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2016 (9) TMI 1114 - MADRAS HIGH COURTValidity of assessment order - cancellation of registration certificate with retrospective effect - reversal of input tax credit when registration was in force - principles of natural justice - requirements of Rule 10(2) of the Tamil Nadu Value Added Tax Rules, read with Section 19 of the Tamil Nadu Value Added Tax, 2006 - Sections 39(14) and 39(15) of the Act - Section 17 of the VAT Act, 2006 - Held that: - there cannot be any quarrel that input tax credit availed by any registered dealer is only provisional and that the Assessing Officers are empowered to revoke the same, if it appears to the assessing authority to be incorrect, incomplete or otherwise not in order. If Section 19(15) of the VAT Act, 2006, to be given effect, in letter and spirit, then, no sooner the Registration Certificate of the selling dealer is cancelled by the appropriate authority, such registered dealer, who had purchased any taxable goods from the selling dealer and availed input tax credit in respect of the said goods, has to pay the amount availed on the date from which the order of cancellation of the Registration Certificate takes effect. The buying dealer is also liable to pay, any addition to the amount due, interest at the rate of two percent per month on the amount of tax payable, for the period commencing from the date of claim of input tax from the dealer. Section 39(15) of the VAT Act, 2006, is silent, as to whether the competent authority is empowered to cancel, modify or amend any certificate of registration granted by him, retrospectively. The decision in the case of the Hon'ble Supreme Court in State of Maharashtra vs. Suresh Trading Co. [1996 (2) TMI 451 - SUPREME COURT OF INDIA] is relied upon where it was held that whatever be the effect of retrospective cancellation upon the selling dealer, it can have no effect upon any person, who has acted upon the strength of a registration certificate, when such certificate was alive. The retrospective cancellation of the Registration Certificate is set aside - appellant was not provided with an opportunity to file any counter affidavit, on the grounds of challenge made in the supporting affidavit to the writ petition filed to quash the Registration Certificate, with retrospective effect - matter remanded to writ court - petition dismissed.
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