is that the appellant has made name sake purchases and effected immediate name sake to another and thereby creating a trial of claim of input claim of input to be used by subsequent buyers to offset output tax on unaccounted purchase as detailed above. 162. There are several disputed questions of facts which are involved apart from denial of input tax credit availed and utilized. The appellant is therefore not entitled for any relief in these Writ Appeals. It would be neither prudent for us to sit as appellate authority for desirable to get into disputed questions of facts. 163. We are therefore of the view, these Writ Appeals are liable to be dismissed. However, we give liberty to the appellant to file a statutory appeal before the Appellate Authority. The Appellate Authority shall dispose such appeal in the light of the observation in this order. W.A.No.451 of 2022 M/s.JBM Dakshin Table-II Sl.Nos.14 Assessment Year : 2010 to 2011 164. This Writ Appeal has been filed by the appellant against the Common Order dated 15.06.2021 passed by the le....
X X X X Extracts X X X X
X X X X Extracts X X X X
....were allegedly made from a dealer who evaded tax from the bill traders and effected circular transaction among themselves to evade tax. Relevant portion of the orders dated 14.01.2015 of the Commercial Tax Officer for the three years read identically. They read as under:- "Objections filed by the dealers have been carefully examined. Regarding the claim of ITC on the purchases made by the dealers, they have not produced documents for the following particulars. i. Purchase orders ii. Movement of goods iii. Bank Statements iv. Closing stock at the end of the each financial year. v. Godown for keeping the goods towards claim of ITC on the closing stock. Sec. 2(33)(i) provides for the sales will be taken into account only on a transfer in any goods for cash, deferred payment or other valuable consideration. Sec. 2(29) provides for place of business of the dealers and Sec. 19(13) provides for denial of ITC where a registered dealer without entering into a transfer of sale. The provisions are extracted below: Sec. 2(33)(i): Sale with all its grammatical variations and cognate expressions means every transfer....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e impugned Orders of the Commercial Tax Officer indicates that the respective orders passed are non speaking order. There is no discussion in it. 175. We are therefore, inclined to set aside the impugned order and remit the case back to the Commercial Tax Officer or such other officer authorized in their behalf to pass a speaking order on merits in the light of the observation and the position of law that is clarified by us in this detailed order. Writ Petitions (W.P): 176. We shall now deal with the respective Writ Petitions. 177. The table below gives the details of the respective writ petitions challenging the respective Impugned Order /Assessment Order:- TABLE-III Sl.No. Name W.P.No. Impugned/ Assessment Order I.O/ A.O. dated 1. Tvl.Lathika Oil Trading 9372 of 2019 TIN:33353623043/ 2015-2016 24.01.2019 2. Tvl.Atmosfaira Impex Private Limited 11482 of 2019 TIN:33891465854/ 2012-2013 31.01.2019 3. 4. 11483 of 2019 TIN:33891465854/ 2013-2014 5. 11484 of 2019 TIN:33891465854/ 2014-2015 6. 11488 of 2019 TIN:33891465854/ 2015-2016 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e above Writ Petition, the petitioner has challenged the impugned assessment order dated 24.1.2019 passed by the respondent Commercial Tax Officer for the assessment year 2015-2016. 182. The impugned order invokes best judgment assessment notice under section 22(4) of the Tamil Nadu Value Added Tax Act, 2006 and confirms to tax liability. 183. In support of the case of the petitioner in W.P.No.9372 of 2019 (M/s.Tvl.Lathika Oil Trading,Represented by its Proprietrix, V.Juliet Prema Arputham), learned Counsel Mr.R.Seniappan submitted as follows:- "The seller and the purchaser both of them are doing business in the same complex and assess on the files of the respondent herein. As requested through reply dated 10.10.2016 in response to the notice dated 26.08.2016, the respondent fairly verified and accepted and certified in the impugned order itself page no 22 and inner page no 3 of the impugned order) that the seller has filed monthly returns with payment of disputed tax, however rejected his claim of ITC on the ground that the proof of movement was not produced despite the fact that the goods has in fact been moved by own arrangements as evidenced from the letter dated....
X X X X Extracts X X X X
X X X X Extracts X X X X
....,21,798/- (Rs.3,81,44,280 - Rs.62,22,482) in the returns filed. The total purchase turnover of the petitioner should have been actually Rs.50,26,00,106/- (Rs.47,06,78,317 + Rs.3,19,21,789) instead of mere Rs.47,06,78,317/- as was declared by adding only a sum of Rs.62,22,482/- in interstate purchase to the local purchase of edible oil of Rs.47,06,78,317/-. 190. The petitioner is prima facie liable to pay differential tax of Rs.16,24,262/- on the local sales effected on the balance purchase turnover of Rs.3,19,21,798/- (Rs.3,81,44,280-Rs.62,22,482) which escaped assessment. W.P.Nos.11482, 11483, 11484, 11487 & 11489 of 2019 Tvl.Atmosfaira Impex Private Limited Table-III Sl.Nos.2 to 6 Assessment Year :2012-2013 to 2016-2017 191. These Writ Petitions pertains to the above mentioned assessment years. The petitioner has challenged the assessment orders passed by the Assessing Officer/Respondent therein on 31.01.2019. The dispute pertains to the period partly before the amendment and partly after the amendment to Section 19 of the TNVAT Act, 2006. 192. Apart from the main issue relating to denial of input tax credit, there are several other issues. For the purpose....
X X X X Extracts X X X X
X X X X Extracts X X X X
....etitioner. M/s.Megha Trading Corporation is owned by none other than the mother of the Director Thiru.Ashutosh Goel and wife of another director Thiru.Rajesh Goel of Tvl.Atmosfaira Impex Private Limited. 196. Tvl.South India Trading Corporation is owned by none other than one of the Director (Thiru.Rajesh Goel) of Tvl.Atmosfaira Impex Private Limited. The residential places of the Proprietors Tmt.Deepika Goel (Tvl.Megha Trading Corporation) and Thiru.Rajesh Goel (Tvl.South India Trading Corporation) is none other than the Residential Address No.115/C-16, Nelson Chamber, Nelson Manickam Road, Aminjikarai, Chennai - 29 of the Director of Thiru.Ashutosh Goel (Tvl.Atmosfaira Impex Private Limited). 197. It has been further observed that there is no storing place for the goods purchased by Tvl.Megha Trading Corporation and Tvl.South India Trading Corporation. The sellers Tvl.Megha Trading Corporation and Tvl.South India Trading Corporation have therefore not at all handled the goods. Therefore, it has been concluded that there was only transfer of money with no corresponding transfer of goods and movement of goods. 198. The details of ITC availed by the petitioner on the streng....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... produce for movement of goods such as Lorry receipt, way bill, G.C.notes, loading and unloading expenses etc to Enforcement Officials. On receipt of notice issued and at the time of personal hearing also the dealers have not produced any records such as Lorry receipt, way bill, G.C.Notes, loading and unloading expenses etc still now. Though the dealers are in possession of original bills at the time of inspection they have not produced the bills before me for verification and for cross examination. Hence in the absence of any records and proof of the movement of the goods, the input tax credit of Rs.81194142.00 availed by the dealer hereby reversed as proposed in the notice. 202. In our view, the petitioner has not made out a case for interference. The petitioner has not produced any documents to substantiate movement of goods. Therefore we given liberty to the petitioner to challenge the impugned orders, if advised before the Appellate within the time stipulated in this order. The Appellate Authority shall dispose such appeal in the light of the observations in this order. W.P.Nos.15046, 15049, 15050, 15052, 15053, 15055 of 2019 Tvl.Murugan Garments Table-III Sl.No....
X X X X Extracts X X X X
X X X X Extracts X X X X
....6722 13428176 671409/- Total 14429156/- 721458/- For the Assessment Year 2015-2016: Sl.No. Name of the Seller TIN No Purchase Value (Rs) ITC Claimed (Rs) 1. Sree Sakthi Tex 33826278208 14007240/- 700362/- 2. RR Tex 33633786722 4942980/- 247149/- 3. Murugappa Cottons 33242444893 2808000/- 140400/- 4. KirthinithiTex 33786360971 705840/- 35292/- Total 22464060/- 35292/- 205. The reasons given in the respective assessment years are as follows:- i. Mere possession of TIN No by the unethical sellers is not a proper proof. ii. The continuous stated in their objections that they have reported the purchases in the returns and all payments were made through cheques and bank transfer but for the above transaction, no proof has been produced, and hence disallowed, Further the Lorry Vouchers were fabricated after the issue of Notice. 206. The petitioner has no documents to substantiate that the dealers to whom payments were made at that the supplies effected by them accompanied in other collateral documents to substantiate th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Rs.19,42,396/- Rs.29,13,594/- 212. The Assessing Officer has concluded that the petitioner has not discharged the burden of proof. The petitioner had purchased the goods from genuine dealers and thus, it has been concluded that credit availed on the strength of bogus invoices cannot be allowed. 213. The petitioner has also not produced the purchase bill. Thus, the credit has been denied. 214. In our view, the petitioner has not made out a case for interference. The petitioner has no documents to establish movement of goods. Therefore, we give liberty to the petitioner to challenge the impugned orders, if advised before the Appellate Authority within the time stipulated in this order. The Appellate Authority shall dispose such appeal in the light of the law declared by us. W.P.Nos.18761, 18766 & 18769 of 2021 M/s.Aassaan Commodity Trade Table-III Sl.Nos.17 to 19 Assessment Year :2012-2013 to 2014-2015 215. In these Writ Petitions the petitioner had challenged the impugned assessment order dated 30.07.2021 passed by the respondent Sales Tax Officer for the assessment year 2012-2013 to 2014-2015. 216. The reading of the notice issued to the petitio....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the purpose of levy of sales tax." 223. It is further stated that there is a deem sale between the petitioner and the two concerns and therefore the petitioner was justified incorrect and utilizing the same for discharging the lax liability on the sales effected under the provisions of the TNVAT Act, 2006. 224. In our view, the petitioner has not made out a case for interference. The petitioner has no documents to substantiate movement of goods. Therefore, we give liberty to the petitioner to challenge the impugned orders, if advised before the Appellate Authority within the time stipulated in this order. The Appellate Authority shall dispose such appeal in the light of the law declared by us. W.P.Nos.11808, 11811, 11812, 11814, 11816 & 11819 of 2022 M/s.Sharda Motors Industries Table-III Sl.Nos.20 to 25 Assessment Year :2010-2011 to 2015-2016 225. The petitioner purchased automobiles as well as other raw materials required for manufacture of auto parts from some vendors located within the State and outside the State. 226. The petitioner availed ITC. Initially proceedings were initiated on various dates for the respective assessment years. The Department ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....contention is not sustainable and the penalty is warranted." 229. The reasoning in all the orders for the respective years are similar.The Department's contention was that the petitioner had wrongly availed credit in excess and therefore issued notices to the petitioner for the respective assessment years. Apart from the above, there are several other issues also in the above proceedings that were initiated against the petitioner. 230. Barring the above two issues all the issues have attained finality. There is no further challenge in so far as above two mentioned issues i.e. regarding mismatch between the credit availed in Annexure I of the petitioner and Annexure II filed by the respective selling dealers, the demand has been confirmed in the light of Circular dated 18.01.2019 bearing reference Circular No.3/2019/Q1/39643/2018, Relevant portion of the order for Assessment Year 2011-2012 as far as Mismatch reads as under: Conclusion of the Assessing Authority: The above readings were carefully examined. The total transactions are analysedwith two major categories. 1] Reported by the seller at the other end, settling the mismatching on some....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ctually been paid and delivered: From the above, when the selling dealer is at default, the buying dealer has to be establish the genuineness of physical occurrence of the transaction, as envisaged in Section 17 of the TNVAT Act 2006 which is not fulfilled. In the absence of compliance of statutory provisions, the assessing authority finds no room to consider the transaction as physically occurred and genuine. Moreover, as per the amended provisions of the Act, the "paid" position of sufferance of tax is not at all established when it is not found reported at the other end. In fine, the concern transactions are not established in a genuine way to be considered. Hence, the proposal to the extent of Rs.33,16,213.00 is hereby confirmed as their contention is not sustainable with the statutory stipulation. However, the narrative result of the examination is furnished in Annexure to the order." 231. As far as retrospective cancellation of registration, the Assessment Order has held as under: "Conclusion of the Assessing Authority: On this issue, it is clarified that the Registration Certificates of the selling dealers have been cancelled with retrospective ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the genuineness. In this line, their contention is not sustainable. From the above, when the selling dealer is at default, the buying dealer has to be establish the genuineness of physical occurrence of the transaction, which can be constituted only with the following three components of a genuine transaction. 1) The valid & original purchase invoice, issued by the selling dealer to establish the transfer of title of goods. 2) The proof for bank or cash payment of the proceed, made against the consideration to establish the rights on transfer of title of goods. 3) proof of transportation to establish the transfer of possession of goods. In the above contention of the dealer, they have not established the right on the transfer of title, by way of not filing any bank payment proof and not established the transfer of possession of goods, by way of not filing transportation proof. In the absence of fulfillment of the legal stand, the transaction happened in between the parties has not constituted the purchase or sale. Hence, their purchase transactions are not valid and qualified in accordance with the law and resultant credit on their tax ....