TaxTMI 
TaxTMI 
2025 (12) TMI 215
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....to. The defendant has made part payments of a sum of Rs.2,25,414/-on 9.6.2014 and a sum of Rs.18,58,103/- on 8.7.2014 totalling an amount of Rs.20,83,517/- through ICICI RTGS payment towards the abovesaid purchase. After giving credit to the said part payments made by the defendant, still there is a sum of Rs.3,21,650/- due and payable by the defendant to the plaintiff. In spite of the plaintiff's request and demand made vide its letters dated 9.9.2014 and 29.1.2015, the defendant failed and neglected to pay the said outstanding amounts to the plaintiff. The plaintiff has sent a legal notice on 4.4.2015 through his counsel to the defendant by way of a registered post with acknowledgment due and the said notice was received by the defendant on 8.4.2015. The defendant neither made payment nor replied to the said legal notice. The defendant is liable to pay interest at 24% per annum on the balance outstanding invoice amount as the transaction is commercial in nature. As on date, a sum of Rs.3,21,650/- is outstanding in respect of the abovesaid purchase and the same has to be paid along with 24% interest per annum. Hence, the total outstanding amount payable by the defendant is Rs.....
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.... done in case of invoices mentioned at Sl.Nos.6, 7 and 10 as the said invoices were within 90 days of the date of invoice and hence defendant could avail VAT credit and the same was paid to the plaintiff. It is also submitted that the invoices against which VAT amounts are disallowed are of the month February and March and as per the provisions of TN VAT Act, the purchaser has to take credit "before the end of the financial year or before ninety days from the date of purchase, whichever is later" and in these cases the defendant has applied the period of "90 days" from the date of invoice as the cut of date for availing VAT credit. In the case of invoice at Sl.No.10 the defendant has applied the period as "the end of financial year" as the cut of date for availing VAT credit and though the invoice at Sl.No.10 was also after the lapse of 7 months of the date of invoice, the defendant has paid the VAT portion also to the plaintiff as the defendant could take VAT credit till the end of financial year. The defendant also made certain deductions against invoice nos. at S1.No.6 to 10 in the table being liquidated damages as per the terms of the contract between plaintiff and defendant du....
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....copies of invoices?" 8. The learned counsel for the appellant/plaintiff submits that the suit claim is based on undisputed and valid invoices marked as Ex.A3, Ex.A6 and Exs.A8 to A12 for supplying the goods as per the purchase order of the defendant marked as Ex.A2 and Ex.A7 respectively. As per the terms of the purchase order, the defendant has to pay the invoice amount to the plaintiff. The defendant failed to plead and pay the court fee for any counter claims or set off for their alleged liquidated damages and dis-allowance of VAT credit portion. He would submit that it is an admitted fact that as per the purchase order, the invoices were raised to consignee address and the goods received by them with original tax invoices. Therefore, if they were entitled to claim input tax credit, they have to claim the same within 90 days from the date of original invoice as per the provisions of the TN VAT Act. His further submission is that as per the provisions of Section 19 (10)(b) of the TN VAT Act, 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 and therefore, the....
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....intiff. In support of his contentions, he relied on the decision of the Hon'ble Supreme Court in the case of M/s. Kailash Nath Associates vs. Delhi Development Authority & another reported in 2015(4) SCC 136. Hence, he prayed for setting aside the dis-allowed portion of the judgment and decree passed by the courts below. 10. On the other hand, the learned counsel appearing for the respondent/defendant submits that the plaintiff has violated conditions of the purchase orders and submitted the invoices belatedly. As per TN VAT Act, the purchaser had to take value added tax credit before the end of the financial year or before 90 days from the date of purchase whichever is later. It is further contended that only three invoices were submitted enabling the defendant to claim VAT credit, but, seven invoices were furnished after lapse of several months. Hence, the defendant could not claim VAT credit, Hence, the plaintiff is not entitled for the amount claimed for in the said seven invoices. He would further submit that as per Section 19(11) of the TN VAT Act, input tax credit needs to be taken within the same month of the transaction of taxable purchase and if this cannot be done....
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....t appeal. 11.Heard on both sides and records perused. 12. On a perusal of the impugned judgment it is seen that the courts below have arrived to a conclusion that in view of the belated supply of invoice, VAT credit could not be claimed by the defendant and hence the plaintiff is not entitled for claiming VAT amount from the defendant. It is not in dispute that the goods were supplied to the defendant on credit basis based on various purchase orders and the plaintiff raised invoices for payment thereto. According to the plaintiff, after giving credit to the part payments made by the defendant a sum of Rs.3,21,650/- is due and payable to the defendant to the plaintiff. In spite of several requests and letters communicated to the defendant, the defendant failed to pay the outstanding amounts to the plaintiff. Hence, a legal notice (Ex.A15) was sent on 04.04.2015, which was received by the defendant on 08.04.2015. The defendant neither made payment nor replied for the said legal notice. Hence, the plaintiff filed the above suit for recovery of money. The claim of the plaintiff was resisted by the defendant stating that as per Section 19(11) of TN VAT Act, input tax credit needs ....
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....tract, the purchaser shall deduct liquidated damages, a sum equivalent to 0.5% of the price mentioned for each week of delay or part purchase order value/undelivered portion to be reckoned from the contract delivery date to cargo readiness date final inspection agency's signed date in the test certificate". 13. It cannot be disputed that the plaintiff and the defendant are governed by the TN VAT Act. It is also not disputed that the invoices were VATable under Section 19(3) of the TN VAT Act and that input tax credit needs to be taken within the same month of transaction on taxable purchases. According to the defendant, disallowed VAT is Rs.2,50,572/- and the liquidated damages is Rs.15,057/- and the same has been claimed by the plaintiff and that the defendant is liable to deduct the same as per the terms of the contract. The defendant has relied upon the order of this Court in W.P. No.14807 and W.P. No.14808 of 2013 in which it has been held that "There is a statutory obligation for every registered dealer having turnover of sales above the amounts specified to issue a tax invoice serially numbered containing the prescribed particulars and failure to comply with the mandat....
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....e, from the above observations, it is made clear that the word "shall" in Section 19(11) of TN VAT Act is held to be mandatory and not directory. In the bunch of writ petitions filed before this Court in the case of Usa Agencies vs. Commercial Tax Officer reported in 2013 MLJ 6 142, it is held that the word "shall" used in Section 19(11) of the TN VAT Act, is held to be mandatory and not directory. The relevant portions are extracted hereunder. 53. Section 19(11) of TN VAT Act provides that if any registered dealer fails to claim Input Tax Credit in respect of any transaction of taxable purchase in any month, he shall make the claim before the end of the financial year or before ninety days whichever is later. In our considered view, Section 19(11) actually relaxes the rigour of Rule 7 under which the registered dealer is required to furnish correct and complete details of Input Tax Credit on or before 20th of succeeding month. In addition to filing of revised return under Rule 7(9), Section 19(11) enables the dealer to make the Input Tax Credit before the end of the financial year or before ninety days whichever is later. Section 19(11) not only effectuates the provision ....