By G. G. Goyal
Janak Vaghani Chartered Accountants
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VA T-Input Tax Credit – Allowed in Assessment – Subsequent Cancellation of Registration Certificate of Selling Dealer – Can Not Affect Right of Purchasing Dealer – ITC cannot be Reversed, Section 19 of The Tamil Nadu Value Added Tax Act, 2006.
FACTS
The petitioners had claimed input tax credit of tax paid on purchase of goods from registered dealer u/s. 19 of The TNVAT Act. Subsequently, department took action against the selling dealers, who sold the goods to the petitioners for one or other reason and cancelled registration certificates of selling dealers from retrospective effect. Based on this, the VAT department issued notices in some cases calling upon petitioners to show cause as why input tax credit should not be reversed, in some cases passed revised assessment orders reversing input tax credit availed. All the affected petitioners filed writ petition before the Madras High Court challenging the notices, revised assessment orders and provisional assessment orders.
HELD
It was not is dispute that the registration certificates of the selling dealers were cancelled with retrospective effect and, therefore, to reverse the input tax credit on the plea that registration certificates have been cancelled with retrospective effect cannot be countenanced. Whatever benefits that accrued to the petitioners based on valid documents in the course of sale and purchase of goods, for which tax was paid cannot be declined. The transaction that took place when the registration certificates of selling dealers were in force cannot be denied to the petitioners on the above plea. Accordingly, the High Court allowed the writ petition filed by petitioners and all the notices revised assessment orders and the provisional assessment orders, in so far they sought to deny the benefit of the input tax credit on the above ground were set aside.
