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Wipro Limited, rep. by its Regional Finance Manager/Authorized Signatory Sankaraman S Versus Assistant Commissioner Commercial Tax Department, Chennai

2015 (3) TMI 1171 - MADRAS HIGH COURT

Eligibility of notice - Held that:- Interference at the show cause notice stage should be rare and not in a routine manner. Mere assertion by the petitioner that notice was without jurisdiction would not suffice and it should be prima facie established to be so. Further, where only factual adjudication is necessary, interference should not be done by the Courts. In the case on hand, it is only a show cause notice. It may or may not be correct that for breach of the provisions of the sellers, act .....

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his explanation/objections within a period of 15 days from the date of receipt of a copy of this order and if the respondent is not satisfied with the explanations, the petitioner shall be given an opportunity of being personally heard and put forth his submissions to clarify the same. - W.P. Nos. 8661 to 8663 of 2015 And M.P. Nos. 1 of 2015 - Dated:- 26-3-2015 - S. Vaidyanathan, J. For the Petitioner : Mohammed Shaffiq For Respondent : V. Haribabu ORDER Heard the learned counsel for the petiti .....

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fter referred to as "the TNVAT Act"), discharging appropriate taxes within the prescribed time. According to the petitioner, the notices dated 19.12.2014, which were received on 05.02.2015, were issued proposing to disallow the Input Tax Credit for the assessment years 2011-12, 2012-13 and 2013-14 only for the reason that the selling dealers have not filed their returns and have not paid the tax, which was collected from the petitioner, is in violation of principles of natural justice .....

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are contrary to the various decisions of the Hon'ble Apex Court as well as this Court and hence they are liable to be set aside. 5. In support of the above contentions, the learned counsel for the petitioner has relied on the following decisions:- (i) A decision of this Court in the case of Tvl.Raymix Concrete India Pvt. Ltd., rep. by its Chief Accountant S.M.Sekar vs. Assistant Commissioner (CT), The Commercial Tax Officer, J.J.Nagar Assessment Circle (W.P.No.7522 of 2015 dated 18.03.2015), .....

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aid the collected tax and that liability has to be fastened on the selling dealer. It cannot be mulcted on the petitioner-purchasing dealer, which had shown proof of payment of tax on purchases made. 9. Sub-section (16) of Section 19 states that the input tax credit availed is provisional. It, however, does not empower the authority to revoke the input tax credit availed on a plea that the selling dealer has not paid the tax. It only relates to incorrect, incomplete or improper claim of input ta .....

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provision under which the present action has been initiated, namely invoking sub-section (16) of Section 19, does not appear to be correct on the admitted facts as above. All the revision orders revising the input tax credit on the admitted case of tax having been paid to the selling dealer, therefore, are found to be totally incorrect, erroneous and contrary to the provisions of the TNVAT Act and Rules. As a result, all the orders are liable to be set aside. 4. Learned Additional Government Ple .....

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ined either online or assessment Circle, the objections are over-ruled and confirmed the proposal. 5. Heard the learned counsel for the petitioner as well as the learned Additional Government Pleader appearing for the respondent and perused the documents available on record. 6. Having considered the submission made by both sides, more particularly paragraphs 8 and 9 of the decision, which is extracted supra, I am of the view that the writ petition has to be allowed and the the alternative remedy .....

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laim of the purchasing dealer cannot by any length of reasoning, be denied by the Revenue. The mere fact that the Revenue had not make an assessment on the assessee's vendor, per se, cannot stand in the way of the assessing officer considering the claim of the assessee under section 19 of the Tamil Nadu Value Added Tax Act. Going by section 17 of the Tamil Nadu Value Added Tax Act that the burden on the purchasing dealer rest to the extent of showing that he is not liable to tax under the Ac .....

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ee for refund could not be rejected nor delayed. As already pointed out, the Revenue does not deny, as a matter of fact, that the assessee's vendors are all registered dealers on the files of the Revenue and the assessee had also given the TIN number of these vendors. When such particulars are available, it is for the Revenue to take necessary action against the vendors, who had not remitted tax collected by them to the State. Without taking recourse to that, I do not think that the Revenue .....

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s Court in the case of Althaf Shoes (P) Ltd., Vs. Assistant Commissioner (CT) reported in (2012) 50 VST 179 (Mad). In the said decision, this Court considering somewhat an identical situation, the only difference being in the said case it was pertaining to refund and in the instant case, it pertains to Input Tax Credit, has held as follows: As already pointed out, the circular issued by the Commissioner clearly states that so long as the vendor is found to be a registered dealer on the files of .....

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at, I do not think that the Revenue could deny the claim of the assessee. 4. Learned Additional Government Pleader (Taxes) also does not dispute the legal position. Since the impugned assessment order is only with regard to the reversal of Input Tax Credit, that too, solely based upon the verification with regard to the vendor, the same could not have been done. In the light of the decision referred supra and for all the above reasons, the petitioner is entitled to succeed and accordingly, this .....

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ler. It cannot be mulcted on the petitioner9 purchasing dealer, which had shown proof of payment of tax on purchases made. Sub-section (16) of section 19 states that the input-tax credit availed of is provisional. It, however, does not empower the authority to revoke the input-tax credit availed of on a plea that the selling dealer has not paid the tax. It only relates to incorrect, incomplete or improper claim of input tax credit by the dealer. It is not so in these cases. In the present case, .....

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oking sub-section (16) of Section 19, does not appear to be correct on the facts as above. All the revision orders revising the input-tax credit on the admitted case of tax having been paid to the selling dealer, therefore, are found to be totally incorrect, erroneous and contrary to the provisions of the TNVAT act and Rules. As a result, all the orders are liable to be set aside.. (v) The Hon'ble Supreme Court in the case of Hindustan Poles Corporation vs. Commissioner of Central Excise rep .....

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;41. Before we part with this case, we would like to impress upon the respondent authorities that before issuance of show cause notices, the Revenue must carefully take into consideration the settled law which has been crystallised by a series of judgments of this Court. The Revenue must make serious endeavour to ensure that all those who ought to pay excise duty must pay but in the process the Revenue must refrain from sending of indiscriminate show cause notices without proper application of m .....

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horities. In such a case, the parties get ample opportunity to put forth their contentions before the authorities concerned and to satisfy the authorities concerned about the absence of case for proceeding against the person against whom the show-cause notices have been issued. Abstinence from interference at the stage of issuance of show-cause notice in order to relegate the parties to the proceedings before the authorities concerned is the normal rule. However, the said rule is not without exc .....

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factual adjudication would be necessary, interference is ruled out". (vii) paragraph No.31 of the decision of the Hon'ble Supreme Court in the case of East India Commercial Company vs. Collector of Customs reported in AIR 1962 SC 1893, which reads as follows:- "31........We, therefore, hold that the law declared by the highest court in the State is binding on authorities or tribunals under its superintendence, and that they cannot ignore it either in initiating a proceeding or dec .....

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ench appears to have been under the impression that the ITO was the sole judge of the fact whether the firm in question was resident or non resident. This conclusion is wholly wrong. No authority, much less a quasi-judicial authority, can confer jurisdiction on itself by deciding a jurisdictional fact wrongly. The question whether the jurisdictional fact has been rightly decided or not is a question that is open for examination by the High Court. If the High Court comes to the conclusion that th .....

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