Infiniti Wholesale Limited, (formerly known as Woolworths Wholesale (India) Private Limited, Represented by its Company Secretary, Vikram Jain, Chennai vs Assistant Commissioner (CT), Koyambedu Assessment Circle, Market Management Committee Building, Koyambedu

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2014 Supreme(Mad) 3980

High Court of Judicature at Madras
T.S. SIVAGNANAM, J.
Infiniti Wholesale Limited, (formerly known as Woolworths Wholesale (India) Private Limited, Represented by its Company Secretary, Vikram Jain, Chennai
Versus
The Assistant Commissioner (CT), Koyambedu Assessment Circle, Market Management Committee Building, Koyambedu
Writ Petition No. 9265 of 2013 & M.P. Nos. 1 to 5 of 2013 & M.P. Nos. 1 to 5 of 2014
Decided on: 06-11-2014

Advocates Appeared:
For the Petitioner:N. Prasad, Advocate.
For the Respondent: Manokaran Sundaram, AGP.

Headnote:
Indian Companies Act, 1956 - Tamil Nadu Value Added Tax Act, 2006 - Tamil Nadu Value Added Tax Rules, 2007 - Rule 10(2) - Central Sales Tax Act, 1956 - Section 8(1) - Unregistered dealers and evaded tax - Possession of valid tax invoice – Claim of compensation - Petitioner is involved trading of consumer items and wholesalers for various enterprises - Vendors of petitioner are usually manufacturers of consumer durables and other goods and are said to be registered dealers and they raise Tax Invoices as contemplated under Rule 10(2) of Tamil Nadu Value Added Tax Rules 2007 - Petitioner would state that it pay to its vendors price as well as tax charged and take Input Tax Credit in short - It is stated that during relevant assessment year a small portion of purchases were made by petitioner from registered dealers outside State of and those purchases were made as purchases contemplated under Section 8(1) of Central Sales Tax Act, 1956 and petitioner has effected resale within state of and paid tax - Petitioner would state that on inter-state purchases it has not taken input tax credit - Respondent has issued a notice stating that on verification of returns filed by petitioner for assessment certain defects were noticed which are briefly stated – Held, In case of Agencies cited supra petitioner was dealer lubricants purchasing lubricants from a registered dealer - On inspection it was found that vendor dealer had not filed monthly returns nor paid tax to Department - Though petitioner had paid tax to selling dealer revision notice was issued proposing that should be reversed on failure of selling dealer paying tax - Allowing said writ petition it was held that at time of filing self-assessment return under Section 22(2) petitioner-dealer had followed Rule 10(2) of Added Tax Rules, 2007 and therefore could not be said to have wrongly availed of input tax credit wrongly - Section 19(1) states that input-tax credit can be claimed by a registered dealer if he establishes that tax due on such purchase has been paid by him in manner prescribed and that was accepted at time when self-assessment was made - Pre-revision notices and orders clearly stated that petitioner-dealer had paid tax to selling dealer - If that be case it was held that petitioners case therein squarely fell under proviso to Section 19(1) of Act - Further it was another matter that selling dealer had not paid collected tax - Liability had to be fastened on selling dealer and not on petitioner-dealer which had shown proof of payment of tax on purchases made - orders were thus set-aside - This Court is of view that above referred to decisions squarely cover case on hand - Only conclusion that could be arrived is availed by petitioner could not have been proposed to be reversed or reversed on grounds stated by respondent selling dealer has not filed returns or not paid taxes or they were unregistered dealers or their registrations were retrospectively cancelled - Writ petition is allowed

Judgment

1. The petitioner, a Public Limited Company, incorporated under the Indian Companies Act, 1956, and registered as a dealer, on the file of the respondent, under the provisions of the Tamil Nadu Value Added Tax Act, 2006, (in short “the Act”), has filed this writ petition, challenging the order of assessment, dated 25.02.2013 for the assessment year 2011-12.

2. The petitioner is involved in trading of consumer items and wholesalers for various enterprises. The vendors of the petitioner are usually manufacturers of consumer durables and other goods and are said to be registered dealers and they raise Tax Invoices, as contemplated under Rule 10(2) of the Tamil Nadu Value Added Tax Rules, 2007, (VAT Rules).

3. The petitioner would state that it pay to its vendors the price as well as the tax charged and take Input Tax Credit (in short “ITC”). It is stated that during the relevant assessment year, a small portion of the purchases were made by the petitioner from registered dealers, outside the State of Tamil Nadu and those purchases were made, as purchases contemplated under Section 8(1) of the Central Sales Tax Act, 1956, and the petitioner has effected resale within the state of Tamil Nadu and paid tax. The petitioner would state that on the inter-state purchases, it has not taken input tax credit.

4. The respondent has issued a notice, dated 20.07.2012, stating that, on verification of the returns filed by the petitioner for the assessment year 2011-12, certain defects were noticed, which are briefly stated as here-under:-

"(i) There is short reporting of turnover by the registered vendors of the petitioner in comparison to the purchase turnover of the petitioner to the tune of Rs.3,37,50,298/-;

(ii) The vendors who are registered dealers have not filed returns for Rs.66,784/-;

(iii) The vendors have not paid tax and yet petitioner has taken credit (termed as non assessee vendors), though assessment orders mentions the existing TIN Nos. of the vendors at Rs.79,460/-;

(iv) The vendors are unregistered dealers and evaded tax to the tune of Rs.34,73,089/-.

5. On the above allegations, the respondent proposed to reverse the ITC of Rs.3,73,69,631/-, availed by the petitioner, as per Section 19(13) of the VAT Act. The petitioner was given liberty to file objections to the proposal made in the notice, dated 20.07.2012, in writing, with connected records, within ten days from the date of receipt of the order.

6. The petitioner submitted its reply, dated 05.08.2012, stating that they were in possession of valid tax invoice; vendors are registered dealers within the state of Tamil Nadu; credit was taken only on local purchase on the basis of tax invoices issued by local registered dealers; Section 19(13) of the Act had no applicability to a case, where credit had been taken on the basis of valid tax invoice. Without prejudice to the above contentions, the petitioner stated that they were in the process of obtaining confirmation from the vendors and that returns were filed and tax discharged at their hands and they will comply with the same, though Section 19(1) of the Act does not contain any such requirement and sought for two months time.

7. The petitioner appeared for personal hearing on 26.08.2012 and filed further objections on 10.10.2012, which was delivered in the office of the respondent, on 26.10.2012. In the further objections, dated 10.10.2012, the petitioner contended that the notice, dated 20.07.2012, did not specify the exact transaction, in respect of which there was a mismatch; requested assistance of the respondent in specifying the exact transactions from the returns of the vendors, as the petitioner, being purchaser was not in possession of the returns filed by the vendors. Without prejudice to the above two contentions, the petitioner submitted the confirmation to the tune of Rs.2,60,92,645/-, which was based on the confirmations furnished by its vendors.

8. Once again, the petitioner appeared before the respondent, on 10

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