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2015 Supreme(Mad) 2957
IN THE MADURAI BENCH OF MADRAS HIGH COURT
R. SUBBIAH, J.
TVL Sri Lakshmi Textiles, Rep. by its Partner, S. Venkatraman – Petitioner
Versus
Commissioner of Commercial Taxes, Chennai & Others – Respondents
W.P. (MD) No. 17266 of 2015 & M.P. (MD) No. 1 of 2015
Decided On : 25.9.2015
Advocate Appeared:
For the Petitioner: Mr. B. Rooban for M/s. R.V. Manikandan Associates.
For the Respondent:Mr. R. Karthikeyan, Government Advocate.
The central legal point established in the judgment is that a petitioner cannot be held liable for the failure of the seller to report tax payments when the petitioner has paid the tax to the seller.
Headnote:
Certiorari - Tamil Nadu Value Added Tax - Section 22(2), Section 27(3), Section 17, Section 19(16) - The court discussed the provisions of the Tamil Nadu Value Added Tax Act, particularly focusing on the acceptance of returns, reversal of Input Tax Credit, burden of proof, and revocation of Input Tax Credit. The court relied on previous judgments to support the petitioner's claim and emphasized that the petitioner cannot be held liable for the failure of the seller to report tax payments.
Fact of the Case:
The petitioner, a partnership firm, sought a Writ of Certiorari to quash the impugned assessment order by the second respondent, alleging non-payment of tax by other end dealers and proposing to reverse Input Tax Credit and levy penalty.
Finding of the Court:
The court found that the petitioner had paid tax to the seller and cannot be held liable for the seller's failure to report tax payments. The court relied on previous judgments to support the petitioner's claim and allowed the Writ Petition.
Issues: The issues revolved around the reversal of Input Tax Credit, burden of proof, and the petitioner's liability for the failure of the seller to report tax payments.
Ratio Decidendi: The court's decision was based on the principle that the petitioner cannot be made liable for the failure of the seller to report tax payments, especially when the petitioner had paid the tax to the seller.
Final Decision: The Writ Petition was allowed, and the impugned assessment order was quashed.
1. This Writ Petition has been filed praying for a Writ of Certiorari to call for the records pertaining to the impugned proceedings of the second respondent in TIN/33915681560/ 2013-14, dated 10.08.2015 and quash the same.
2. The case of the petitioner is that the petitioner firm is a partnership concern carrying on business in the name and style of Sri Lakshmi Textiles dealing in inner garments and textiles. The said concern is registered under the second respondent which is regularly paying monthly returns under the Tamil Nadu Value Added Tax Act and the petitioner promptly adjusted the legitimate tax dues to the department from the Input Tax Credit available on the tax paid on purchases. During the assessment year 2013-2014, the petitioner has reported the total and taxable turnover of Rs. 2,02,88,151/- and Rs. 15,98,693/- through returns and adjusted the corresponding tax dues to the respondent Department from the Input Tax Credit available for the petitioner. It is deemed that the second respondent has passed the deemed assessment order by accepting the returns under Section 22(2) of the Tamil Nadu Value Added Tax Act.
3. While the situations stood thus, the second respondent has issued a notice dated 28.07.2015 alleging that on verification of the department web- site, some of the other end dealers had not paid tax to the tune of Rs. 10,317/- and proposed to reverse the said Input Tax Credit and also to levy penalty under Section 27(3) of the TNVAT Act. The entire purchases were duly accounted for in the books of accounts. No material defect or wrong availment of Input Tax Credit as alleged by the second respondent in the above-said notice. Hence, the petitioner filed reply dated 04.08.2015 with the second respondent explaining the real facts with regard to the alleged defect along with the copies of the purchase bills/tax invoices of the said dealers showing the collection of taxes from the petitioner and the copies of the monthly returns filed.
4. Despite the said fact, the second respondent has passed the impugned assessment order dated 10.08.2015 by confirming his proposal vide notice dated 28.07.2015. Though valid objections have been filed by way of explanation, the respondent has simply rejected the same by passing the impugned order. Further, the second respondent himself has admitted that the claim of Input Tax Credit is covered by valid tax invoices as required under Rule 10(2) of the Tamil Nadu Value Added Tax Rules and when it is so, he cannot compel the petitioner to produce annexure II of the other end dealer which can be easily verified by him through the department internet website.
5. To back his averment, the learned counsel for the petitioner relied on the following judgment of this Court, which are as follows:-
(i) Althaf Shoes Pvt. Ltd. vs. Assistant Commissioner (CT), 50 VST 179.
(ii) Sri Vinayaga Agencies vs. The Assistant Commissioner (Ct), Chennai and Another, (2013) 60 VST 283 (Mad).
(iii) Infiniti Wholesale Ltd. vs. The Assistant Commissioner (CT), W.P. No. 9265 of 2013 dated 06.11.2014.
6. In all the cases cited supra, an identical prayer sought for by the petitioner in this Writ Petition has been entertained and the same has also been allowed by this Court. If at all there is non-payment of tax collected by the other end dealer, the petitioner cannot be made liable for the same. Hence, the impugned order is liable to be set aside.
7. The learned Government Advocate submitted that though the petitioner firm has properly reported the sales turnover in annexure-I and bill copies, however, the petitioner firm has not produced the other end annexure-II as required by the Department. Further, as per Section 17 of the Tamil Nadu Value Added Tax, the burden of proof lies on the petitioner firm. That apart, the petitioner has not preferred an appeal before the Appellate Deputy Commissioner, Tirunelveli and therefore, the petitioner firm is not entitled to avail the tax. Therefore, this Writ Petition
