MANU/TN/2174/2023

Equivalent/Neutral Citation: [2023]115GSTR320(Mad)

IN THE HIGH COURT OF MADRAS

T.C. Nos. 19, 20, 21 of 2022, W.A. Nos. 2607, 2618 of 2021, 451 of 2022, 2714 of 2021, 2637
to 2640 of 2021, 119, 125, 131, 135 of 2022, 1194, 1195, 1197, 1201 of 2022, W.P. Nos. 9372
of 2019, 11482 to 11484, 11488, 11489 of 2019, 12450 of 2019, 15046, 15049, 15050, 15052,
15053, 15055 of 2019, 1226, 1230, 1239 of 2021, 18761, 18766, 18769 of 2021, 11808, 11811,
11812, 11814, 11816, 11819 of 2022, C.M.P. Nos. 17113, 17062, 17199, 17201, 17203, 17204,
17622 of 2021, 906, 931, 963, 989, 7556, 7561, 7569 and 7585 of 2022
Decided On: 18.04.2023
Tvl Sahyadri Industries Ltd. Vs. The State of Tamil Nadu
Hon'ble Judges/Coram:
S. Vaidyanathan and C. Saravanan, JJ.
Counsels:
For Appellant/Petitioner/Plaintiff: Mahesh Raichandani for A. Saranya
For Respondents/Defendant: Haja Nazirudeen, Additional Advocate General for M.
Venkateswaran, SGP (Taxes) assisted by C. Harsharaj, Additional Government Pleader and
Amirtha Poonkodi Dinakaran, Government Advocate
Case Category:
INDIRECT TAXES MATTERS
ORDER
S. Vaidyanathan and C. Saravanan, JJ.
1 . By this common order all these Writ Petitions, Writ Appeals and Tax Cases, are being
disposed.
2. In these cases following issue arises for our consideration:-
(a) Whether input tax credit availed under Section 19 of the Tamil Nadu Value Added Tax
Act, 2006 (herein after referred to as TN VAT Act, 2006) by these petitioners/appellants
can be denied retrospectively on account of cancellation of the VAT registration of the
dealers who are said to have effected sale of the goods to these petitioners/appellants?
(b) Whether, the input tax credit availed by them can be denied in absence of transport
documents and other documents to prove movement of goods to these
petitioners/appellants from the dealers who effected sale of goods to these
petitioners/appellants?
(c) Whether amendment to Section 19(1) of TN VAT Act, 2006 vide Tamil Nadu Act, 13
of 2015 with effect from 29.01.2016 is prospective or retrospective?
3. For the sake of convenience, we shall deal with the cases in three parts. The petitioners have
challenged the Assessment Orders in Writ Petitions. Writ Appeals pertain to challenge to the
Orders passed by a learned Single Judge of this Court. By the impugned order the learned Single
Judge of this Court dismissed the Writ Petitions filed by them. In the Writ Petitions,before the
Single Judge of this Court, the appellants had challenged the Assessment Orders passed by the
Assessing Officers.
4 . Tax Cases arise out of a common order passed by the Tamil Nadu Sales Tax Appellate
Tribunal (STAT), Additional Branch, Coimbatore-18 in Coimbatore Tribunal Sales Tax Appeal

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 Nos. 91 to 93 of 2016.
5 . The petitioners in the Writ Appeals (WA) and in the Writ Petitions (WP) have an alternate
remedy against the impugned assessment order under the provisions of the aforesaid Act before
the Appellate Assistant Commissioner. Ordinarily, we would have straight away dismissed the
Writ Petitions and the Writ Appeals filed with liberty to file statutory appeals before the aforesaid
appellate authority and confined this order on merits in the Tax Cases alone.
6. However, since this Court has earlier admitted these Writ Appeals/Writ Petitions long back, we
shall endeavour to give a finality to the issues by giving our decision on the legal position for the
assessing officers/appellate authorities as the case may be to adjudicate and decide the appeals.
7. In support of their cases, reliance was placed on the following case laws by the counsel for
the respective petitioners/appellants:-
i. Prince Khadi Woollen Handloom Prod. Coop. Indl. Society vs. Commissioner of Central
Excise, MANU/SC/1128/1997 : 1996 (88) ELT 637 (SC);
ii. Reckitt & Colman of India Limited vs. Collector of Central Excise,
MANU/SC/1522/1997 : 1996 (88) E.L.T. 641 (S.C.);
iii. Saci Allied Products Limited vs. Commissioner of Central Excise,
MANU/SC/0320/2005 : 2005 (183) ELT 225 (SC);
iv. Commissioner of Central Excise vs. Ballarpur Industries Limited ,
MANU/SC/3595/2007 : 2007 (215) E.L.T. 489 (S.C.);
v. Commissioner of Customs, Mumbai vs. Toyo Engineering India Limited,
MANU/SC/3625/2006;
vi. Bachhaj Nahar vs. Nilima Mandal and another, MANU/SC/8199/2008 : (2008) 17 SCC
491;
vii. Warner Hindustan Limited vs. Collector of Central Excise, Hyderabad,
MANU/SC/1016/1999 : 1999 (113) ELT 24 (SC);
viii. D.Y.Beathel Enterprises vs. State Tax Office, MANU/TN/1459/2021 : 2021-TIOL-
890-HC-MAD-GST;
ix. Union of India and others vs. Dhanwanti Devi and Others, MANU/SC/1272/1996 :
(1996) 6 SCC 44;
x. Shree Bhairav Metal Corporation vs. State of Gujarat, MANU/GJ/0396/2015;
xi. Althaf Shoes Private Limited vs. Assistant Commissioner (CT), MANU/TN/5302/2011;
xii. Infiniti Wholesale Limited vs. The Assistant Commissioner (CT), W.P. No. 9265 of
2013;
xiii. Eicher Motors Limited and Ors vs. Union of India, MANU/SC/0051/1999 : 1999
(106) ELT 3 (S.C.);
xiv. Collector of Central Excise, Pune and others vs. Dai Ichikarkaria Limited and Others,
MANU/SC/0467/1999 : 1999(112)ELT353(S.C.);
xv. Additional Commissioner of Income Tax vs. BahriBros.Private Limited,
MANU/BH/0136/1984 : 154 ITR 244 (1985);
xvi. Commissioner of Central Excise Chandigarh vs. Neepaz Steels (India),
MANU/CE/8487/2007 : (2007) 213 ELT 100;

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 xvii. Commissioner of Central Excise, Chandigarh vs. Neepaz Steels (India),
MANU/CE/8487/2007 : (2008) 230 ELT 218;
xviii. GheruLal Bal Chand vs. State of Haryana and Others, MANU/PH/2876/2011 :
(2012) ILR 2Punjab and Haryana781;
xix. Mahalaxmi Cotton Ginning Pressing and Oil Industries, Kolhapur vs. The State of
Maharashtra and Ors, MANU/MH/0620/2012;
xx. Shanti Kiran India Private Limited vs. Commissioner Trade and Tax Department,
MANU/DE/0058/2013;
xxi. On Quest Merchandising India Private Limited and Ors., vs. Government of NCT of
Delhi and Ors., MANU/DE/3276/2017;
xxii. DuniChondRataria vs. Bhuwalka Brothers Ltd., MANU/SC/0038/1954;
xxiii. KalwaDevadattam and Others vs. The Union of India and Others,
MANU/SC/0106/1963 : (1964) 3 SCR 191, AIR 1964 SC 880;
xxiv. Addagada Raghavamma and another vs. AddagadaChenchamma and another,
MANU/SC/0250/1963 : (1964) 2 SCR 933, AIR 1964 SC 136;
xxv. Debi Prasad (Dead) By L.R.S. vs. Smt. Tribeni Devi and Others,
MANU/SC/0354/1970 : 1970 (1) SCC 677;
xxvi. Union of India vs. M/s.ChaturbhaiM.Patel& Co., MANU/SC/0046/1975 : (1976) 1
SCC 747;
xxvii. State of Kerala vs. K.T.ShaduliYusuff, MANU/SC/0303/1977 : (1977) 39 STC 478
(SC);
xxviii. State of U.P. and Others vs. M/s.Indian Hume Pipe Company Limited,
MANU/SC/0305/1977 : (1977) 2 SCC 724;
xxix. Deputy Commissioner (CT), Coimbatore Division, Coimbatore-2 vs. Sivakumar and
Company, MANU/TN/0550/1979;
xxx. Lakshmi Steel Traders vs. Board of Revenue (Commercial Taxes),
MANU/TN/0345/1990 : (1991) 82 STC 406 (MAD);
xxxi. Madras Granites Private Limited vs. Commercial Tax Officer, Arisipalayam Circle,
Salem and Another, MANU/TN/2827/2002 : (2006) 146 STC 642 (MAD);
xxxii. Godrej Sara Lee Limited vs. Assistant Commissioner and another,
MANU/SC/0513/2009 : (2009) 14 SCC 338;
xxxiii. State of Tamil Nadu vs. A.N.S.Guptha and Sons, MANU/TN/3786/2009 : (2011)
38 VST 45 (MAD);
xxxiv. Reliance Jute and Industries Limited vs. C.I.T.West Bengal, Calcutta,
MANU/SC/0338/1979 : (1980) 1 SCC 139;
xxxv. M/s.Bharat Barrel and Drum Mfg.Co.Ltd and another vs. The Employees State
Insurance Corporation, MANU/SC/0502/1971 : 1971 (2) SCC 860;
xxxvi. State of Maharashtra vs. SureshTrading Company, MANU/SC/1740/1997 : (1997)
11 SCC 378;
xxxvii. Tarun Creation vs. Commercial Tax Officer, Bazaar Circle, Tirupur,
MANU/TN/6473/2020 : (2020) 82 GSTR 449 (Mad);

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 xxxviii. Magadh Sugar and Energy Limited vs. State of Bihar and others,
MANU/SC/0706/2021;
xxxix. Poppatlal Shah vs. The State of Madras, MANU/SC/0074/1953 : (1953) 4 STC 188
(SC);
xl. The State of Kerala and Others, vs. Annam and Others, MANU/KE/0013/1969;
xli. Heinz India Private Limited and another vs. State of Uttar Pradesh and Others,
MANU/SC/0229/2012 : (2012) 5 SCC 443;
xlii. Sudesh Kumar vs. State of Uttarakhand, MANU/SC/7022/2008 : (2008) 3 SCC 111;
xliii. Oryx Fisheries Private Limited vs. Union of India and Others, MANU/SC/0921/2010
: (2010) 13 SCC 427;
xliv. Duni Chand Rataria vs. Bhuwalka Brothers Ltd., MANU/SC/0038/1954 : (1955) 1
SCR 1071, AIR 1955 SC 182;
xlv. BayyanaBhimayya and Sukhdevi Rathi vs. The Government of Andhra Pradesh,
MANU/SC/0280/1960 : (1961) 12 STC 147 (SC);
xlvi. Uniworth Textiles Limited vs. Commissioner of Central Excise, MANU/SC/0060/2013
: (2013) 9 SCC 753;
xlvii. Calcutta Discount Company Limited vs. Income Tax Officer, Companies District-1,
Calcutta and Another, MANU/SC/0113/1960 : (1961) 2 SCR 241;
xlviii. State Trading Corporation of India Limited and another vs. State of Mysore and
another, MANU/SC/0346/1962 : (1963) 3 SCR 792, AIR 1963 SC 548;
xlix. Tata Engineering and Locomotive Company Limited vs. Assistant Commissioner of
Commercial Taxes, MANU/SC/0318/1967 : (1967) 2 SCR 751, AIR 1967 SC 1401;
l. Hansraj Gordhandas vs. H.H.Dave, Assistant Collector of Central Excise and Customs,
Surat and Others, MANU/SC/0265/1968 : (1969) 2 SCR 253;
li. Raza Textiles Limited vs. Income Tax Officer, Rampur, MANU/SC/0333/1972 : (1973)
1 SCC 633;
lii. Controller of Estate Duty, Madras vs. Smt. Parvathi Ammal, MANU/SC/0333/1974 :
(1975) 4 SCC 176;
liii. K.Gopinath Nair and others vs. State of Kerala, MANU/SC/0467/1997 : (1997) 10
SCC 1;
liv.Commissioner of Central Excise, Chandigarh vs. Pepsi Foods Limited,
MANU/SC/1049/2010 : (2011) 1 SCC 601;
lv. Whirlpool Corporation vs. Registrar of Trade Marks, Mumbai and Others,
MANU/SC/0664/1998 : (1998) 8 SCC 1;
lvi. State Government Houseless Harijan Employees Association vs. State of Karnataka
and Others, MANU/SC/0800/2000 : (2001) 1 SCC 610;
lvii. Collector of Central Excise, Bombay vs. Maharashtra Fur Fabrics Limited,
MANU/SC/1456/2002 : (2002) 7 SCC 444;
lviii. Commissioner of Central Excise, Hyderabad vs. Sunder Steels Limited,
MANU/SC/0116/2005 : (2005) 3 SCC 363;

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 lix. Sandur Micro Circuits Limited vs. Commissioner of Central Excise, Belgaum,
MANU/SC/7761/2008 : (2008) 14 SCC 336;
lx. Meera Sahni vs. Lieutenant Governor of Delhi and Others, MANU/SC/7878/2008 :
(2008) 9 SCC 177;
lxi. Commissioner of Central Excise, Bhubaneshwar-I vs. Champdany Industries
Limited,MANU/SC/1611/2009 : (2009) 9 SCC 466;
lxii. J.Jayalalithaa and Others vs. State of Karnataka and Others, MANU/SC/0994/2013 :
(2014) 2 SCC 401;
lxiii. Commissioner of Income Tax (Central)-I, New Delhi vs. Vatika Township Private
Limited, MANU/SC/0810/2014 : (2015) 1 SCC 1;
lxiv. Union of India and another vs. Indusind Bank Limited and another,
MANU/SC/1016/2016 : (2016) 9 SCC 720;
lxv. Jayam and Company vs. Assistant Commissioner and another, MANU/SC/0956/2016
: (2016) 15 SCC 125;
lxvi. Parle Agro Private Limited vs. Commissioner of Commercial Taxes, Trivandrum,
MANU/SC/0646/2017 : (2017) 7 SCC 540;
lxvii. Shanti Kiran India Private Limited vs. Commissioner Trade and Tax Department,
MANU/DE/0058/2013 : [2013] 57 VST 405 (Delhi);
lxviii. Infiniti Wholesale Limited vs. Assistant Commissioner (CT), Koyambedu
Assessment Circle, Koyambedu, Chennai, MANU/TN/2337/2014 : [2015] 82 VST (Mad);
lxix. Sri Lakshmi Textiles vs. Commissioner of Commercial Taxes, Ezhilagam, Chepauk,
Chennai and another, MANU/TN/3059/2015 : [2016] 93 VST 202 (Mad);
lxx. Computer Consultants vs. Assistant Commissioner (CT), Hosur (South) Assessment
Circle, Hosur and another, MANU/TN/3901/2016 : [2017] 97 VST 391 (Mad);
lxxi. Faiveley Transport Rail Technologies India Limited vs. Assistant Commissioner
(CT), Hosur (South), Hosur, MANU/TN/1671/2016 : [2017] 97 VST 395 (Mad);
lxxii. Collector of Central Excise, Pune and Others vs. Dai Ichikarkaria Limited and
others, MANU/SC/0467/1999 : 1999 (112) ELT 353 (S.C.);
lxxiii. Additional Commissioner of Income Tax vs. Bahri Bros. Private Limited, (2007)
213 ELT 100;
lxxiv. GheruLal Bal Chand vs. State of Haryana and Others, MANU/PH/2876/2011 :
(2012) ILR 2 Punjab and Haryana 781;
lxxv. Shanti Kiran India Private Limited vs. Commissioner Trade and Tax Department,
MANU/DE/0058/2013;
lxxvi. Assistant Commissioner (CT), Broadway Assessment Circle, Chennai vs. Bhairav
Trading Company, MANU/TN/2035/2016 : [2015] 96 VST 315 (Mad);
lxxvii. Assistant Commissioner (CT), Presently Thiruverkadu Assessment Circle, Kolathur,
Chennai vs. Infiniti Wholesale Limited, MANU/TN/4081/2016 : [2017] 99 VST 341
(Mad);
lxxviii. Jayam and Company vs. Assistant Commissioner and another,
MANU/SC/0956/2016 : [2016] 96 VST 1 (SC);

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 lxxix. Govardhan M. vs. State of Karnataka, MANU/KA/2105/2012;
lxxx. M/s.K.Sashidhar vs. Indian Overseas Bank and Others, MANU/SC/0189/2019 :
2019 (12) SCC 150;
lxxxi. M/s.UMC Technologies vs. Food Corporation of India and another,
MANU/SC/0858/2020 : 2021 (2) SCC 551;
lxxxii. Anglo French Textiles vs. Cestat, Chennai, MANU/TN/4598/2018 : 2018 (362)
E.L.T. 576 (Mad.);
lxxxiii. Madan Lal Arora vs. The Excise and Taxation Officer, Amritsar,
MANU/SC/0307/1961 : [1961] 12 STC 387 (SC) lxxxiv. Transworld Shipping Services
Private Limited vs. Government of India, MANU/TN/0976/2018 : 2018 (361) E.L.T. 176
(Mad.);
lxxxv. Mr.J.Sheikparith vs. The Commissioner of Customs (Sea port-Exports) Chennai,
The Additional Director General Directorate of Revenue Intelligence South Zonal Unit,
Chennai, MANU/TN/5221/2020 : 2020 (9) TMI 311.
8. On behalf of the respondents CTD (Commercial Tax Department), following cases were cited:-
(a) Commissioner of Income Tax (Central)-I, New Delhi vs. Vatika Township Private
Limited, MANU/SC/0810/2014 : (2015) 1 SCC 1;
(b) Allied Motors Private Limited vs. Commissioner of Income Tax, Delhi
MANU/SC/0317/1997 : (1997) 3 SCC 472;
(c) Commissioner of Income Tax-I, Ahmedabad vs Gold Coin Health Food Private
Limited, MANU/SC/3523/2008 : (2008) 9 SCC 622;
(d) Zile Singh vs. State of Haryana and Others, MANU/SC/0876/2004 : (2004) 8 SCC 1;
(e) Jayam and Company vs. Assistant Commissioner and Another, MANU/SC/0956/2016
: (2016) 15 SCC 125;
(f) ALD Automotive Private Limited vs. Commercial Tax Officer Now upgraded as
Assistant Commissioner (CT) and Others, MANU/SC/1168/2018 : (2019) 13 SCC 225;
(g) C.Bright, Managing Trustee, K.S.M.Educational& Charitable Trust vs. District
Collector and others, MANU/TN/3844/2019;
(h) Union of India and Others vs. A.K.Pandey MANU/SC/1665/2009 : (2009) 10 SCC
552;
(i) Commissioner of Income Tax, Bhopal vs. Shelly Products and another,
MANU/SC/0399/2003 : (2003) 5 SCC 461;
(j) State Bank of India vs. V.Ramakrishnan and another, MANU/SC/0849/2018 : (2018)
17 SCC 394;
(k) S.Sundaram Pillai and Others vs. V.R.Pattabiraman and others, MANU/SC/0387/1985
: (1985) 1 SCC 591;
(l) Madhav Steel Corporation vs. State of Gujarat MANU/GJ/1300/2013 : (2014) 72 VST
318 (Guj);
(m) Bharat Coop. Bank (Mumbai) Ltd., vs. Cooperative Bank Employees Union,
MANU/SC/1574/2007 : (2007) 4 SCC 685;
(n) M/s.Mahalakshmi Oil Mills vs. State of Andhra Pradesh, MANU/SC/0314/1988 :

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 (1989) 1 SCC 164;
(o) Punjab Land Development and Reclamation Corporation Limited, Chandigarh vs.
Presiding Officer, Labour Court, Chandigarh and Others, MANU/SC/0479/1990 : (1990) 3
SCC 682;
(p) M/s.Schwing Stetter (India) Private Limited vs. The Commissioner of Commercial
Taxes and another, in the High Court of Madras in W.P. Nos. 37604 and 37605 of 2007
and others dated 05.04.2016;
(q) Sri Vinayaga Agencies vs. The Assistant Commissioner (CT), Vadapalani I
Assessment Circle and Another,MANU/TN/1386/2013 : (2013) 60 VST 283 (Mad);
Tax Cases (T.C.)
9. We shall first narrate the brief facts of the cases in these Tax Cases. These Tax Cases arise out
of a Common Order passed by the Sales Tax Appellate Tribunal (herein after referred to as
'STAT') in Coimbatore in Sales Tax Appeal Nos. 91 to 93 of 2016.
10. These appeals were filed by the Commercial Tax Department before STAT against order of
the Appellate Deputy Commissioner (CT)(FAC) partly allowing the appeals and partly remanding
the cases back to the Assessing Officer for the following Assessment Year as detailed below:-
TABLE-I

11. The petitioners in the above Tax Cases is a dealer. After, monthly returns were filed for the
respective assessment years, the assessments were reopened and revised assessment order were
passed based on the report received from inspection conducted at the place of the business of
the petitioner.
12. The petitioner herein had earlier filed a Writ Petition before this Court in W.P. Nos. 21963 to
21965 of 2015. These Writ Petitions were disposed by directing the petitioner to file a statutory
appeal against the assessment orders that came to be passed on 26.05.2015. Thus, the petitioner
preferred a statutory appeal before the Appellate Deputy Commissioner (CT) (FAC), Erode in AP.
Nos. 155 to 157 of 2015. These appeals were partly allowed. Aggrieved by the same, the State
preferred appeal before the Sales Tax Appellate Tribunal (STAT) in Appeal Nos. 91 to 93 of 2016.
1 3 . Relevant portion of the impugned common order of Sales Tax Appellate Tribunal
(STAT)reads as under:
"7. Both sides argument was heard and the written statements filed were examined with
reference to the records produced by both parties. The points raised for consideration in
this present appeal are as below:-
IA

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 Note: There is no need for any discussion on capital goods because, the revenue
in the form prescribed have not included the same as the relief claimed. So also,
for the reasons that the first appellate authority has given certain extent of relief
on capital goods leaving the balance as remanded. Nowhere in the orders
issued, it was quantified for the remanded portion. As the claim on any capital
goods was sought for relief provided for in form A, the question of discussion
on such point does not arise. So, the point for consideration in this appeal
would be as follows:-
Point (a) and (b)
8 . The dispute involved in these two category is the reversal ITC due to
cancellation of registration of selling dealers, for three years in respect of item
No. (a) and for two years in respect of item No. (b) which is related to particular
dealers.
i. In respect of (a) both before the first appellate authority and before
this Tribunal the respondent dealers furnished evidences to the effect
that the dealers registration was cancelled with retrospective effect and
in such cases the reversal ITC made is not justifiable as decided in
many decisions like in the case of JINSAN Distributors vs. Commercial
Tax Officer, Chennai reported in 59 VST 256.
ii. As rightly given with findings by the first appellate authority this
dispute, it is a matter of issue on "covered decisions" that were relied
on both by the dealer and by the first appellate authority for the reason
of which no need to repeat them.
iii. In cases relating to certain specific dealers ie., Masani Industries and
Senthur Murugan sunlight board, the respondent dealers had sufficient
proof for the inadvertent mistake of furnishing the TIN number of their
erstwhile registration numbers or the inadvertent mistake adopted by
the assessing authority in taking consideration of the date of
constitutional change of registration. As such there is no reasonableness
in making the reversal tax credit in respect of the items referred to in
point No. (b) above.
9 . So. Considering the above facts, we are of the view that the first appellate
authority had rightly deleted the reversal ITC of Rs. (Rs. 244821-00+252492-
00+93535-00+343528-00+467600-00) (for the years 2010-11, 2011-12 and

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 2012-13) aggregating to Rs. 14,03,976-00 involved in item No. (a) and (b)
above, and hence this forum find no reasons to interfere in the deletion of the
reversal ITC involved in item No. (a) and (b) above.
12.Therefore this appellate Tribunal is of the considered view to concur with the
findings of the first appellate authority in deletion of the above reversal tax
credit and it is ordered accordingly in favour to the respondent/dealer.
Point (c)
Rev.ITC on selling dealer not paid:
13 As for as this issue is concerned, though the respondent/dealers produced
tax invoices to the effect that they are in possession of the same, as rightly
contended by the revenue, they never prepared to come forward to produce the
material evidencesfor the proof of movement of goods from the selling dealer.
The decision reported in 82 VST 324 of Hon'ble High Court of Gujarat in which it
was held that "However while claiming input tax on the purchases, the dealer
was also required to prove and establish the actual movement of goods and the
genuineness of the transaction. Mere production of the bills, vouchers etc., was
not sufficient to claim the input tax credit".
14. Therefore considering the facts that the respondent/dealer had not proved
the movement of proof but claimed only on the ground of possession of the tax
invoice, which alone is not sufficient to claim the input tax credit, as per the
principles laid down in the decision reported in 82 VST 324. But in this case
such evidences were not produced. Moreover, the respondent dealer ought to
have produced relevant Bank statement for proof of having the receipt of
consideration by the selling dealer on those transaction of sales. Only after
discharging these kind of burden of proof, the purchaser could be exonerated
from the liability. For making such kind of investigation on these point of proof,
we are of the view and considered view that it would be appropriate to remand
this portion of dispute to the assessing authority for making investigation as per
the guidelines issued in Para 4 of the circular issued by the Commissioner of
Commercial Taxes in Circular No. 5/2021 (I.W10/12521/2016/dated
24.02.2021).
15. We are therefore hold to remit back the reversal ITC of Rs. 21,32,351-00,
Rs. 17,22,838-00 and Rs. 24,53,056-00 respectively, relating to the year 2010-
11, 2011-12 and 2012-13 falling under the category (C) and it is ordered
accordingly.
Point (d)
Levy of penalty
16. It is found that the assessing authority has invoked Section 27(4) of the Act which
warrants levy of penalty in cases of fraud, mis statement, production of false bills with
intention to evade tax.
the decision of the Honourable STAT (MB) in the case of State of Tamilnadu vs.
Indra Industries, Katpadi in STA No. 127/2016 dated 22.06.2016 wherein it was
held that "In fact penalty under Section 27(4) of the Act could be invoked only
in the case where there is wrong availment of input tax credit by producing false
bills, vouchers, declaration certificates with a view to support his claim of input
tax credit and it has to be levied on a graded scale as prescribed under sub
section (4) of section 27 of the TNVAT Act".
17. In the present case of the appeal, the levy of penalty was made not on account of
any reasoning of fraud, mis-statement or production of any false bills. Therefore the

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 decision cited above squarely applies to the case. The orders of the first appellate
authority in deleting the levy of penalty is therefore ordered to be up held and ordered
accordingly.
In fine,
i. Point No. (a), (b) and (d) are decided in favour to the dealer and against the
revenue.
ii. Point No. (c) is remanded back to the assessing authority.
In the result, the state appeal filed in CTSA 91/2016, 92/2016 and 93/2016 are "Partly
Dismissed and Partly Remanded".
14. In these appeals, the appellant has raised the following questions of law:-
"6. Questions of law raised for decision by this Hon'ble High Court:
(a) Whether in the facts and circumstances of the case, the Hon'ble Appellate
Tribunal was correct, in law, in passing the impugned order on a ground which
never formed part of the appeal of the Respondent before Appellate Tribunal?
(b) Whether in the facts and circumstances of the case, the Hon'ble Appellate
Tribunal was correct, in law, in passing the impugned order against the
principles of law laid down by the Apex Court in the cases of Bachhaj Nahar v.
Nilima Mandal and Anr. MANU/SC/8199/2008 and Warner Hindustan Limited vs.
CCE-MANU/SC/1016/1999 : 1999 (113) ELT 24 (SC)?
(c) Whether in facts and circumstances of the case, the Hon'ble Appellate
Tribunal was correct, in law, not following the judgments passed by this Hon'ble
Court in Althaf Shoes (P) Ltd vs. Asstt. Commissioner-MANU/TN/5302/2011; Sri
Vinayaga Agencies vs. Assistant Commissioner (CT) and Another-
MANU/TN/1386/2013 and D.Y.Beathel Enterprises vs. State Tax Office-
MANU/TN/1459/2021 : 2021-TIOL-890-HC-MAD-GST, which involved facts and
circumstances identical to those involved in the present case in complete
violation of principles of judicial discipline?
(d) Whether in the facts and circumstances of the case, the Hon'ble Appellate
Tribunal was correct in travelling beyond the scope of papers and objections on
record and relying on the judgment of the Hon'ble High Court of Gujarat in the
case of Shree Bhairav Metal Corporation vs. State of Gujarat-82 VST 324,
wherein, the order was passed based on completely different set of facts and
circumstances vis-a-vis facts and circumstances obtaining in the present case?
(e) Whether in the facts and circumstances of the case, the Hon'ble Appellate
Tribunal was correct, in law, in passing the impugned order against the
observation/directions of this Honorable Court contained in the order dated
22.07.2015 passed in the petitioner's own case?
(f) Whether in the facts and circumstances of the case, the Hon'ble Appellate
Tribunal was correct in passing the impugned non-speaking order without giving
any findings on the submissions made by the petitioner in complete violation of
principle of natural justice, fair play and equity?
(g) Whether in the facts and circumstances of the case, the Hon'ble Appellate
Tribunal was correct in passing the impugned non-speaking order without giving
any finding on the documents submitted by the petitioner in support of its claim
for ITC in complete violation of principle of natural justice, fair play and equity?
15. In support of the case of the petitioner in T.C. Nos. 19, 20 & 21 of 2022 (Tvl.Sahyadri

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 Industries Limited), learned counsels for the petitioner Mr.Mahesh Raichandran and C.Suraj
submitted as follows:-
"2.1 First, the Appellate Tribunal remanded the matter back to the assessing officer on a
basis/reason/ground which never formed part of the proceedings of the respondent from
audit stage to the appeals filed before the Appellate Tribunal. It is well settled law that
the court or tribunal cannot make a new case at tribunal stage which was never pleaded
before it. In this connection reference was made to Reckitt & Colman of India Ltd vs.
Collector of Central Excise-MANU/SC/1522/1997 : 1996 (88) ELT (SC)-Para 3 refers;
Warner Hindustan Limited vs. CCE-MANU/SC/1016/1999 : 1999 (113) ELT 24 (SC)-Para
2 refers; &Saci Allied Products Ltd vs. CCE-MANU/SC/0320/2005 : 2005 (183) ELT 225
(SC)-Paras 17, 18 & 19 refers.
2.2 Second, the issue of denial of ITC on account of selling dealers not filing Form-I
return is settled in favor of the petitioner through judgments of this Hon'ble Court.
Kindly see: (i) Althaf Shoes (P) Ltd-Paras 3, 9 & 10 refers; (ii) Sri Vinayaga Agencies-
Paras 6, 8 & 10 refers & (iii) Infiniti Wholesale Ltd-Paras 4, 9, 22, 23 & 24 refers. These
judgments were submitted at the time of hearing and form part of the first typed set.
The Appellate Tribunal has overlooked and ignored the above binding precedents in clear
violation of principles of judicial discipline and decorum.
2.3 Third, the petitioner submits that reliance on the judgement of the Hon'ble Gujarat
High Court in the case of Shree Bhairav Metal Corporation is completely misplaced and
out of context. In the said case, the registration certificate of the selling dealer of the
assessee stood cancelled and it was alleged that M/s Lucky Enterprises is not a genuine
dealer and had indulged in to billing activities and all the transactions were found to be
bogus and non-genuine. Para 2of the said judgment refers. There is no such case or
facts here. There is no allegation/ finding that the Petitioner's suppliers were indulged in
any sort of bogus or non-genuine transactions. the registration certificate or the
existence of the selling dealer of the petitioner was never under doubt or dispute
throughout the course of the above proceedings. Therefore, the above judgement has no
relevance/applicability in the facts of the present case. It is well settled that no decision
can be read ignoring the facts of that case and the points which arise for determination
in that case. Kindly See:Union of India and Others v. Dhanwanti Devi and Others
MANU/SC/1272/1996 : (1996) 6 SCC 44-Para 10 refers.
2 . 4 Fourth, without prejudice, Para 4 of Circular No. 5/2021 dated 24.02.2021
categorically clarifies that for the period up to 2013-14, the notice issued for the first
would be hit by limitation. Once this is the case, there is no question of the above
circular having any application in the facts of the present case as the period of dispute is
2010-11, 2011-12 & 2012-13 and the proceedings, if any, at the end of the selling
dealer stand barred by limitation. Be that as it may, Rule 6(11) of the TN VAT Rules,
2007, inter alia, provides that accounts maintained by a registered dealer shall be
preserved by him for a period of six years from the date of assessment (previously five
years-six years effective from 2012). Therefore,the so called purported fresh
investigation in terms of Circular No. 5/2021 dated 24.02.2021 is an impossibility as the
selling dealer may not possess the accounts/records/documents pertaining to the period
under dispute-2010-11, 2011-12 & 2012-13.
2.5 Assuming whilst vehemently denying, even if the condition of delivery/movement of
goods is to be taken as applicable in the facts of the present case, the same would not
affect the eligibility of ITC at the hands of the petitioner in the present facts for the
reasons explained infra.
2.6 First, the presumption is that any amendment is prospective and not retrospective,
unless there is a specific mention or implicit indication. In the present case, there is no
such mention or indication in the proviso to section 19 of the TNVAT Act, 2006. Per
contra, it is clearly provided and stated that the amendment would be operative from
14th October, 2015.

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 2.7 Second, an amendment to a substantive provision cannot be retrospectively applied.
The condition of 'delivery of goods' is a substantive provision in itself. It is not
procedural in nature. Hence, in the instant case, the proviso inserted in section 19 is not
a clarificatory provision.
2 .8 Third, in the case of CIT v. Vatika Township Private Ltd.-MANU/SC/0810/2014 :
(2015) 1 SCC 1, the Hon'ble Supreme Court has clarified the position regarding general
principles against retrospectivity as principle of 'fairness' while holding that legislations
which modified accrued rights or which impose obligations or impose new duties or
attach a new disability have to be treated as prospective.
2 . 9 Fourth, an assessee cannot be asked to reverse input tax credit which he has
rightfully availed based on law which existed during that period. We may refer to
decision of the Hon'ble Supreme Court in CCE vs. Dai IchiKarkaria Limited.
MANU/SC/0467/1999 : 2002-TIOL-79-SC-CX-LB where it was held that credit once
rightfully earned is an indefeasible right. Thus, where the petitioner has earned the
credit under section 19 of the Act, prior to the amendment/ introduction of the proviso,
it would not be hit by the amended provision.
2.10 Similarly, in Eicher Motors Ltd. vs Union of India &Ors-MANU/SC/0051/1999 :
2002-TIOL-149-SC-CX-LB, the Hon'ble Supreme Court refused to apply a modified rule
to previous tax period wherein the assessee had already paid the tax and availed modvat
credit.
2.11 Fifth, the intention of the Legislature has to be gathered from the language used.
Even if it is assumed that there was an intention to provide cure to the existing
provision, the same must flow from the language of the provision. The legislature says
what is means and means what it says. There is no room for intendment or logic or
presumption.
2.12 Sixth, the Ld. Assistant Solicitor General, during the course of hearing, relied upon
the provisions of Section 64 of the TNVAT Act to buttress his arguments with respect to
retrospective applicability of the amendment to Section 19. The petitioner submits that
reliance on Section 64 is completely misplaced and out of context. The said provision
only provides for maintenance of accounts by the dealer. The said provision has no
relevance for the issue under dispute. The said provision does not contain any condition
for availment of ITC. The said provision has no reference to the provisions of Section 19
or vice-versa. Therefore, reliance on the same is of no relevance for the issue under
dispute.
2.13 In view of the above submissions and judgments, the impugned order has no legs
to stand and the same must be quashed and set aside."
16. There is no final determination on the issue which has been remanded back. The assessment
orders pre-date the amendment to Section 19(1) of TNVAT Act, 2006 with effect from
29.01.2016 vide Tamil Nadu Act, 13 of 2015.
1 7 . Although the Writ Appeals and Writ Petitions were argued as if the issues therein were
confined to denial of input tax credit availed under Section 19(1) of the TN VAT Act, 2006, it was
noticed that there were several other issues also in the assessment orders which was challenged
before the Writ Court and before this Court in this connected Writ Petitions/Writ Appeals.
1 8 . The learned counsels who appear for the Writ Petitions and Writ Appeals have made
elaborate submissions on this scheme of TN VAT Act, 2006 to persuade as to held that input tax
credit availed by the petitioners and the writ appellants cannot be denied. Therefore, we will
reproduce important submissions of the counsels in these Writ Petitions/Writ Appeals, before we
answer the issue.
19. In support of the case of the appellant in W.A. No. 2714 of 2021 (M/s. Sameera Timbers and

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 Plywoods), learned Counsel Mr.S.Ramanathan submitted as follows:-
(1) Reversal of ITC for the reason that no documents in proof of movement of goods
were filed is not correct.
(2) The amendment Act 13/2015 which is to the effect that the delivery of goods has to
be proved is with effect from 29.1.2016.
(3) The assessment year relates to 2011-12. As per the provision existed during that
period, it is enough if it is proved that tax has been paid on the purchases effected as
per Section 19(1) of the TN VAT Act read with Rule 10(2) of the TN VAT Rules. The show
cause notice and the orders were passed prior to the amendment.
(4) Original Invoices-Proof for payment-Monthly return of the sellers was filed. The ITC
was reversed that no proof for movement of goods were filed.
(5) The Respondent has reversed the ITC stating that the registration certificate of the
sellers were cancelled with retrospective effect.
(6) The Petitioner has purchased the goods when the registration certificates of the
sellers were in force and for retrospective cancellation, ITC cannot be reversed.
(7) The issue is covered by the decision reported in 59 VST Page 256-Madras High Court
in the case of Jinsasan Distributors. The Hon'ble Court in W.P. No. 34743 of 2014 dated
23.12.2014 has held that the above reason is not sustainable.
(8) The Petitioner has filed invoice copies in proof of payment of tax. The Petitioner has
filed the monthly returns of the sellers. The Sellers registration was in force when the
petitioner effected the purchases. As per the decision of the Madras High Court in the
case of JKM Graphics Limited, reported in MANU/TN/0753/2017 : 99 VST page 343 and
the clarification of the commissioner enquiry has to be made on the sellers also.
(9) Originally Respondent levied Penalty at 50% of the tax as per Section 27(4) (i) of
the Act. After remand, the Respondent has levied Penalty at 150% of the tax, which is
against the provisions of the Act and without any authority of law as there is no
provision to levy penalty at 150% as per Section 27(4) of the Act on the date of
assessment order which is dated 27.02.2015. As per section 27(4) (i) of the act, penalty
to be levied is at 50% if it is first detection and as per section 27(4) (ii) penalty to be
levied is at 100%, if it is second and subsequent detection. There is no provision to levy
penalty at 150% before amendment. No show cause notice was also issued proposing to
levy penalty at 150% of tax. This is against the provision of Section 27(4) proviso.
2 0 . In support of the case of the appellants in W.A. Nos. 2637 to 2640 of 2021 (Tvl.Selva
Furnitures), W.A. Nos. 119, 125, 131 & 135 of 2022 (M/s.SSB Industries) and W.A. Nos. 1194,
1195, 1197 & 1201 of 2022 (M/s.Amman Industries), learned counsel Mr.N.Prasad submitted as
follows:-
(1) "Enquiry"-It is most respectfully submitted, that Section 27(2) requires
determination "after" making an enquiry. Thus,assessment must be preceded by an
enquiry. The enquiry is at two stages, namely, prior to the commencement of
assessment and after the commencement of assessment-reference was invited to (i)
1977-39 STC page 478 (SC) (at page additional typeset-Volume-I in WA No. 119/2022-
page 71 at page 76). (ii) 2017-99 VST page 343 (MAD) (page 45-Case Laws Volume-II
in WA No. 119/2022, at pages 74, 77, 78, 79. It was submitted that in the second case,
even while noticing that there were allegations of bogus transactions, this Hon'ble Court
found the need for a mechanism for proper enquiry. Vide paras 23 & 56. The mechanism
was formed vide Circular No. 5/2021 dated 24.02.2021 issued by the Principal
Secretary/Commissioner of Commercial Taxes and directed to be applied by this Hon'ble
Court in WP No. 929 of 2021 dated 26.11.2021-vide page 30 of Volume IV-WA No. 2637
of 2021. There is no writ appeal by the Revenue against this order.

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 (2) The allegation in the show cause notice was one of collusion with the buyer to pass
on input credit without transaction of sale. The alleged revenue loss is that though there
is no transaction of sale made by the Appellant, the Appellant has issued tax invoices to
buyers to enable such buyers to have input tax credit which those buyers would have,
used, for payment of tax on sale of goods effected by them from unaccounted purchases
made by those buyers-allegation in Notice dated 24.02.20216-page 24-A in W.A.2637 of
2021. There was no enquiry with the buyer. If the charge was one collusion, the buyer
ought to have been enquired. Collusion is a pact between two people to defraud a third
person. Kindly see MANU/SC/0330/1984 : 1984 (1) SCC page 612-page 4 Volume II at
page 10 (para 11). Thus the need for enquiry. There is also no enquiry with the
assessment circles of the vendor and the buyer, though tax payment by buyer is proved.
(3) It was further submitted that the power to enquire is available under Section 81 of
the Act. The assessing authority is like a Civil Court and must make an enquiry. Kindly
see 2011-38 VST page 45 (MAD) (page 110 additional typeset-Volume-I in WA No.
119/2022 at page 116 to 121).
(4) Failure to conduct an enquiry is in violation of principles of natural justice-kindly see
1977-29 STC page 378-page 76, at page 77, 78 additional typeset-Volume-I in WA No.
119/2022.
(5) It is most respectfully submitted that, the tax law to be applied is the law prevailing
during the relevant assessment year. Kindly see MANU/SC/0338/1979 : 1980 (1) SCC
page 139-page 1 Volume IV (WA No. 2637/2021 at page 3): Civil Appeal No. 299/2002
dated 29.03.2007-page 1 (Volume-III at page 2-para 3), (page 5-para 8), (page 6-para
9). Thus, Section 19(1) and Rule 10(2) prior to 29.01.2016 is to be applied, for the prior
Assessment Years.
(6) It is most respectfully submitted that credit is a vested right. ( MANU/SC/0051/1999
: 1999 (2) SCC page 361-page 18 Volume IV (para 5).
(7) It was further submitted that, the substituted proviso inserted by TN Act 13 of 2015,
is substantive and therefore prospective, because it is restriction on existing right. A law
which imposes a restriction on right is substantive law. Kindly see MANU/SC/0502/1971
: 1971 (2) SCC page 860-page 4-Volume IV Case Laws in WA No. 2637/2021 (paras 6 &
10).
(8) Contradictions in the Assessment. It is submitted that, the Assessments suffer from
the following contradictions. It was submitted that, the impugned assessments, even
while, looking to disallow, the input tax credit, on the ground that that the purchases
and sales of the Appellants are make believe, yet retain the output tax paid by the
Appellant.While disallowing the input tax credit at the hands of the Appellant, the output
tax by the Vendors, is not refunded to the Vendors who are registered dealers and whose
registration is recorded in the impugned Assessment.
(9) Finally, Without prejudice submission, to the above contention, It was submitted,
that, if it is found that substituted proviso is retrospective, "actual delivery", includes
constructive delivery. The expression "actually" occurs in two places of the substituted
proviso. "Actually" is in reference to a fact which has actually occurred and does not
refer to the quality of delivery. Kindly see AIR 1969 KER page 38 (page 77 Volume IV in
WA No. 2637/2021 at page 82 (para 14).
(10) It is most respectfully submitted that actual delivery will include constructive
delivery-(i) MANU/SC/0038/1954 : AIR 1955 SC page 182-page 170 Volume IV-WA No.
2637/2021 at page 174 (para 14). (ii) 1961-12 STC Page 147Page 176-Vol. IV-WA 2637
of 2021 at Page 179-VOL IV.
(11) It was submitted that if the substituted proviso to Section 19(1) is construed as
applicable only for actual physical delivery and not actual constructive delivery, then, the

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 substituted proviso to Section 19(1) will be in conflict with Section 3(3) which allows
set off for every category of sale and delivery. Also, while there will be charge or liability
on every type of sale and delivery under Section 3(2) credit will stand denied in cases
involving constructive delivery.
(12) It was submitted that that even if the amended proviso to section 19(1) is found to
apply to the period prior to 29.01.2016 the terms of the proviso may be found satisfied
if the assessee produces "proof of delivery" though not proof of movement. The
amendment does not require proof that the goods have been moved. It only requires
proof that the goods have been "actually delivered".
(13) In reply to the submissions of the Revenue:
i. It was submitted that that the Revenue has placed reliance on Section 19(16)
of the TNVAT Act, 2006. It is submitted that, Section 19(16), can be invoked,
only when, the input tax credit is "incorrect, incomplete or otherwise not in
order". It is respectfully submitted that the claim for ITC may not be treated as
incorrect or incomplete when there is compliance with Section 19(1) and Rule
10(2).
ii. The principle of delivery of goods is implicit in the Scheme of the Act and
placed reliance on Section 64(3) of the Act. The Revenue has placed reliance on
Section 64. It is respectfully submitted that, the question is as regards
requirements under Section 19(1) prior to TN Act 13 of 2015 and not, scope of
Section 64. In any view an invoice is one of the documents under Section 64. It
is respectfully submitted that the Legislature or the Government can provide a
certificate/ form as condition for concession and treat the form as conclusive.
Kindly see MANU/SC/0417/1986 : 1986 (2) SCC page 501-page 12-Volume II at
page 22 (at para 33).
iii. It was further submitted that the Revenue has placed reliance on certain
decisions of the Hon'ble Supreme Court of India. The appellants respectfully
wish to submit as under on the case laws cited by the Revenue.
Sr. Citation given by the Reply of the Appellants
No.
Res p o n d en t/
Revenue
1. 2016 (15)SCC pageIt is respectfully submitted that the
125 (SC) page 99 ofsaid decision e m p h a s i s e s tax
Respondent's case invoice i s relevant for ITC. Kindly
laws set see paragraphs 10, 11 & 12 of the
judgment. Further, the retrospective
operation of the amendment was
struck down holding that credit was
vested right - paragraph 19. This is
under TNVAT Act.
2. 1997 (3) SCC pageIt is respectfully submitted that this
472 (SC) page 66 ofdecision, dealt with insertion of first
Respondent's case proviso to Section 43-B, whose
laws set insertion was to grant relief to the
a s s e s s e e , while avoiding
unintended consequence. The
amendment w a s beneficial - vide
paragraphs 1 0 t o 14. I t w as no t a
provision creating new disability.
3. 2015 (1) SCC page 1I t i s respectfully submitted that the
(SC) page 35 ofd e c i s i o n only held that while
Respondent's case subsequent legislation imposing

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 laws compilation new disability, will be treated as
prospective, fresh legislation
granting relief will be retrospective.
Kindly see paragraphs 28 to 30. It
was also held that when there is no
ambiguity in the prior law,
subsequent law will not be treated
as declaratory - vide paragraph 32.
4. 2008 (9) SCC pageI t i s respectfully submitted that the
622 (SC) - vide page background to the amendment to
75 of Respondent's the Income Tax Act was an
case laws uncertainty in legal position. Kindly
compilation see paragraph 5 of the judgment
which parliament sought to put at
rest. Again, it was found that when
the prior law was unambiguous a
s t a t u t e cannot be treated as
declaratory - vide paragraph 19.
5. 2003 (5) SCC pageIt is respectfully submitted that, it
461 (SC) vide pagewas found that the amendment was
164 of Respondent's intended t o clarify doubts which
case laws existed on account of conflicting
compilation decisions - vide paragraph 38. On
the contrary, as regards, the input
credit under Section 19(1) the law
prior to TN Act 13 of 2015 was
unambiguous and only required
production of tax invoice from
registered seller.

E. Submission on Alternative Remedy:

i. It is most respectfully submitted that failure to conduct an enquiry is in
violation of the principles of natural justice-kindly see-1977 (39) STC page 478
(SC)-page 71 additional typeset volume I-at page 76.
ii. It is most respectfully submitted that whether provision is prospective or
retrospective is a pure question of law-hence Writ will lie-MANU/SC/0513/2009
: 2009 (14) SCC page 338-additional typeset volume 1 in WA 119 of 2022-page
109.
21. In support of the case of the appellant in W.A. No. 451 of 2022 (M/s. JBM Dakshin), learned
counsel Ms.Aparna Nandakumar, submitted as follows:-
MOVEMENT OF GOODS-PROPOSITION
Proposition I : Indefeasible Right to ITC
The fundamental principle of a vat system is the indefeasible right of input tax credit
available to the purchaser of goods.
i. 1. Eicher Motors Limited and Ors v. Union of India MANU/SC/0051/1999 :
1999 (106) ELT 3 (S.C .) [Page No. 1 to 5] Para 5 and 6 at Page 5.
ii. 2. Collector of Central Excise, Pune and Ors. v. Dai IchiKarkaria Ltd. and Ors.
MANU/SC/0467/1999 : 1999 (112) ELT 353 (S.C.) [Page No. 6 to 16] Para 19 at
Page 13.
iii. Case Law Under Eu VAT :Mahagebenkft v Nemzeti Ado-es Vamhivatal Del-

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 dunantuliRegionalis Ado F?igazgatosaga and Peter David v Nemzeti Ado-es
VamhivatalEszak-alfoldiRegionalis Ado F?igazgatosaga(C-80/11), (C-142/11),
21 June 2012* [Page No. 128 to 138] Para 33 at Page 133; Para 37 to 40 at
Page 134.
Proposition II : Extent of Burden of Proof

1 . Sri Vinayaga Agencies v. Assistant Commissioner (CT) and Ors.

MANU/TN/1386/2013 [Page No. 69 to 72] Para 6 to 11 at Page 71 and 72.
2. Assistant Commissioner (CT), Vadapalani I Assessment Circle and Ors. v. Sri
Vinayaga Agencies MANU/TN/7257/2020 [Page No. 111 to 113] Para 6 to 8 at
Page No. 113.
3. The requirement in similar provisions of Delhi VAT Act that the purchaser has
to establish that the tax has been actually paid by the selling dealer has been
held to be ultra vires and violative of Article 14 of the Constitution of India. SLP
filed by the department against this Judgment is dismissed. On Quest
Merchandising India Pvt. Ltd. and Ors. v. Government of NCT of Delhi and Ors.
MANU/DE/3276/2017; [Page 73 to 91] Para 19 at Page 77 and Para 54 at Page
91.
4. Commissioner Of Trade and Taxes Delhi V. Arise India Limited Special Leave
to Appeal (C) No(s). 36750/2017 Dated 10.01.2018 [Page 92 to 93].
5 . Gheru Lal Bal Chand v. State of Haryana and Ors. MANU/PH/2876/2011 :
(2012)ILR 2Punjab and Haryana781. Challenge to validity of similar provisions
of Haryana VAT Act. [Page 24 to 36] Para 18 at Page 30, Para 34 at Page 36.
6. R.S. Infra-Transmission Ltd. v. State of Rajasthan D.B. Civil Writ Petition No.
12445 /2016 dated 11.04.2018 [Page 94 to 110] Page 110.
7. Mahalaxmi Cotton Ginning Pressing and Oil Industries, Kolhapur v. The State
of Maharashtra and Ors. MANU/MH/0620/2012 [Page No. 37 to 62] Para 6 at
Page 41 and 42, Para 38 at Page 55.
Proposition III : The amendment to proviso by way of substitution is substantive in
nature and prospective AND NOT procedural in nature and retrospective
1 . There has been paradigm shift in the perspective and scope of burden of
proof to be discharged by the purchaser.
2. It creates a new obligation which was not contemplated in the earlier existing
provisions.
3. It cast an onerous responsibility to prove a fact which is beyond the control
and knowledge of the purchaser in the absence of any machinery provisions to

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 supplement the stringent requirement of the amended proviso. Therefore, the
substituted proviso is a substantive provision and the amendment is not
declaratory or procedural and hence the same is only prospective.
4. The amended proviso has altered the substantive right of evidentiary standard
from 'beyond reasonable doubt' to 'preponderance of probabilities'
5 . Commissioner of Income Tax v. Vatika Township Private Limited (2014) 1
SCC 1 [Page No. 18 to 42 ]Para 30 to 39 at Page No. 34 to 42 of the Additional
Typed Set of Papers II
6 . Union of India (UOI) and Ors. v. Ganpati DealcomPvt. Ltd.
MANU/SC/1028/2022 [Page No. 43 to 83 ]Para 17.30 at Page No 80 of the
Additional Typed Set of Papers II
7. Shanti Kiran India Pvt. Ltd. v. Commissioner Trade & Tax Deptt. [Page No. 63
to 68] Para 7 at Page 66, Para 11 at Page 67.
Proposition IV : Actual Delivery
The requirement of actual delivery includes a symbolic and a notional delivery.
The onus of establishing and proving the allegation of tax evasion or fictitious
transactions is only on the assessing authority in the absence of a proper mechanism as
is found in Section 48(2) of the MVAT Act
1 . Duni Chand Rataria v. Bhuwalka Brothers Ltd. MANU/SC/0038/1954 : AIR
1955 SC 182 [Page No. 118 to 124] Page 119 and 123 Para 14.
2 . Commissioner of Central Excise, Chandigarh v. Neepaz Steels (India)
MANU/CE/8487/2007 : (2007) 213 ELT 100 [Page No. 20 to 21].
3 . Commissioner of Central Excise, Chandigarh v. Neepaz Steels (India)
MANU/CE/8487/2007 : (2008) 230 ELT 218 [Page No. 22 to 23]
4 . D.Y. Beathel Enterprises v. The State Tax Officer (Data Cell) (Investigation
Wing) MANU/TN/1459/2021 [Page No. 114 to 117]
5 . Case Law under Eu VAT :Bonik EOOD v DirektornaDirektsia
'Obzhalvaneiupravlenienaizpalnenieto'-Varna
priTsentralnoupravlenienaNatsionalnataagen tsia za prihodite, Case C-285/11, 6
December 2012 Page No. 139 to 146] Page 142, Page 144 Paras 25 to 28, Page
145 and 145 Paras 39 to 43.
6 . Maks Pen EOOD v DirektornaDirektsia 'Obzhalvaneidanachno-
osiguritelnapraktika' Sofia Case C-18/13 dated 13 February 2014 [Page No. 147
to 158] Page 156
2 2 . In support of the petitioner in W.P. No. 12450 of 2019 (M/s.Indo Metal Press Private
Limited), learned counsel Mr.S.Rajasekar, submitted as follows:-
"In the present case, the following substantial questions of law arise for consideration of
this Hon'ble Court:
(1) Whether Input Tax Credit (in short ITC) availed by a Registered Dealer
(Petitioner herein) after complying with the statutory requirements of Section
19(1) of the Tamil Nadu Value Added Tax Act, 2006 (in short the 2006 Act),
read with Rule 10(2) of the Tamil Nadu Value Added Tax Rules, 2007 (in short
the 2007 Rules) can be denied by the Respondent and whether at all Respondent
had any jurisdiction to do so?

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 (2) Whether the conditions and restrictions subsequently inserted in the
statutory provisions prospectively w.e.f. 29.01.2016 can be indirectly insisted
for the earlier periods and whether in that guise, the VAT authorities can apply
the amended law retrospectively?
(3) Whether the VAT authorities can impose conditions and restrictions for
availment of ITC beyond the statutory provisions as the same stood during the
relevant period?
(4) When section 19(10)(a) specifically provides about "Original Tax Invoice"
duly filled, signed and issued by the selling registered dealer and containing the
prescribed particulars as per rule 10 (2) as the relevant document for availing
ITC and when such "Original Tax Invoices" are produced by the assessee,
whether the VAT authorities can disallow ITC on the ground that the assessee
did not produce documents showing "movement of goods"?
(5) In any event whether the Respondent had any jurisdiction to disallow the
entire ITC aggregating to about Rs. 8.11 crores availed by the petitioner during
the assessment period of 2012-13
Ø without specifying or supplying details of even one single invoice or
one single vendor about whom any irregularity was noticed by the
Department;
Ø without making any inquiries from the Supplying Vendors or from the
petitioner's Buyers even though all the Vendors and all the Buyers were
registered dealers under the 2006 Act having their TIN and RC Nos. duly
mentioned in the respective invoices;
Ø and whether such disallowance of entire ITC was arbitrary, illegal and
in violation of the principles of natural justice?
(6) What is the true scope and effect of sections 19 (13) and 19 (16) of the
2006 Act?
(7) Whether in the facts and circumstances of the instant case, conditions
precedent for levy of penalty under Section 27(3)(c) of the 2006 Act existed or
were at all satisfied and whether the levy penalty was patently without
jurisdiction?
2 . It is submitted that the petitioner are fabricators, metal sheet fabricators at
Kancheepuram and assessee on the files of the Assistant Commissioner [ST],
Kelambakkam Assessment Circle, Chennai-the Respondent in TIN No. 33431603265. It
purchases iron and steel goods from registered dealers in Tamil Nadu under cover of
original tax invoices containing all prescribed details about the vendor's name, address,
TIN number, amount of VAT paid etc. On the goods so purchased by the Petitioner, it
availed input tax credit (ITC) of the VAT paid by the vendors as per the tax invoices in
accordance with the provisions of the 2006 Act and the 2007 Rules.
3. The goods purchased by the petitioner were resold by it to registered dealers in Tamil
Nadu. On all sales made by the Petitioner within the State of Tamil Nadu, it paid VAT at
the applicable rates under the 2006 Act. All the said sales were made by the petitioner
under cover of proper tax invoices containing all prescribed particulars about the buyers'
names, addresses, TIN number, VAT paid etc.
4. For the assessment year 2012-2013 the petitioner had duly filed the monthly return in
Form I reporting a total and taxable turnover under TNVAT Act, 2006.The petitioner's
place of business was inspected by the Enforcement Wing Officials on 05.12.2013
wherein certain defects have been noticed.

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 5 . Leaving apart various other defects which have been resolved, the present writ
petition focuses only on the reversal of ITC on the pretext that proof regarding the actual
movement of goods were not furnished.
6. To the various Notices issued, replies were filed by the petitioner which was ignored
and the present impugned proceedings dated 27.03.2019 was issued by the Respondent.
Whether ITC availed by a Registered Dealer after complying with the statutory
requirements of Section 19(1) of the 2006 Act read with Rule 10(2) of the 2007 Rules
can be denied by the VAT authorities and whether the VAT authorities have any
jurisdiction to do so?
1. It is submitted that the Petitioner fully complied with the aforesaid statutory
requirements of Section 19(1) and Rule 10(2). All purchases in question were
made by it from the Registered Dealers and their original tax invoices in support
of the claim of ITC containing the details and particulars mentioned above were
duly produced by the Petitioner.
2 . All these original tax invoices were duly filled, signed and issued by the
Registered Dealers from whom the goods were purchased and the same
contained the aforesaid prescribed particulars evidencing amount of input tax.
All the invoices of the said purchases made by the Petitioner were duly filed by
it and this has been admitted in the impugned order also.
3. As stated in the proviso to section 19 (1), the registered dealer claiming ITC
was required to establish that the tax due on the purchases made by him has
been paid and this was to be done "in the manner prescribed". The manner
prescribed for this purpose was in Rule 10 and as per Sub-Rule (2), the
Petitioner was required to produce the original tax invoice containing the
required details. These requirements were duly and fully complied with and
satisfied by the PetitionerDuring the relevant period, save as aforesaid, there
was no other requirement under Section 19 or Rule 10 or any other provision of
the 2006 Act or the 2007 Rules for availing the said ITC. The Petitioner having
fully complied with the statutory requirements, the said ITC was lawfully
allowable to it and the petitioner availed the said ITC fully in accordance with
law and the VAT authorities had or have any jurisdiction to disallow the same.
4. Section 19 of the 2006 Act was considered by the Hon'ble Supreme Court in
the judgment reported in MANU/SC/0956/2016 : (2016) 15 SCC 125 (Jayam &
Co Vs. Assistant Commissioner). The Hon'ble Supreme Court was inter-alia
pleased to hold that the original tax invoice complete in all respects, evidencing
the amount of input tax, is one of the most important documents/conditions for
availing ITC. In this connection, paragraphs 10 and 11 from the said judgment
of the Hon'ble Supreme Court are reproduced below:
"10. From sub-section (10) of Section 19 onwards, provisions are made
to follow the procedure and fulfil the requisite conditions for availing
ITC. For the purposes of this particular issue, sub-section (10) is the
material provision. This provision, which is couched in negative terms,
categorically stipulates that such ITC would be admissible to the
registered dealer and he would not be entitled to claim this credit "until
the dealer receives an original tax invoice duly filled, signed and issued
by a registered dealer from where the goods are purchased...". Further,
such original tax invoice should evidence the amount of input tax. So
much so, even if the original tax invoice is lost, the obligation cast on
the registered dealer is to obtain duplicate or carbon copy of such tax
invoice from the selling dealer and only then input tax is allowed.
1 1 . From the aforesaid scheme of Section 19 following significant

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 aspects emerge:
(a) ITC is a form of concession provided by the legislature. It is not
admissible to all kinds of sales and certain specified sales are
specifically excluded.
(b) Concession of ITC is available on certain conditions mentioned in
this section.
(c) One of the most important condition is that in order to enable the
dealer to claim ITC it has to produce original tax invoice, completed in
all respect, evidencing the amount of input tax."
It is trite law that when the statute provides for a particular thing to be done in
a particular manner, that thing must be done in that way and other conditions/
methods are impliedly and necessarily excluded. Reliance in this connection is
placed on the following judgments of the Hon'ble Supreme Court:
(a)MANU/SC/0994/2013 : (2014) 2 SCC 401 (J. Jayalalitha &Ors Vs.
State of Karnataka) (Para 34)
(b) MANU/SC/7878/2008 : (2008) 9 SCC 177: (Meera Sahni Vs. LG of
Delhi &Ors) (Para 35)
Whether the conditions and restrictions subsequently inserted in the statutory
provisions prospectively w.e.f. 29.01.2016 can be indirectly insisted for the
earlier periods and whether in that guise, the VAT authorities can apply the
amended law retrospectively?
5 . Amendments made by the Tamil Nadu Value Added Tax (2nd Amendment)
Act, 2015 are not retrospective or clarificatory and were specifically brought into
force w.e.f. 29.01.2016 and cannot apply to the present case which relates to an
earlier period.
6 . The Tamil Nadu Value Added Tax (2nd Amendment) Act, 2015 received the
assent of the Governor on 13.02.2015 and Section 1(2) thereof provided as
under:
"It shall come into force on such date as the State Government may, by
notification, appoint."
7.By Notification dated 29.01.2016, the Governor of Tamil Nadu appointed
29.01.2016 as the date on which the said Amendment Act came into force. Thus,
after receiving the assent of the Governor, the amendment was not brought into
force for a period of about one year. The Amendment Act was specifically
brought into force from 29.01.2016 and there can be no scope to apply it
retrospectively.
8. By the aforesaid Amendment Act, several amendments were made to TN VAT
Act and several Sections were amended. The definition "input tax" in Section
2(24) was amended to mean the "tax paid" as against "tax paid or payable" as
existing prior to the amendment. Similar amendments were made in Sections
18(2), 19(1)(a), 19(4), 19(5)(b) and 19(9).
9. Simultaneously, Sub-Rules (2A) and (2B) were inserted in the 2007 Rules by
G.O. M.S. No: 18 dated 29.01.2016 which came into force on 29.01.2016
providing as under:
"(2-A) Every registered dealer who claims input tax credit to the extent
of the tax paid on purchases of taxable goods specified in the First

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 Schedule to the Act from the other registered dealers inside the State,
shall establish, whenever it is deemed necessary by the assessing
authority, that the tax due on such purchase of goods has actually been
remitted into the Government account.
(2-B) For the removal of doubts, it is hereby declared that, in no case,
the amount of set-off or refund on any purchase of goods shall exceed
the amount of tax in respect of the same goods, actually paid, if any,
under the Act or any other Act referred to in section 88 of the Act, into
the Government treasury except to the extent where purchase tax is
payable by the claimant dealer on the purchase of the said goods
effected by him.";
10. The aforesaid amendments in the Act and the Rules were specifically made
effective from 29.01.2016 and the same were prospective in operation and were
not retrospective. The said amendments were substantive in nature and imposed
new conditions and restrictions for the first time. Claiming of ITC was restricted
to "tax paid" instead of "tax paid or payable" as earlier. Under the earlier Proviso
to Section 19(1), the dealer claiming ITC was required to establish that the tax
due on such purchases has been paid by him i.e., the recipient Registered
Dealer. This provision was completely changed and under the amendment
Proviso, the recipient dealer was required to establish that the tax due on
purchases has actually been paid in the manner prescribed by the selling
Registered Dealer who sold such goods and that the goods have been actually
delivered. Similarly, under the new Sub-Rules (2A) and (2B), completely new
conditions were imposed for the first time. The amendments were not
declaratory or clarificatory in nature so as to clear up any alleged doubts. Onthe
other hand, the said amendments created new obligations and imposed new
conditions and restrictions for the first time.
11. Such amendments imposing new conditions and restrictions and/or which
are particularly brought into force from a specified date cannot be said to be
clarificatory or retrospective. This position of law is well settled by several
judgments of the Hon'ble Supreme Court some of which are as under:
(a)MANU/SC/0810/2014 : (2015) 1 SCC 1: CIT Vs. Vatika Township P
Ltd (Para 33-35)
(b)MANU/SC/0956/2016 : (2016) 15 SCC 125: Jayam & Co Vs. Asst
Commissioner (Para 14-19)
(c) MANU/SC/1016/2016 : (2016) 9 SCC 720: UOI Vs. Indusind Bank
Ltd. (Para 18-24)
(d)MANU/SC/0467/1997 : (1997) 10 SCC 1: K. Gopinathan Nair &Ors
Vs. State of Kerala (Para 20)
(e) MANU/SC/1740/1997 : (1997) 11 SCC 378: State of Maharashtra
Vs. Suresh Trading
1 2 . A similar issue was considered by the Hon'ble Delhi High Court in the
judgment reported in (2013) 57 VST 405. In Delhi VAT Act also, after the
amendment, several new conditions were incorporated including insertion of
Clause (g) to Section 9(2) which required that the purchasing dealer has to
establish that the tax paid by him has actually been deposited by the selling
dealer. The Hon'ble High Court in paragraphs 13 to 16 of the judgment was
pleased to hold that the said new condition for granting ITC benefit cannot be
held to be a clarificatory one and it was introduced only w.e.f. 01.04.2010 and
cannot be of any assistance to the Revenue for the earlier period (kindly see

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 paragraphs 14 and 15 of the judgment).
13. However the fact that the said amendments are not retrospective and thus
not applicable to the present case is quite clear from the submissions made
above. In the guise of requiring further documents and details like lorry
receipts, weighment slips etc., the respondents are indirectly making an attempt
to enforce the conditions of the new proviso inserted in Section 19(1) even for
the earlier periods and they have no jurisdiction, right or authority to do so.
During the period prior to the said amendment, the legal obligations of
Registered Dealer receiving the goods and taking ITC werethose enumerated in
Section 19(1), 19(10) and Rule 10(2) and as stated above, these were fully
complied with by the Petitioner.
Whether the VAT authorities can impose conditions and restrictions for
availment of ITC beyond the statutory provisions as the same stood during the
relevant period?
14. All the requirements for availing ITC are laid down in Section 19 and Rule
10. The scheme contained in Section 19 is a self-contained code covering all
features of ITC. This was also so held by the Hon'ble Supreme Court in the case
of Jayam & Co (supra). No new condition or restriction which is not there in the
statute can be imposed by the VAT authorities. In support of this submission,
reliance is placed on the following judgments of the Hon'ble Supreme Court:
(a)MANU/SC/7761/2008 : (2008) 14 SCC 336: Sandur Micro Circuits
Limited Vs. CCE (Para 6)
(b)MANU/SC/0116/2005 : (2005) 3 SCC 363: CCE Vs. Sunder Steels
Ltd. (Para 5)
(c) MANU/SC/0265/1968 : AIR 1970 SC 755: Hansraj Gordhandas Vs.
Asst. CCE (Para 5)
(d)MANU/SC/0895/2011 : (2014) 15 SCC 625: Saraswati Sugar Mills
Vs. CCE (Para 19)
It is also well settled that in tax law, one has to go by the plain language of the
statute and there is no room for any intendment. Reliance in this connection is
placed on the following judgment:
a. (2010) 14 SCC 751: CCS Vs. Doaba Steel Rolling Mills (Para 25, 28).
When section 19 (10) (a) specifically provides about "Original Tax
Invoice" duly filled, signed and issued by the selling registered dealer
and containing the prescribed particulars as per rule 10 (2) as the
relevant document for availing ITC and when such "Original Tax
Invoices" are produced by the assessee, whether the VAT authorities can
disallow ITC on the ground that the assessee did not produce
documents showing "movement of goods"?
15. As stated above, under sections 19 (1) and 19 (10) read with rule 10 (2),
original tax invoice containing the prescribed particulars is the statutory
document for availment of ITC and this position was also approved by the
Hon'ble Supreme Court in Jayam's case (supra). When the statute mandates
original tax invoice as the statutory document, the tax authorities cannot go
beyond the said mandate.
16. In so far as the documents relating to "movement of goods" are concerned,
these are relevant for the Central Sales Tax Act, 1956 where movement of goods
from one State to another is the very essence of chargeability. However any

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 such document is not prescribed under the 2006 Act or the 2007 Rules for
availment of ITC and the VAT authorities have no jurisdiction to disallow ITC
taken by the petitioner based on original tax invoices of its vendors containing
all prescribed particulars.
17. As stated above, either in the show cause notice or in the impugned order
not even one single invoice or one single vendor has been mentioned in respect
whereof any irregularity was found by the Department nor any details or
particulars of any such case were supplied to the petitioner.
18. At this stage reference may also be made to the prescribed "Form-I" which
is the form for filing VAT Returns. The petitioner duly filed its monthly returns
every month during the relevant period. As per the statutory form itself, in these
Returns, inter-alia the following details were given about ITC, details of
purchases and details of sales:
a. Purchase value of purchases made and VAT thereon.
b. Amount of ITC taken.
c. Sales Turnover during the month concerned and VAT thereon.
d. Annexure I to the Return (List of purchases made) giving inter-alia
following details for the entire month:
• Name of the sellers
• Seller's TIN Numbers
• Commodity Code
• Invoice Numbers and Dates
• Purchase value, tax rate and VAT paid.
e. Annexure II to the Return (List of sales made) giving inter-alia
following details for the entire month:
• Names of the buyers
• Buyer's TIN Numbers
• Sale value, tax rate and VAT paid.
18. Similar Returns along with their respective Annexures I and II were filed by
the petitioner's vendors and by the petitioner's buyers and the entries in the
returns fully tallied with the entries in the petitioner's returns.
2 3 . 2 Section 63A provides about the requirement of getting the accounts
audited and Audit Report in Form WW is required be filed wherein the auditor
certifies correctness of the details of purchases made, ITC allowable, sales
made, VAT payable and other particulars. These provisions were also duly
complied with by the petitioner and the said audit reports were also filed by it.
1 9 . In the format of the return as substituted on 29/01/2016, Annexure 8
relates to "List of Goods Purchased in the Course of Inter State Trade" and in
relation to such purchases, the format itself requires the movement details such
as, name of transport company, means of transport, number and date of transfer
documents etc. Thus whenever such documents relating to movement were
required to be produced by an assessee, it was specifically so mentioned and
required in the Statute itself. However in respect of the local purchases there

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 was never any such requirement and none can be insisted upon by the
Department. As submitted above, when the statute requires a particular thing to
be done in a particular manner and when the statute declares a particular
document to be the statutory document for availing a particular benefit, such
mandates of the statute have to be strictly followed and the VAT authorities
cannot go beyond such mandate and impose any new condition or restriction not
there in the statute.
In any event whether VAT authorities had any jurisdiction to disallow the entire
ITC aggregating to Rs. 8.11 crores availed by the petitioner during the relevant
year-
Ø without specifying or supplying details of even one single invoice or
one single vendor about whom any irregularity was noticed by the
Department in spite of the petitioner's asking these details;
Ø without making any inquiries from the Supplying Vendors or from the
petitioner's Buyers even though all the Vendors and all the Buyers were
registered dealers under the 2006 Act having their TIN and RC Nos.
duly-15-mentioned in the respective invoices;
and whether such disallowance of entire ITC was arbitrary, illegal and
invoice and of the principles of natural justice?
20. Without pointing out a single instance of irregularity, the entire ITC of Rs.
8.11 crores has been disallowed arbitrarily and illegally and on a complete non-
application of mind. The impugned order is completely perverse. The said entire
credit of ITC was taken by the petitioner based on the statutory documents,
namely, tax invoices of the selling vendors. The purchased goods were sold by
the petitioner to registered dealers under tax invoices showing payment of VAT
by the petitioner. All transactions were reflected in the returns filed by the
petitioner and the details of each single invoice along with name, address and
TIN of the party, number and date of the invoice, tax paid etc were mentioned
and these details in the petitioner's returns tallied with the returns filed by the
respective parties. In connection with the above, following are important:
(a) Not a single invoice has been alleged to be fake.
(b) Not even in respect of one single invoice the supplier has been
alleged to be non-existent.
(c) Not even in respect of one single invoice, any discrepancy has been
found about the tax amount mentioned in the invoice or about any other
connected matter.
(d) Not even in one single case, TIN numbers and other particulars
mentioned in the tax invoices have been found to be bogus.
(e) In many of the tax invoices, particulars of the vehicles were also
mentioned. Not even in one single case anything wrong about
genuineness of the vehicles has been alleged.
(f) Not even in one single case any enquiry was made or any statement
was recorded of the vendors even though their full address, TIN number
and other particulars were duly mentioned in the invoices already filed
with the VAT authorities.
21. The aforesaid sales turnover could take place only because the goods were
purchased and then resold. Unless the goods were purchased, there was no
scope for making the said sales. The tax paid by the petitioner on its sales

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 turnover was more than the ITC availed by it and the said entire tax on the sales
turnover was actually paid by the petitioner by utilising ITC available with it and
by paying the balance through banking channel as permitted under the law. Full
details of all such payments were mentioned in the returns. If there would have
been no purchases, there would have been no resultant sales nor there would
have been any question of payment of any sales tax/VAT on the sales turnover.
22. Quite surprisingly, at the time of collection of tax on the sales turnover, the
Respondents are coolly collecting the said tax and accepting the sales turnover
but when the purchases connected to the same sales turnover involving ITC are
considered, they are seeking to take a diametrically opposite stand and deny the
ITC as if there were no purchases. Such a stand on the part of the Department is
completely arbitrary and illegal
2 3 . As stated above, in the show cause notice, only general and vague
allegations were made without any details or particulars. Even though the whole
of ITC availed by the petitioner on purchase turnover was being sought to be
disallowed by alleging that the vendors did not pay the VAT and were indulging
in circular trading, not even a single such instance was pointed out. Not even
one single invoice or one single vendor was named in respect of which these
allegations were made. These details and particulars, if at all any, were not
supplied to the petitioner in spite of specific request made for that purpose in
the petitioner's reply.
24. ITC is a statutory right of the assessee and if the Department proposes to
disallow any part of it, it is incumbent and obligatory upon the Department to
inform the assessee about full details and particulars of the invoices and the
vendors in respect of which any discrepancy has been found or noticed by the
Department. The VAT authorities are also bound to inform the assessee about
results of the enquiries made by them, if at all any, and supply to it the
supporting documents and evidence for making such allegations. The said
statutory right cannot be defeated or nullified by making such general vague
allegations without any supporting evidence or material and without informing
the assessee about the same and then affording it proper opportunity to make
its submissions with respect to such evidence relating to the invoice or the
vendor for which ITC is being sought to be disallowed.
25. In the Show Cause Notice, except making general and vague allegations,
not even one instance was pointed out with reference to any particular invoice
or any particular vendor wherein any discrepancy was found. Without such
details and particulars, it was impossible for the Petitioner to defend itself by
filing proper reply along with documents and materials and evidence relating to
the alleged violating instances. It is in these circumstances that in its reply
dated 22.03.2017, the Petitioner inter-alia submitted as under:
"We may further add that in case yourgoodself is still skeptical, you may
verify the sellers returns to evidence the fact that goods have indeed
been sold and that their corresponding turnover has been duly reported
to the Department vide monthly returns filed."
26. The aforesaid request was also made at the time of personal hearing and it
has been specifically recorded in the impugned order. In spite of this, this
aspect of the matter has been completely ignored in the impugned order and the
Respondent gave no reason or details as to why the said exercise was not
carried out and as to how even without any such instances being pointed out,
the ITC was being sought to be disallowed. In the impugned order, not a single
discrepancy with reference to any particular invoice or any particular vendor has
been pointed out and merely vague, unsubstantiated allegations have been made
without any basis or material at all. The impugned order suffers from complete

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 perversity and non-application of mind and is a nullity. In support of the
aforesaid submissions, reliance is placed on the following judgments of the
Hon'ble Supreme Court:
a) MANU/SC/8493/2008 : (2009) 2 SCC 192 (Kothari Filaments Vs.
Commissioner of Customs) (Paragraphs 14 & 15): In this judgment, in
paragraphs 14 and 15 it was held that a person charged with mis-
declaration is entitled to "supply of documents" and only on knowing
the contents of the documents he would be in a position to furnish an
effective reply.
b) MANU/SC/1076/2014 : (2015) 3 SCC 49 (Associated Builders Vs.
DDA) (Paragraphs 28 & 29): In this judgment, it was inter-alia held that
quasi-judicial authorities cannot act in arbitrary, capricious or whimsical
manner and that their decisions must not be actuated by any extraneous
considerations. It was held that non-application of mind is a defect that
is fatal to any adjudication.
c) MANU/SC/0181/2009 : (2009) 4 SCC 299 (Rajasthan State Road
Transport Corporation Vs. Bal Mukund Bairwa) (Paragraphs 34, 35): In
this judgment, it was inter-alia held that an order passed in violation of
the principles of natural justice is a nullity.
27. Even otherwise, the Respondents cannot deny ITC without any evidence or
basis or material for any particular transaction and simply by making
unsubstantiated and vague allegations. ITC can be denied only if any irregularity
is found in respect of any transaction and for this purpose the Respondents are
bound to examine each individual transaction and then decide as to whether ITC
in respect of that transaction was in any way disallowable. Reliance in support
of this submission is placed on the following judgments of the Hon'ble Supreme
Court.
(a) MANU/SC/0470/1970 : 1970 (1) SCC 622 Tata Engineering and
Locomotive Co Ltd vs The Assistant Commissioner of Commercial Taxes
(paragraphs 9, 12)
(b) MANU/SC/1419/1998 : 1997 (94) ELT 458 Collector of Central
Excise vs Partap Steel Rolling Mills (Supreme Court).
What is the true scope and effect of sections 19(13) and 19(16) of the 2006 Act?
28. Section 19 (13) on its own plain language can apply only if a registered
dealer without entering into a transaction of sale, issues an invoice, Bill etc to
another registered dealer, with intention to defraud the government revenue and
if that be so, the assessing authority has been empowered, after making such
enquiry as it thinks fit and after giving a reasonable opportunity of being heard
to the assessee concerned, to deny the benefit of ITC. These ingredients and
conditions precedent for applicability of the said section do not at all exist in the
present case. As stated above, the VAT authorities have not pointed out even a
single invoice where any such irregularity was found by them nor have they
pointed out even a single vendor who did not pay the input tax mentioned in its
tax invoice. If at all any action is intended to be taken under the said section,
these are conditions precedent have to be satisfied by the VAT authorities and
the dealer concerned has to be supplied with all details and documents of the
particular invoices and the particular vendors in respect whereof any such
irregularity has been found by them along with the results of the enquiries made
by them so that the assessee may make its proper submissions in the matter.
The said section can never be invoked by making such general, vague and
unsubstantiated allegations without even naming even one single invoice or one

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 single vendor which according to the VAT authorities is sought to be branded as
irregular.
29. Sub-Section (16) of Section 19 reads as under:
(16) The input tax credit availed by any registered dealer shall be only
provisional and the assessing authority is empowered to revoke the
same if it appears to the assessing authority to be incorrect, incomplete
or otherwise not in order.
In the present case, the said ITC was availed by the Petitioner after fully
complying with the statutory provisions. The amount of VAT on the
goods purchased by the petitioner was evident from the vendor's
invoices which were the specified documents for this purpose as per the
statute. Nothing wrong has been found by the respondents about the tax
invoices. No ITC was taken by the Petitioner incorrectly or on the basis
of any incomplete invoice and there was nothing which could be
regarded as "otherwise not in order" in the invoices or in the said ITC
taken by the Petitioner. The expression "or otherwise" can only be read
ejusdem generis with the earlier expressions, namely, 'incorrect' or
'incomplete' and it can only mean that the ITC was taken incorrectly or
it was incomplete. This is not at all the position in the present case. It is
not as if the said expression can be construed to mean conferment of an
arbitrary, uncontrolled or unguided discretion upon the officers
concerned to act as per their own whim and fancy. In support of this
submission that the expression "or otherwise" should be construed
ejusdem generis with the earlier expressions, reliance is placed on the
judgment of the Hon'ble Supreme Court reported in
MANU/SC/0333/1974 : (1975) 4 SCC 176: CED Vs. Parvathi Ammal
(Para 13)
30. It is further submitted that even otherwise as per the rule of construction
noscitur a sociss, meaning of a word is to be judged from the company it keeps
and it is a legitimate rule of construction to construe the words in a statute with
reference to the words found in immediate company. For this reason also, the
expression "or otherwise" has to be read having the same colour as that of the
expressions 'incorrect' or 'incomplete'. In support of this submission, reliance is
placed on the judgment reported in MANU/SC/0646/2017 : (2017) 7 SCC 540:
ParleAgroPvt. Ltd. Vs. CCT (Para 42-44).
31. It is further submitted that Monthly Returns for each month are required to
be filed by the 20th day of the succeeding month. For the entire period, the
Monthly VAT Returns were duly filed by the Petitioner. Throughout the period
and even thereafter for several years till the issuance of Show Cause Notices,
the Petitioner was never required by the VAT authorities to file any movement
documents. As stated above, the Act or the Rules do not require filing of any
movement documents. However, if the VAT authorities so required, it was
incumbent upon them to inform the Petitioner after filing of the Return for the
month concerned at the earliest point of time. No such step was taken during
the entire period and even thereafter for several years. Now, at this stage, it is
simply not permissible for the VAT authorities to require any movement
document for the entire purchase turnover.
The submissions made in the preceding paragraphs are also fully supported by
the following judgements of this Hon'ble Court
3 2 . The aforesaid interpretation of the provisions of Section 19 in similar
circumstances is fully supported by the following judgments of this Hon'ble
Court:

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 a. MANU/TN/5302/2011 : (2012) 50 VST 179: Althaf Shoes (P) Ltd. Vs.
Assistant Commissioner (CT): It was held that when the purchasing
dealer has complied with Section 19(1) and Rule 10(2), its claim for ITC
cannot be denied by the Revenue by any length of reasoning
(Paragraphs 10 and 11).
b. MANU/TN/1386/2013 : (2013) 60 VST 283: Sri Vinayaga Agencies
Vs. Assistant Commissioner (CT) In this judgement of this Hon'ble
Court, by relying on Section 19(1) and Rule 10(2), it was held that
when these provisions were complied with and self-assessment was
made under Section 22(2), there was no question of denying the ITC.
Section 19(16) was also analysed and it was held that it does not
empower the authorities to revoke the ITC on the plea of any default on
the selling dealer's part.
c. MANU/TN/3059/2015 : (2016) 93 VST 202: Lakshmi Textiles Vs.
Commissioner of Commercial Taxes: In this case, following the
judgment in Sri Vinayaga Agencies the Writ Petition was allowed.
d. MANU/TN/3901/2016 : (2017) 97 VST 391 Computer Consultants Vs.
Assistant Commissioner (CT): In this judgment also, the law laid down
in Althaf Shoes and Sri Vinayaga Agencies was followed.
e. MANU/TN/1671/2016 : (2017) 97 VST 395 Faiveley Transport Rail
Tech. India Ltd Vs. Assistant Commissioner: In this judgment, by
following the law laid down in the earlier judgments mentioned above,
the Writ Petitions were allowed.
f. MANU/TN/4081/2016 : (2017) 99 VST 341 Assistant Commissioner
(CT) Vs. Infiniti Wholesale Ltd: This was a judgment of a Division
Bench of this Hon'ble Court and it was held that if there is any default
on the part of the selling dealer, the action lies against the defaulting
seller but not against the purchaser and ITC taken by the purchasing
dealer based on the Invoice generated by the selling dealer cannot be
disallowed.
g. MANU/TN/1871/2008 : 2009 (23) VST 118: Sujana Universal Vs.
Deputy CTO: In this Division Bench judgment of this Hon'ble Court, it
was held that the initial burden under Section 10 will get discharged by
the buying dealer by production of sale bill and registration number of
the seller and thereafter it is for the Department to verify the
accountings of the selling dealer. It was further held that the reasons
given by the Revenue that the transactions were only between bill
traders were not supported by any materials and were mere surmises.
33. In so far as the burden of proof under Section 17(2) is concerned, the said
burden was duly and fully discharged by the Petitioner by producing the
statutory documents required for this purpose under the provisions of Section
19 and Rule 10 as mentioned in the preceding paragraphs. No other document
was mentioned in the Act or in the Rules to be filed by the assessee availing the
ITC. The Respondent cannot simply allege at this stage after expiry of several
years that movement documents were not filed. No such movement documents
were required to be filed under the Act or the Rules. As stated in the foregoing
paragraphs, save and except alleging baseless suspicion, the Respondent has
not relied upon or mentioned in the show cause notice or in the impugned order
any document or enquiry report or particulars or details relating to even one
single case where any irregularity was found. In fact in the show cause notice or
in order, there was no reference to even a single invoice are single vendor
where any irregularity was found as stated above. It is well settled that

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 suspicion, however strong, cannot be a substitute for proof. Reliance is placed
in this regard on the following judgments:
a. MANU/SC/0632/1979 : (1980) 3 SCC 110 (Abdulla Muhammad Vs.
State) (Paragraph 20).
b. MANU/SC/0541/1993 : (1993) 3 SCC 564 (UoI Vs. Brij Fertilizers P
Ltd) (Paragraph 8).
34. In so far as the Respondent's power to make enquiry is concerned, firstly,
the show cause notices were issued several years after end of the relevant
assessment years but no details of any enquiries or enquiry reports or materials
or evidence or any invoice or any vendor were mentioned in the show cause
notices or even in the orders passed thereon. After passing the said orders, the
respondent cannot make any grievance about its power to make enquiry.
35. Secondly, the said power under Section 27(1) and 27(2) is qualified by the
expression "after making such enquiry as it may consider necessary". The said
power, on the basis of the plain language of the statute itself, is to be exercised
within the parameters of the Act and the Rules. However, now at this late stage
after several years, the Respondent cannot require the Petitioner to produce the
documents relating to movement of the goods purchased by it. There was no
such statutory requirement during the entire relevant period. If at all in any
particular case the VAT authorities have any reasons to believe about any
irregularity, it is incumbent and obligatory upon them to inform the Petitioner
about such particular instance/instances and supply to it all enquiry reports and
evidence so as to enable it to deal with the same. However no such documents
or details or informations were supplied or referred to or relied upon in the
show cause notices or in the orders. The respondents cannot make any fishing
or roving enquiry. In this connection, reliance is placed on MANU/SC/0617/2015
: (2015) 11 SCC 628 (Tata Chemicals Ltd. Vs. Commissioner of Customs)
wherein, in paragraph 15, the Hon'ble Supreme Court was pleased to hold inter-
alia as under:
"Statutes often use expressions such as "deems it necessary", "reason
to believe", etc. Suffice it to say that these expressions have been held
not to mean the subjective satisfaction of the officer concerned. Such
power given to the officer concerned is not an arbitrary power and has
to be exercised in accordance with the restraints imposed by law."
36. In so far as the ingredients of "sale" are concerned, all the ingredients of
Section 2(33) were fully satisfied. All details about the seller, buyer,
consideration etc. were mentioned in the tax invoices which were the sale
documents transferring the property to the Petitioner. All tax invoices showed
the payment of tax as well as the consideration charged for the goods by the
seller. There was no other statutory requirement. Even Section 64(3) of the
2006 Act provides three documents, namely, Bill of Sale or Delivery Note or
other prescribed document. Thus, Bill of Sale, namely, Invoice, is a document
mentioned in the Statute itself. There is no question of the Petitioner having
discharged only the "initial burden" and not "rest of the burden". The burden
was fully discharged by producing the required statutory documents.
37. In so far as the provisions of the CST Act are concerned, the very basis of
application of CST Act is movement of goods from one State to another and
admittedly the present case does not relate to CST.
3 8 . Even though in the present case there was delivery of all the goods
purchased by the Petitioner as mentioned above, the legal position under the
Sale of Goods Act, 1930 is inter-alia to the effect that a contract of sale may be

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 made in writing or by word of mouth or may even be implied from the conduct
of the parties. In the trade, it is quite normal to receive oral orders on
telephones and then to buy the goods from registered dealers and direct them to
give delivery instructions for dispatch the goods to the places of the Petitioner's
buyers directly. When the goods are purchased, the registered dealer issues its
own tax invoice on the Petitioner and when the goods are sold by the Petitioner,
it issues its own tax invoice on its buyer. This is a normal trade practice which
holds good not only with the Petitioner but with other traders in the State also
and there is no restriction in this regard in the provisions of law.
39. Under Section 33 of the 1930 Act, delivery of goods sold may be made by
doing anything which the parties agree shall be treated as delivery. The vendors
from whom the goods were purchased by the Petitioner have never disputed the
sales made to the Petitioner and as evidenced from the tax invoices issued by
the vendors on the Petitioner. Similarly, the Petitioner's buyers have never
disputed the sales made by it to the said buyers and as evidenced by the tax
invoices issued by the Petitioner. All the purchase and sales transactions were
duly completed between the parties concerned by delivering the goods as per
the instructions of the buyer concerned. A third party cannot challenge the
transactions between the buyers and the sellers even otherwise.
Re: Alternative remedy:
40. It is submitted that in the present case, the Respondents have proceeded in
the matter and passed the said impugned order raising the said huge and
exorbitant demands in gross violation of the provisions of law and wholly
without jurisdiction and/or in excess of jurisdiction. The Respondents are
proceeding in the matter arbitrarily, on a complete non-application of mind and
in palpable misuse of the powers conferred upon them. The issues raised herein
go to the very root of the jurisdiction of the Respondents to initiate the
proceedings in question and to raise the said demands. The impugned
proceedings and the impugned order are wholly without jurisdiction and
contrary to the specific statutory provisions as mentioned in detail in the
preceding paragraphs. It is submitted that in the facts and circumstances of the
instant case, it is just, reasonable and proper that the instant Writ Petition may
kindly be decided by this Hon'ble Court and appropriate reliefs be granted to the
Petitioner. In support of this submission, reliance is placed on the following
judgments:
(a)MANU/SC/0664/1998 : (1998) 8 SCC 1: Whirlpool Corpn Vs.
Registrar of Trade Marks (Para 14-21)
(b) MANU/SC/0346/1962 : AIR 1963 SC 548: State Trade Corporation
of India Vs. State of Mysore
(c) MANU/SC/0333/1972 : (1973) 1 SCC 633: Raza Textiles Vs. Income
Tax Officer
(d) MANU/SC/0318/1967 : AIR 1967 SC 1401: TELCO Vs. Assistant
Commissioner of Commercial Taxes
(e) MANU/SC/0113/1960 : AIR 1961 SC 372: Calcutta Discount Co. Ltd.
Vs. Income Tax Officer
4 1 . 1 respectfully submit that application of a wrong law results in a
jurisdictional error committed and therefore the discretion vested in this Hon'ble
Court to exercise powers under Art. 226 of the Constitution is not ousted. In the
reported judgment of the Hon'ble Apex Court in MANU/SC/3995/2006 : [2006]
286 ITR 89 (SC) Arun Kumar V Union of India it has been held as follows:

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 "A Jurisdictional fact' is a fact which must exist before a court, Tribunal
or an authority assume jurisdiction over a particular matter. A
Jurisdiction fact is one on the existence or non-existence of which
depends the jurisdiction of a court, a tribunal or an authority. It is the
fact upon which an administrative agency's power to act depends if the
jurisdictional fact does not exist, the court, authority or officer cannot
act. If a court or authority wrongly assumes the existence of such fact,
the order can be questioned by a writ of certiorari. The underlying
principle is that by erroneously assuming the existence of such
jurisdictional fact, no authority can confer upon itself jurisdiction which
it otherwise does not possess. The existence of jurisdiction fact is thus
the sin qua non or conditional precedent for the exercise of power by a
court of limited jurisdiction.
If the jurisdictional fact exists, the authority can proceed with the case
and take an appropriate decision in accordance with law. Once the
authority has jurisdiction in the matter on existence of the jurisdictional
fact it can decide the fact in issue or adjudicatory fact. A wrong decision
on a fact in issue or on an adjudicatory fact would not make the
decision of the authority without jurisdiction or vulnerable provided the
essential or fundamental fact as to existence of jurisdiction is present."
The petitioner submits that the amendment to Proviso to section 19 cannot also
be held as clarificatory in view of the latest decision of the Division Bench of
this Hon'ble Court in WA No. 4292 of 2019 dated 04.03.2020 wherein the period
2009-10 was allowed in favour of the assessee.
The present assessment year 2012-13 also being prior to the amendment carried
out in section 19 would also be benefited by the above Hon'ble Division bench
decision.
In view of the above submissions it was prayed that the impugned orders may
be set-aside in the circumstances of the case and thus render justice.
2 3 . In support of the case of the petitioner in W.P. Nos. 1226,1230 & 1239 of 2021
(M/s.A.S.Textiles), learned Counsel Mr.P.Rajkumar submitted as follows:-
1 . Amendment made to section 19(1) of the TNVAT Act,2006 by amending Act 13 of
2015 with effect from 29.1.2016 is a substantive amendment and is prospective in
nature.
2 . Through the amendments brought in with effect from 29.1.2016, the buying dealers
to claim the input tax credit have to establish that theselling dealers have actually paid
the tax on their sales effected to the buying dealers and also should establish that the
goods have actually been delivered.
3 . According to the department, the above said amendment make it mandatory for the
dealers/buyers who claims input tax credit shall establish the actual payment of tax and
also establish the actual delivery. Further according to the Department, the amendment
is by way of substitution and so it would be retrospective in nature.
4. If according to the Department, the Amendment made to section 19(1) of the TNVAT
Act,2006 by Amendment Act 13 of 2015 is retrospective in nature, then it would create
new disabilities or obligations or impose new duties in respect of transactions already
accomplished. Therefore the above said amendment made to section 19(1) of the TNVAT
Act is a substantive amendment which would have only a prospective effect and cannot
be applied for transactions already accomplished.
5. The Hon'ble Supreme Court in the case of M/s.Hitendra Vishnu Thakur &Ors Vs State

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 of Maharashtra reported in MANU/SC/0526/1994 : 1994(4) SCC 602(Para 26) and also in
the case of Shyam Sunder and Others Vs Ram Kumar and Another reported in
MANU/SC/0405/2001 : (2001) 8 SCC 24( Copy of these judgements submitted at the
time of hearing ) have held that held as :
i. A Statute which affects substantive rights is presumed to be prospective in
operation unless made retrospective , either expressly or by necessary
intendment, whereas a statute which merely affects procedure , unless such a
construction is textually impossible, is presumed to be retrospective in its
application, should not be given an extended meaning and should be strictly
confined to its clearly defined limits.
ii. Law relating to forum and limitation is procedural in nature , whereas law
relating to right of action and right of appeal even through remedial is
substantive in nature.
iii. Every litigant has a vested right in substantive law but no such right exists in
procedural law.
6.A procedural statute should begenerally speaking be applied retrospectively where the
result would be to create new liabilities or obligations or to impose new duties in respect
of transactions already accomplished.". It is submitted that a statute which not only
changes the procedure but alsocreates new rights and liabilities shall be construed to be
prospective in operation, unless otherwise provided, either expressly or by necessary
implication."
7 . For an amended provision to have a retrospective operation, the amendment should
be either expressly or by necessary implication retrospective. In this connection,
following judgements of the Hon'ble Supreme Court were relied upon:-
i. Controller of Estate Duty Gujarat-I Vs M.A.Merchant MANU/SC/0144/1989 :
1989 Supp (1) SCC 49;
ii. Govinddas Vs Income Tax Officer reported in MANU/SC/0248/1975 : (1976) 1
SCC 906;
iii. C.I.T.,Bombay Vs Scindia Steam Navigation Co, MANU/SC/0194/1961 :
1962(1) SCR 78;
iv. Commissioner of Income Tax Vs Vatika Township Private Limited, v.
MANU/SC/1278/2013 : (2014) 1 SCC 1;
vi. S.E.B.I Vs Alliance Finstock Ltd &Ors reported in MANU/SC/1267/2015 :
(2015) 16 SCC 731;
vii. Order dated 19.2.2021 passed in W.P. Nos. 8255 & 8256/2016 in the case of
Sri Rajeswari Stores Vs State of TN &another
8 . CERTAIN PROVISIONS OF THE TNVAT ACT,2006 DO NOT MENTION ABOUT THE
MAINTENANCE AND POSSESSION OF TRANSPORT DOCUMENTS WHILE SALE OR
PURCHASE IS EFFECTED INSIDE THE STATE PRIOR TO 29.1.2016 AND EVEN AFTER
29.1.2016
i. Section 64(3) of the TNVAT Act only envisages that every registered dealer or
person who moves goods in pursuance of a sale or purchase or otherwise from
one place to another shall send along with the goods moved a bill of sale or
delivery note or such other documents , as may be prescribed.
ii. Section 67(2), Section 67(3) and Section 67(5) of the TNVAT Act,2006.

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 iii. Section 69 of the TNVAT Act,2006.
iv. Rule 6(2)(a),Rule 6(2)(b) and Rule 6(2)(c) of the TNVAT Rules.
9 . CERTAIN AMENDMENTS MADE IN THE TNVAT RULES WITH EFFECT FROM 29.1.2016
INSISTS FOR PROOF OF PAYMENT OF TAX TO CLAIM INPUT TAX CREDIT AND ALSO
TRANSPORTER'S WAY BILL IN FORM MM
---------------------------
i. Rule 10(2-A) of the TNVAT Rules was inserted as per G.O.Ms. No. 18 dated
29.1.2016
ii. Rule 15(3)(a) of the TNVAT Rules and its proviso were substituted for Rule
15(3) as per GO.Ms. No. 18 dated 29.1.2019.
iii. The insistence for proof of payment of tax by the earlier seller as per Rule
10(2-A) of the TNVAT Rules and carrying the electronic way bill in Form MM
along with sale bill or delivery note while moving the goods for sale or purchase
as provided in Rule 15(3)(a) were introduced only from 29.1.2016 and therefore
it is evident that the above said amendments that these amendments are
substantive in nature and would have only prospective effect. In other words,
the transactions already completed prior to 29.1.2016, the proof of movements
of goods along with electronic way bill in Form MM cannot be demanded.
iv. Similarly with effect from 29.1.2016, Rule 15(14) & 15(15) of the TNVAT
Rules were replaced wherein electronic Form KK has to be generated by clearing
and forwarding agent.Similarly with effect from 29.1.2016 , Rule 15(17)(bb)
was introduced wherein electronic transit pass in Form LL has to be generated
and carried along with the goods.
v. Similarly, with effect from 29.1.2016,Rule 15(18)(a) was replaced for Rule
15(18) of the TNVAT Rules, 2006 as per this new Rule for the purpose of
sections 67-A,68 & 69 , the owner or other person in charge of a vehicle or boat
shall carry a bill of sale or delivery note in electronic Form JJ, a transporter's
declaration in Electronic Form MM and the declaration in electronic KK in the
case of movement of goods by clearing and forwarding agents.
1 . CERTAIN PROVISIONS OF THE SALE OF GOODS ACT,1930 DEALING WITH
"DELIVERY" AND ITS RELEVANCE
i. The word " delivery" or the phrase " have actually been delivered" introduced
in the proviso to section 19(1) of the TNVAT Act with effect from 29.1.2016 by
Amendment Act 13 of 2013 has to be understood with reference to the word
"delivery " as defined in section 2(2) read with section 33 of The Sale of Goods
Act,1930.
ii. Delivery may be actual or constructive. "Delivery" is constructive when it is
effected without any change in the actual possession of the thing delivered, as
in the case of delivery by attornment or symbolic delivery. Thus, in view of the
provisions of section 2(2) read with section 33 of the Sale of Goods Act,1930, a
symbolic delivery of possession of goods , divesting the seller's possession and
lien may be sufficient compliance of the Act.
2. VIOLATION OF PRINCIPLES OF NATURAL JUSTICE IN THE PETITIONER'S CASE
i. In the notices dated 13.4.2017 issued for the asst years 2013-2014 to 2015-
2015, there was no proposal to levy penalty under section 27(3) of the TNVAT
Act , whereas in the assessment orders dated 26.6.2019, penalty was levied
under section 27(3) of the TNVAT Act. After the assessment orders dated

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 26.6.2019 were set aside and remitted back, the first respondent issued fresh
notices dated 19.3.2020 in which also there was no proposals to levy penalty
under section 27(3) of the TNVAT Act. But strangely enough in the impugned
assessment orders dated 30.11.2020, the first respondent has imposed penalty
under section 27(3) of the TNVAT Act,2006. So on the question of violation of
principles of natural justice ,the levy of penalty under section 27(3) of the
TNVAT Act has to be set aside.
ii. Further the levy of penalty under section 27(3) of the TNVAT Act in respect of
reversal of ITC is clearly contrary to the provisions of the TNVAT Act,2006.
3 . ENQUIRY ALREADY CONDUCTED WITH THE SELLING DEALERS AND REVISION
NOTICES TO MAKE ASSESSMENTS ON THEM ALREADY ISSUED
i. The Commercial Taxes Department has already made enquiry as contemplated
under section 19(13) of the TNVAT Act with the selling dealers, M/s.Latha
Traders and M/s.R.Mani Traders and pursuant to such enquiries, revision notices
dated 13.1.2017 have been issued by CTO, Karur(East) Asst Circle to R.Mani
Traders for the years 2013-2014 and 2014-2015 and a revision notice dated
12.1.2017 has been issued for the year 2015-2016. Similarly revision notices
dated 6.1.2017 have been issued by the CTO, Karur(West) Asst Circles for the
years 2012-2013,2013-2014 and 2014-2015 to M/s.Latha Traders.
ii. So having taken steps to make assessments in the hands of the selling
dealers, passing the impugned assessment orders on the petitioner stating that
the earlier sellers have not reported and paid the tax on the sales transactions
effected to the petitioner is contrary to the provisions of the TNVAT Act,2006
and the law laid down by the Hon'ble Madras High Court in the case of Vinayaga
Agencies reported in MANU/TN/1386/2013 : 60 VST 283 and affirmed by the
Division Bench in the case of Infiniti Wholesale reported in MANU/TN/2337/2014
: 99 VST 341.
iii. In view of the above submissions and the judgements of the Hon'ble
Supreme Court and this Hon'ble Court, the petitioner respectfully prays that this
Hon'ble Court may be pleased to quash the impugned orders and render justice.
24. In support of the case of the petitioner in W.P No. 18761, 18766 & 18769 of 2021(Aassaan
Commodity Trade)., learned Senior Counsel Mr.N.L.Raja for N.Murali-Advocate, submitted as
follows:-
A) During the relevant years (AY 2012-13 to AY 2014-15), neither Section 19 of the
TNVAT Act, 2006, nor any other provision in the enactment stipulated that for the
availment of input tax credit, gods must have actually been delivered to the dealer who
claims the input tax credit. The delivery could be, as provided under Section 33 of the
Sale of Goods Act, 1930, be in the manner as mutually agreed between the parties.
B) The stipulation of actual delivery for the availment of input tax credit was inserted
vide the proviso to Section 19(1) of the TNVAT Act, 2006, by Act 13 of 2015. Although
the amendment was legislated on 14/10/2015, it was brought into force prospectively
only from 29/01/2016, vide Notification No 21/2016.
C) Once the amending enactment expressly states that the substituted provision shall
come into force from the date the amendment comes into force, the said provision could
only be prospective in nature. Since the substituted proviso to Section 19(1) was
explicitly brought into force only from 29/01/2016, the stipulation of actual delivery
cannot be applied to availment of ITC for the preceding years. In this regard, reliance is
placed on the following case laws:
i. Govardhan M v. State of Karnataka, MANU/KA/2105/2012-(See para Nos. of

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 the report-¶5, ¶29)
ii. K. Sashidhar v. Indian Overseas Bank, MANU/SC/0189/2019 : (2019) 12 SCC
150-( See para Nos. of the report ¶71, ¶75, ¶76, ¶80)
D. Since Input Tax Credit is a substantive and vested right of the assessee, the
stipulation of actual delivery which is a new condition imposed by Act 13 of 2015,
cannot be applied with retrospective effect for the previous assessment years. In this
regard, reliance is placed on the following case laws:
I. Govind Das v. ITO, MANU/SC/0248/1975 : (1976) 1 SCC 906-See para Nos.
of the report ¶11.
II. Suhas H. Pophale v. Oriental Insurance Co. Ltd., MANU/SC/0093/2014 :
(2014) 4 SCC 657-See para Nos. of the report ¶45-54.
E. Section 2(d) of the Contract Act, 1872, and Section 33 of the Sale of Goods Act,
1930, recognize the paramountcy of party autonomy in matters of consideration and
delivery. Section 33 of the Sale of Goods Act expressly recognizes that the delivery of
goods which are sold may be per the agreement between the parties-the delivery could
be actual, symbolic, notional, physical or . A constructive delivery would also result in
the transfer of property in goods. There is nothing in law which does not permit two
sales simultaneously. In this regard, reliance is placed on the decision CIT v. High
Energy Batteries India Ltd, MANU/TN/0728/2012 : [2012] 348 ITR 574 (Mad)-See para
Nos. of the report ¶9.
F. In a chain of transactions, there could be one physical delivery and multiple
constructive deliveries which result in transfer of property in goods throughout the chain
eoinstanti. In this regard, reliance is placed on the decision of the Constitution Bench of
the Supreme Court in Duni Chand Rataria v. Bhuwalka Brothers, MANU/SC/0038/1954 :
AIR 1955 SC 182, See para Nos. of the report ¶15.
G. Even assuming for the sake of argument that the condition of actual delivery would
retrospectively apply for the period prior to 29/01/2016, the term "actually" cannot be
interpreted narrowly to mean physical but should be interpreted to encompass
constructive and symbolic deliveries. In this regard, reliance is placed on the decision of
the Constitution Bench of the Supreme Court in Duni Chand Rataria v. Bhuwalka
Brothers, MANU/SC/0038/1954 : AIR 1955 SC 182, See para Nos. of the report ¶14-16.
5 . In a chain transaction, the flow of credit with respect to one party alone cannot be
questioned when the ITC claims of all other parties have been accepted.
A) The principal object for the enactment of TNVAT Act, 2006, was to avoid the
cascading effect of taxes and ensure the seamless flow of credit.
B) In a chain transaction where there is a principal physical delivery and
multiple constructive deliveries at the same instant, the claim of credit of one
party in the chain alone cannot be disputed while the claim of other parties in
the chain are accepted. This discriminatory treatment would not only be contrary
to the object of the TNVAT Act, 2006, but also to Article 14 of the Constitution
of India.
C) In this case, the claim of ITC of the Petitioner alone has been questioned
even though the claim of other parties have been accepted by the department.
This is despite the fact that the goods were supplied by the manufacturer to the
Governmental undertaking at the instance of the Petitioner.
6. Violation of principles of natural justice
A. The impugned order is in violation of the principles of natural justice and also

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 travels beyond the contours of the notice.
B. The allegations and findings in pages 13 to 21 of the impugned order (pages
50 to 59 of the paperbook filed in the writ petition) for AY 2012-13 WP 18761 of
2021) and the allegations and findings in pages 7 to 13 of the impugned order
for the AY 2013-14 (pages 53 to 59 of the paper book filed in the writ petition &
for the AY 2013-14-WP 18766/2021) are outside the ambit of the notices issued
to the Petitioner. Neither a notice nor an opportunity of personal hearing was
given to the Petitioner.
C. In the AY 2012-13, an amount of Rs. 25,93,971/-has been additionally
reversed in the impugned order towards which there was neither any proposal in
the notices dated 10/03/2016 or 15/03/2021 nor was the petitioner afforded any
opportunity to show-cause.
D. In the AY 2012-13 an amount of Rs. 14,99,489/-has been reversed as ITC
towards which there was neither any proposal in the notice nor was the
petitioner afforded an opportunity to show-cause.
E. The Respondent had prejudged the issue in the notice dated 15/03/2021 by
recording his remarks after the Petitioner's reply date 30/03/2016.
F. The Petitioner relied upon the following case laws in its challenge to the
violation of principles of natural justice of the impugned order:
I. Oryx Fisheries Private Ltd v. UOI, 2010 (12) SCC 427;
II. MC Technologies v. Food Corporation of India, MANU/SC/0858/2020
: 2021 (2) SCC 551;
25. In support of the case of the petitioner in W.P. No. 11808, 11814, 11816, 11811,11812 and
11819 of 2022(M/s Sharda Motors Industries Limited), learned Counsel Mr.Rama Badran for M/s.
Lakshmi Kumaran and Sridharan, Advocates, submitted as follows:-
1. The only ground on which the Input Tax Credit ('ITC') is denied is that the Petitioner
has failed to prove the physical movement of goods from the place of the vendor to the
place of the Petitioner. The Impugned Orders record that reversal of the ITC is demanded
in light of the amendment carried out in Section 19(1) of the TNVAT Act vide Gazette No
217 Act No 13 of 2015, dated 14.10.2015 which is effective prospectively from
25.01.2016 ('the Amendment').
Submissions
2 . ITC has been availed on satisfaction of all requirements under Section 19(1) of the
TNVAT Act. In absence of any statutory requirement under Section 19(1) of the TNVAT
Act requiring proof for "movement of goods", denying ITC is illegal and beyond
provisions of TNVAT Act.
2.1 Section 19(1) of the TNVAT Act states that the registered purchasing dealer shall
take ITC on output tax, which is paid or payable, after establishing that such tax has
been paid by the purchasing dealer to the selling dealer (until 28.01.2016).
2 . 2 It is an admitted fact that these requirements have been duly satisfied by the
Petitioner. Hence, ITC has been duly availed. Reliance in this regard is also placed on the
decision of this Hon'ble Court in Assistant Commissioner (CT), Vadapalani I Assessment
Circle and Others v. Sri Vinayaga Agencies MANU/TN/4204/2021 : (2021) 84 GSTR 83
(Mad).
2.3 For the period from 29.01.2016, Section 19(1) of the TNVAT Act mandates that ITC
shall be taken by registered purchasing dealer on tax paid under the Act subject to the

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 conditions that (i) selling dealer has paid the same to the Government and (ii) the goods
have actually been delivered.
2.4 It is not in dispute herein that the first condition is satisfied. The only ground on
which the ITC is denied is on account of absence of proof for "physical movement of
goods" from seller's premises to the Petitioner's. As against the same, in FOB contracts,
it is submitted that the requirement under Section 19(1) is to be understood as to only
establish these goods have actually been received. In other words, there cannot be any
onus created to prove "movement of goods". Only delivery/receipt of the goods need to
be proved. The phrase "been delivered" has been wrongly construed by the 1st
Respondent to mean "movement of goods" alone.
2 .5 By providing Goods Inward maintenance register along with other corroborating
documents, the actual receipt of the goods has been established. These documents have
also not been disputed by the Department. Therefore, it is submitted that all the
requirements under Section 19(1) of the TNVAT Act have been duly satisfied and ITC
ought not to be denied.
3 . It is settled position in law that ITC is a vested right and cannot be taken away
without express provision of law. Reliance in this regard is placed on the decisions of
Eicher Motors Ltd. vs Union of India &Ors MANU/SC/0051/1999 : 1999 (106) E.L.T. 3
(S.C.) and CCE vs. Dai IchiKarkaria Limited MANU/SC/0467/1999 : 1999 (112) E.L.T.
353 (S.C.). Therefore, when there is no onus cast on the buying dealer to establish
physical movement of goods under Section 19(1) of the TNVAT Act, ITC cannot be
denied
4. Without prejudice, the Amendment cannot be applied retrospectively.
4 . 1 It issubmitted that the Amendment to Section 19(1) of the TNVAT Act, being
substantive in nature, cannot be interpreted to have retrospective operation as the
Amendment does not explicitly provide for the same.
4 . 2 It is a settled law that unless the Statute expressly provides it, retrospective
operation should not be given to a Statute so as to take away or impair an existing right
or create a new obligation or impose a new liability otherwise than as regards matters of
procedure. Reliance is placed on the decision of the Hon'ble Apex Court in the case of
Commissioner of Income Tax (Central)-I, New Delhi v. Vatika Township Private Limited
MANU/SC/0810/2014 : [2015] 1 SCC 1.
4 . 3 It is submitted that if the Amendment is given retrospective operation, it will
mandate a fresh requirement on the buyer to establish the actual delivery of the goods.
Such a fresh requirement, made for the first time, is very detrimental to buyers such as
the Petitioner.
4.4 Therefore, the Amendment, if given retrospectivity effect, will be against the settled
position of law. Reliance is placed on the decision of the Hon'ble Supreme Court in the
case of Jayam & Co. v. Assistant Commissioner &Anr. MANU/SC/0956/2016 : 2016 (9)
TMI 408-Supreme Court.
5 . For the balance disputed period between 29.01.2016 and 31.03.2016, provisions of
Section 64(3) and Rule 15(3) with respect to movement of goods do not create any
responsibility on the buyer, especially in case of FOB contracts.
5.1 During the course of arguments, it was advanced by the Ld. AAG that Section 64(3)
of the TNVAT Act read with Rule 15(3) and Form MM create onus on the buying dealer to
establish movement of goods from seller's premises to their premises. It is submitted
that the same is erroneous for the following reasons.
5.2 The said provision provides for documents to be carried during transportation of
goods. Further, the onus as per Section 64(3) and Rule 15(3) is on the selling dealer or

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 the carrier of goods on whose responsibility the said movement occurs. The bare perusal
of Form MM establishes the same.
5.3 It is submitted that, in case of FOB contracts, the buyer not being responsible for
movement of goods from selling dealer's premises until the receipt of goods at factory
gate of the buyer's, the said provisions are not applicable. That too, when the Statute
does not create any liability on the Buyer to maintain records in respect of "movement of
goods" in these scenarios.
5.4 The documents to be maintained by the purchasing dealer are contained in Rule 6 of
the TNVAT Rules and it is not in dispute that the Petitioner is in due compliance with the
same. Hence, ITC ought to be granted to the Petitioner.
6 . In light of the above, it was prayed that the Writ Petitions be allowed, and the
Impugned orders be quashed in its entirety.
2 6 . The learned counsel for the respondent Commercial Tax in their Written Statement have
stated as follows:-
I. The provisions of the TNVAT Act, 2006 under dispute
l Comparative Statement Provision prior & after amendment
Section Prior to amendment After amendment
/ Rule
There shall be input tax credit of
the amount of tax paid under this
Act, by the registered dealer to
T h e r e shall be input tax the seller on his purchases of
credit of the amount of tax taxable goods specified in the
paid or Payableunder this First Schedule :
Act, by the registered
dealer to the seller on his Provided that the registered
purchases of taxable goods dealer, who claims input tax
specified in the Firstcredit, shall establish that the tax
Section Schedule : due on purchase of goods has
19(1) actually been paid in the manner
Provided that the registered prescribed by the registered
dealer, who claims input dealer who sold such goods and
tax credit, shall establish that the goods have actually been
that the tax due on such delivered
purchases has been paid by
him in the manner Pro vi ded further that the tax
prescribed. deferred under section 32 shall
be deemed to have been paid
under this Act for the purpose of
this sub- section
R u l e 10(2):- Every
registered dealer who
claims input tax credit
under sub-section (1) of
section 19 shall, produce
the original tax invoice, in
support of his claim of the
input tax credit, containing
Rule the following details, No Amendment / Change
10(2) namely:-
( a ) A consecutive serial

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 number;
--------
(i) The total value of the
goods.
Rule Rule 2-A: Every registered dealer
10(2A) who claims input tax credit to the
extent of the tax paid on
p u r c h a s e s of taxable goods
specified in the First Schedule to
the Act from the other registered
------- dealers inside the State, shall
establish, whenever it is deemed
n e c e s s a r y by the assessing
authority, that the tax due on
such purchase of goods has
actually been remitted into the
Government account.
-------- Rule (2-B) For the removal of
doubts, it is hereby declared that,
in no case, the amount of set-off
or refund on any purchase of
goods shall exceed the amount of
tax in respect of the same goods,
Rule actually paid, if any, under the
10(2B) Act or any other Act referred to in
section 88 of the Act, into the
Government treasury except to
the extent where purchase tax is
payable by the claimant dealer on
the purchase of the said goods
effected by him;
• The section 19(1) of the TNVAT Act, 2006 was amended vide Act No 13 of
2015, dated 14.10.2015 and the amendment takes effect from 29.01.2016
• The Rule 10(2A) & (2B) was inserted by G.O.Ms. No. 18 Dated 29.01.2016
II. PRINCIPAL ARGUMENT OF THE PETITIONERS
The Section 19 (1) was amended by Act No 13 of 2015 with effect from
29.01.2016 with following consequences:
• The eligibility of Input Tax Credit (ITC) was restricted to the extent of
tax paid.
• The substituted proviso read newly introduced Rule 10(2A) of the
TNVAT Rules, 2007 prescribes the Proof of taxes having been paid
actually ought to be established, whenever it is deemed necessary.
• Further the substituted proviso states that the goods sold have
actually been delivered.
The thrust of the petitioners arguments in these writ petitions were that the
proof for delivery or proving the movement goods prior to 29.01.2016 is without
jurisdiction.
Thus, Production of original tax Invoices is conclusive evidences for the claim of
ITC as per the provision prior to the amendment. No further enquiry can be

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 made in order find the eligibility of the claim ITC.
III. SUBMISSION OF THE RESPONDENT
1. Objects and Reasons for the insertion of the Proviso
l. The LA Bill No 8 of 2015-Tamil Nadu Value Added Tax (Second
Amendment) Act, 2015 States the following as Statement of objects and
reasons behind the substitution of the proviso to section 19(2) of the
TNVAT Act, 2006.
(d) Allowing input tax credit only to the extend of the tax paid to the
exchequer by a registered dealer to another registered dealer on the
purchase of goods including capital goods in the course of his business,
only when such tax has actually been paid by the registered dealer who
sold such goods, so as to curb under claims towards input tax credit
resulting in tax evasion;
2. The general facts of the case in all these writ petitions.
a) The place of business was inspected by the enforcement wing on
suspicious bill trading activities;
b) Business was carried on in a large scale without proper infrastructure
and even no godown for storing the goods in many cases ;
c) No stock or very minimum stock was available at the time of
inspection;
d) The sellers were not non-existent or related parties;
e) In some cases, the buyer and seller are located in the same
premises;
f) No proper records were not maintained for the transfer of goods in
pursuance to the sale;
g) No transport document and incidental charges connected with the
purchase and sales of goods were maintained;
h) The transaction with minimum value addition and the entire
discharge of output tax was by of ITC and only marginal amount of tax
was paid.
i) In the above background the Assessing Authority has questioned the
genuineness of the transactions (or) the existence of buyers/sellers and
more importantly involvement of goods and in turn has called/sought
for furnishing documents relating to movement/delivery of goods.
3 . Whether the delivery of goods/actual passing of title of goods is essential
attribute of sale?
• The section 2(33) of the TNVAT Act, 2006 defines ' sale' with all its
grammatical variations and cognate expressions means every transfer of
the property in goods (other than by way of a mortgage, hypothecation,
charge or pledge) by one person to another in the course of business
for cash, deferred payment or other valuable consideration and includes
,-
• The section 31 of the sale of Goods Act, 1930 states that it is the duty
of the seller to deliver the goods and of the buyer to accept and pay for

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 them, in accordance with the terms of the contract of sale. The Section
32 of the sale of Goods Act, 1930 states that unless otherwise agreed,
delivery of the goods and payment of the price are concurrent
conditions, that is to say, the seller shall be ready and willing to give
possession of the goods to the buyer in exchange for the price, and the
buyer shall be ready and willing to pay the price in exchange for
possession of the goods.
• The sale simpliciter means transfer of the property in goods from one
person to another. Therefore the delivery of goods is an essential
attribute of sale/purchase. Thus, irrespective of the Amendment Act 13
of 2015, delivery of goods pursuant to a contract of sale is essential.
Decision relied on
• The Apex Court in the case of Poppatlal Shah-MANU/SC/0074/1953 : 4 STC
188-has held that
"The expression "sale of goods" is a composite expression consisting of
various ingredients or elements. Thus, there are the elements of a
bargain or contract of sale, the payment or promise of payment of price,
the delivery of goods and the actual passing of title, and each one of
them is essential to a transaction of sale though the sale is not
completed or concluded"
• The Apex Court in the case of BSNL Vs UOI-MANU/SC/1091/2006 : 2006 (3)
SCC 1-has held that
"The Sale of Goods Act 1930 comprehends two elements, one is a sale
and other is delivery of goods."
4 . The ITC is a concession granted by Statute and can be availed as per
conditions
• The Apex Court in the case of Jayam & Co Vs Assistant
CommissionerMANU/SC/0956/2016 : -[2016] 15 SCC 125has held at
para 11 & 12.
" 11.From the aforesaid scheme of Section 19 following significant
aspects emerge:
(a) ITC is a form of concession provided by the legislature. It is not
admissible to all kinds of sales and certain specified sales are
specifically excluded.
(b) Concession of ITC is available on certain conditions mentioned in
this section.
(c) One of the most important condition is that in order to enable the
dealer to claim ITC it has to produce original tax invoice, completed in
all respect, evidencing the amount of input tax.
12.It is a trite law that whenever concession is given by statute or
notification, etc. the conditions thereof are to be strictly complied with
in order to avail such concession. Thus, it is not the right of the
"dealers" to get the benefit of ITC but it is a concession granted by
virtue of Section 19".
5 . Whether the substituted proviso to section 19(2), which provides actual
delivery of goods is prospective or retrospective?

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 • Even prior to the amendment, the duty cast on the petitioner is prove
to the transaction of sale is real for the entitlement of ITC. The
assessing authority is empowered to make such enquiry in the case
transaction of bill trading to defraud revenue as per section 19(13) of
the TNVAT Act, 2006 read with section 65 & 81 of the TNVAT Act, 2006.
• Such enquiry in case of bill trading empower the authority to look
beyond the production of original bill and to call for proof delivery of
goods.
• When such being the position the amendment brought in explicitly
providing the condition of actual delivery of goods, by way of removal
doubts that the mere production invoice/bill would not be suffice to
prove the transaction which are not real sales. Thusamendment is only
declaratory/ clarificatory and takes retrospective effect.
• The LA Bill No 8 of 2015 specifies the object and reason to curb undue
claim of ITC resulting in tax evasion.
Decision relied on:
• The Apex Court in the case of Commissioner of IT vs-Vatika Township P Ltd-
MANU/SC/0810/2014 : [2015] 1 SCC 1--held at Para 32
" 32.Let us sharpen the discussion a little more. We may note that under
certain circumstances, a particular amendment can be treated as
clarificatory or declaratory in nature. Such statutory provisions are
labelled as "declaratory statutes". The circumstances under which
provisions can be termed as "declaratory statutes" are explained by
Justice G.P. Singh [Principles of Statutory Interpretation, (13th Edn.,
LexisNexis Butterworths Wadhwa, Nagpur, 2012)] in the following
manner:
"Declaratory statutes
The presumption against retrospective operation is not applicable to
declaratory statutes. As stated in C RAIES [ W.F. Craies, Craies on
Statute Law (7th Edn., Sweet and Maxwell Ltd., 1971)] and approved by
the Supreme Court [Ed.: The reference is to Central Bank of India v.
Workmen, MANU/SC/0142/1959 : AIR 1960 SC 12, para 29] : 'For
modern purposes a declaratory Act may be defined as an Act to remove
doubts existing as to the common law, or the meaning or effect of any
statute. Such Acts are usually held to be retrospective. The usual reason
for passing a declaratory Act is to set aside what Parliament deems to
have been a judicial error, whether in the statement of the common law
or in the interpretation of statutes. Usually, if not invariably, such an Act
contains a Preamble, and also the word "declared" as well as the word
"enacted".' But the use of the words 'it is declared' is not conclusive that
the Act is declaratory for these words may, at times, be used to
introduced new rules of law and the Act in the latter case will only be
amending the law and will not necessarily be retrospective. In
determining, therefore, the nature of the Act, regard must be had to the
substance rather than to the form. If a new Act is 'to explain' an earlier
Act, it would be without object unless construed retrospective. An
explanatory Act is generally passed to supply an obvious omission or to
clear up doubts as to the meaning of the previous Act. It is well settled
that if a statute is curative or merely declaratory of the previous law
retrospective operation is generally intended. The language 'shall be
deemed always to have meant' is declaratory, and is in plain terms

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 retrospective. In the absence of clear words indicating that the
amending Act is declaratory, it would not be so construed when the pre-
amended provision was clear and unambiguous. An amending Act may
be purely clarificatory to clear a meaning of a provision of the principal
Act which was already implicit. A clarificatory amendment of this nature
will have retrospective effect and, therefore, if the principal Act was
existing law which the Constitution came into force, the amending Act
also will be part of the existing law."
The above summing up is factually based on the judgments of this Court
as well as English decisions."
• The Apex Court in Allied Motors P Ltd Vs Commissioner of IT- in
MANU/SC/0317/1997 : [1997] 3 SCC 472-held at Para-13
13. "A proviso which is inserted to remedy unintended consequences
and to make the provision workable, a proviso which supplies an
obvious omission in the section and is required to be read into the
section to give the section a reasonable interpretation, requires to be
treated as retrospective in operation so that a reasonable interpretation
can be given to the section as a whole."
Commissioner of IT-Vs Gold coin Health Food P Ltd- MANU/SC/3523/2008 : [
2008] 9 SCC 622--held at Para-8
" 8. The court has toanalyse the nature of the amendment to come to a
conclusion whether it is in reality a clarificatory or declaratory
provision. Therefore, the date from which the amendment is made
operative does not conclusively decide the question. The court has to
examine the scheme of the statute prior to the amendment and
subsequent to the amendment to determine whether amendment is
clarificatory or substantive".
• The Apex Court in the case of Zile Singh Vs State of Haryana-
.MANU/SC/0876/2004 : [2004] 8 SCC 1-held at Para 15
" 15.Though retrospectivity is not to be presumed and rather there is
presumption against retrospectivity, according to Craies (Statute Law,
7th Edn.), it is open for the legislature to enact laws having
retrospective operation. This can be achieved by express enactment or
by necessary implication from the language employed. If it is a
necessary implication from the language employed that the legislature
intended a particular section to have a retrospective operation, the
courts will give it such an operation. In the absence of a retrospective
operation having been expressly given, the courts may be called upon to
construe the provisions and answer the question whether the legislature
had sufficiently expressed that intention giving the statute
retrospectivity. Four factors are suggested as relevant: (i) general scope
and purview of the statute; (ii) the remedy sought to be applied; (iii)
the former state of the law; and (iv) what it was the legislature
contemplated. (p. 388) The rule against retrospectivity does not extend
to protect from the effect of a repeal, a privilege which did not amount
to accrued right. (p. 392)"
6. The scope of proviso
• The Apex Court has explained the scope of proviso as below in the
case S.Sundaram Pillai & others vs-V R Pattabiraman& others-
MANU/SC/0387/1985 : [1985] 1 SCC 591-Para 43

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 "43.We need not multiply authorities after authorities on this point
because the legal position seems to be clearly and manifestly well
established. To sum up, a proviso may serve four different purposes:
(1) qualifying or excepting certain provisions from the main enactment:
(2) it may entirely change the very concept of the intendment of the
enactment by insisting on certain mandatory conditions to be fulfilled in
order to make the enactment workable:
(3) it may be so embedded in the Act itself as to become an integral
part of the enactment and thus acquire the tenor and colour of the
substantive enactment itself; and
(4) it may be used merely to act as an optional addenda to the
enactment with the sole object of explaining the real intendment of the
statutory provision."
7. Whether the substantive right of the petitioners affected?
• The Section 64(1) of the TNVAT Act, 2006 states that every person
registered under this Act, shall keep and maintain an up-to-date, true
and correct account showing full and complete particulars of his
business
• The section 64(3) of the TNVAT Act, 2006 states that every registered
dealer or person who moves goods in pursuance of a sale or purchase
or otherwise from one place to another shall send along with the goods
moved a bill of sale or delivery note or such other documents, as may
be prescribed.
• The Rule 6 (1) of the TNVAT Rules, 2007 states that every registered
dealer under the Act shall maintain true, correct and complete account
in ink or electronic records in any of the languages specified in the
Eighth Schedule to the Constitution of India or in English showing the
goods produced or manufactured, bought, sold, delivered or supplied.
• The Rule 6 (11) of the TNVAT Rules, 2007 states that theaccounts
maintained by a registered dealer shall be preserved by him for a period
of [six]* years from the date of assessment. *Substituted "Six" for the
word 'five' by G.O.Ms. No. 83 dated 18th June 2012, effective from 19th
June 2012.
• The Rule 15 (3) of the TNVAT states that for purposes of sub-section
(3) of section 64 and sub-section (5) of section 67, the following shall
be the documents to be sent along with the goods, namely:-
(a) A bill of sale or a delivery note in Form JJ and a goods vehicle
record or trip sheet or log book;
• In view of the above provision, the petitioners are bound to maintain
complete records pertaining to his business. The claim of ITC is only
provisional as per section 19(16) of the TNVAT Act, 2006 and further
the ITC is concession granted by the statute, which can be availed on
fulfilling the conditions and subject to verification of the records
wherever necessary. The requirement of proving the transactions as real
and mere bill trading is responsibility cast of the petitioner for claim of
ITC. The petitioners are supposed to maintain the records and preserve
them for the period mentioned as per provision of the Act. Therefore
substantive right of petitioner were not taken away or endangered.

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 8. Can the decision of DB in the case VinayagaAgensies in WA No 4292 of 2019
dated 04.03.2020 is a direct proposition on the issue on hand?
• In this case, the factum of sale is not questioned and ITC was
disallowed for only reason that seller has not paid the tax collected by
him. In these circumstances, the Hon'ble Division Bench has held that
ITC claimed by the buyer cannot be reversed. At Para 8 the Hon'ble
Division Bench held as follows:
" In the present case, for non-deposit of due tax collected form the
purchasing dealer M/s.Vinayaga Agencies, the Revenue is therefore free
to hold enquiry against the selling dealer and collect the Revenue from
the 6/8 http://www.judis.nic.in W.A. No. 4292 of 2019 & CMP. No.
26910 of 2019 selling dealer, which money in the hands of selling
dealer, is held in trust for the State by the selling dealer. It is not the
case of the Revenue before us that the selling dealer in the present case
is a non-existent or a ghost dealer. The identity and registration of the
selling dealer and the fact that he collected the tax from the purchasing
dealer in question are duly proved on record and are not disputed"
• The Division Bench in the case of Vinayaga Agencies has not
considered the scope of proviso in regard " goods have actually been
delivered".
• In all these cases, the very factum of sale is questioned. The
transactions and the invoices are treated as bogus and make believe for
a variety of reasons ranging from non-existent dealers, transaction
between same set of dealers, no goods was supplied, etc. Therefore the
decision rendered in Vinayaga Agencies case will not squarely apply to
the facts of these writ petitions.
9 . Whether the production of tax invoice would amount sufficient discharge of
burden for the claim of ITC?
• The section 2(24) of the TNVAT Act, 2006 defines ITC means the tax
paid under this Act by a registered dealer to another registered dealer
on the purchase of goods including capital goods in the course of his
business;
• The section 19(13) of the TNVAT Act, 2006 states that the assessing
authority shall, after making such enquiry deny the benefit of input tax
credit to such registered dealer who without entering into a transaction
of sale, issues an invoice, bill or cash memorandum to another
registered dealer, with the intention to defraud the Government
revenue.
The entitlement of ITC is dependent on the actual sale of goods. Thus in order
to prove that the transactions in question are real transaction of sale and not
mere issue of invoice/bill to defraud revenue, the production of original tax
invoice would not be sufficient discharge of burden cast on them in lieu of
section 19(13) of the TNVAT Act, 2006.
Decision relied on
The Apex Court in the case of ALD Automotive(P) Ltd. v. CTO,
MANU/SC/1168/2018 : (2019) 13 SCC 225 has held at Para 20, 23,24 as below
" 20.Another principle of statutory interpretation which needs to be
noticed is that a provision in the statute is not to be read in isolation
rather it has to be read along with other related provisions itself, more

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 particularly when the subject-matter dealt with in different sections or
parts of the same statute is the same. This proposition was reiterated by
this Court in Kailash Chandra v. Mukundi Lal [Kailash Chandra v.
Mukundi Lal, MANU/SC/0049/2002 : (2002) 2 SCC 678] . In para 11,
the following has been laid down: (SCC p. 683)
"11.A provision in the statute is not to be read in isolation. It has to be
read with other related provisions in the Act itself, more particularly,
when the subject-matter dealt with in different sections or parts of the
same statute is the same or similar in nature."
23. The section 3 sub-section (3) provided that tax payable under sub-
section (2) by registered dealer shall be reduced, in the manner
prescribed, to the extent of tax paid on his purchase of goods specified
in Part B and Part C of the First Schedule inside the State, who is the
registered dealer who sold the goods to him. The provision of Section 3
sub-section (3) is a provision which entitled a registered dealer to
obtain a tax credit which has been explained in Section 19. The
submission that Section 19 is inconsistent to Section 3(3) is wholly
misconceived. What is envisaged in Section 3 sub-section (3) is
amplified and explained in Section 19. The reduction in the tax as
contemplated in Section 3 sub-section (3) has to be in the manner and
as provided in Section 19. Section 19(11) contains a condition for
claiming the input tax credit. As noticed above, there are other various
provisions in Section 19 itself where it contains provisions where no
input tax credit is allowable e.g. Section 19(6)to Section 19(10)
24. When the input tax credit is to be allowed and when it is to be
disallowed is elaborated in Section 19 which is a self-contained scheme
and benefit under Section 3 sub-section (3) can be claimed only when
conditions as enumerated in Section 19 are fulfilled.
• The DB of Madras High Court in the case of Rattan Steel V The State of Tamil
Nadu [MANU/TN/1100/2013] has held at Para 5
" Even though learned counsel for the assessee pointed out that the
cancellation of registration was only on 19.11.1993 and hence,
exemption could be allowed in respect of sales taken place prior to the
date as taken from the registered dealer, we do not find any ground to
accept this reasoning. When the said dealer has not proved the
genuineness of the transactions, and there being no material to
substantiate the contention of the assessee that the said Raghavendra
Enterprises had in fact handled the goods, even for the period prior to
the date of cancellation of registration, we do not find any ground to
differ from the view taken by the Tribunal."
• The DB of Gujarat High court in the case of Madhav Steel Corporation vs State
of GujaratMANU/GJ/1300/2013 : -[2014] 72 VST 318-(Pl refer Para No 6
"6. Considering the aforesaid facts and circumstances of the case and
when the appellants/dealers have failed to satisfy/prove the actual
physical movement of the goods alleged to have been purchased by
them from the aforesaid two vendors on which the input-tax credit have
been claimed and when the sale transactions are found to be not
genuine and it appears that there were only billing activities, we are of
the opinion that no error has been committed by the assessing officer as
well as learned Tribunal in denying the input-tax credit. Under the
circumstances, as such the proposed substantial questions of law
referred to herein above are answered against the appellants/dealers

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 and in favour of the Revenue."
• The DB of AP High Court in the case of Dwaraka PershadBadari Pershad vs
State of AP- MANU/AP/0458/1992 : [1992] 87 STC 177 has held as follows
" A perusal of the order of the Tribunal in regard to the said seven
dealers, shows that they were all fictitious dealers whose addresses and
names did not exist. However, Sri Srinivasa Reddi contends that the
dealers had registered their names with the department and they shall
be deemed to be genuine dealers. We are unable to accept the same. If
the petitioner is claiming exemption it is for him to show that he had
purchased pulses from dealers who are in existence. Registration of
certain names as dealers with the department would not ipso facto
entitle the petitioner to the exemption if the said dealers are found to be
fictitious and non existing"
10. Whether it is permissible for the authority to call for proof of movement of
goods?
• The section 19(13) of TNVAT Act, 2006 authorises the authority for
making such enquiry in such cases, the claim of ITC by issuing mere
invoice without entering into a transaction of sale, with the intention to
defraud the Government revenue
• The Section 65 of TNVAT Act, 2006 grants power to any officer
prescribed by the Government, for the purposes of this Act, require any
dealer to produce before him the accounts, registers, records and other
documents, and to furnish any other information relating to his business
• The section 81 of TNVAT Act, 2006 empowers the an assessing
authority not below the rank of an Deputy Commercial Tax Officer shall,
for the purposes of this Act, have all the powers conferred on a court by
the Code of Civil Procedure, 1908 (Central Act V of 1908), for the
purpose of-
(a) summoning and enforcing the attendance of any person and
examining him on oath or affirmation; and (b) compelling the
production of any document.
• By virtue of the above provisions, the assessing authority is
empowered to call for production of any documents or any other
information relating to the business, which certain includes the records
such as transport of the goods, delivery of goods, payments incurred
incidental to such movement/ delivery of goods, etc. The assessing
authority is empowered to make such enquiry beyond the original Tax
invoice, regarding delivery of goods as provided under section in order
to ensure that the transaction of sale is real.
• The need for calling for a movement of goods arises only to ensure
that there was delivery of goods. It may be relevant to submit that the
movement of goods is the most proximate fact relating to delivery of
goods and is inextricably linked to delivery. Thus, proof of movement of
goods is relevant to find delivery of goods or otherwise.
11. The Burden of proof in regard to claim of ITC
The Section 17 (2) of the TNVAT Act, 2006 states that for the purpose of claim
of input tax credit, the burden of proving such claim shall lie on such dealer.
2 7 . We have considered the arguments advanced on behalf of the learned counsel for the

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 petitioners and appellants and the learned counsel for the respondent.
28. Section 19 of the TN VAT Act,2006 is the substantial provision for grant of input tax credit to
a registered dealer on the incidence of tax borne in the tax invoice. Input tax credit is to be
availed on the strength of original copy of the invoice as per Section 19(10)(a) of the TN VAT
Act, 20006 read with Rule 10 of the TN VAT Rules, 2007.
29. Section 19(1) of the TN VAT Act, 2006, was amended with effect from 29.01.2016 vide
Second Amendment Act (13 of 2015) 2015 with effect from 29.01.2016. Denial of input tax
credit availed and utilized in these cases pertains to the period prior to the above amendment to
Section 19 of the TN VAT Act, 2006 with effect from 29.01.2016, except in W.P No. 11489 of
2019 (one of the Writ Petitions filed by Tvl.Atmosfaira Impex Pvt. Ltd.). Rest of the cases of all
the petitioner/appellants are governed by the proviso to Section 19(1) of the TN VAT Act, 2006,
as it stood prior to the amendment with effect from 29.01.2016.
30. Prior to amendment to Section 19(1) of the TN VAT Act, 2006, read slightly different from
how it reads after the said amendment vide Second Amendment Act (13 of 2015) 2015 with
effect from 29.01.2016. For a proper perspective, Section 19(1) of the TN VAT Act, 2006 as it
read prior to 29.01.2016 and after 29.01.2016 are reproduced as under:-
TABLE-A
Section 19 (prior to Section 19 (w.e.f. 29.01.2016)
amendment)
19(1): There shall be input19(1): There shall be input tax
tax credit of the amount of credit of the amount of tax
tax paid or payable under this paid under this Act, by the
Act, by the registered dealer registered dealer to the seller
to the seller on his purchases on his purchases of taxable
of taxable goods specified in goods specified in the First
the First Schedule: Schedule:
Provided that the registered Provided that the registered
dealer, who claims input tax dealer, who claims input tax
credit, shall establish that the credit, shall establish that the
tax due on such purchase has tax due on purchase of goods
been paid by him in the has actually been paid in the
manner prescribed manner prescribed by the
regi stered dealer who sold
such goods and that the goods
have actually been delivered.
Provided further that the tax
deferred under Section 32 shall
be deemed to have been paid
under this Act for the purpose
of this sub-section.
31. The amendment to Section 19(1) of the TN VAT Act, 2006 vide Second Amendment Act (13
of 2015) with effect from 29.01.2016 led to a corresponding insertion of Rule 10(2-A) to TN VAT
Rules, 2007. Rule 10(2-A) of the TN VAT Rules, 2007 reads as under:-
10. Input tax credit .-
(1).........
(2) .......
(2-A) Every registered dealer who claims input tax credit to the extent of the tax
paid on purchases of taxable goods specified in the First Schedule to the Act

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 from the other registered dealers inside the State, shall establish, whenever it is
deemed necessary by the assessing authority, that the tax due on such purchase
of goods has actually been remitted into the Government account.
32. Under Rule 10(2-A) to TN VAT Rules, 2007 after the amendment, a registered dealer who
claims ITC has to establish that the tax on purchase of goods has actually been paid in the
manner prescribed by the registered dealer who sold the goods and that the goods have actually
been delivered. Prior to the amendment, credit was available on the tax paid or payable under
the Act. This amendment is in tune with the manner in which the scheme for grant of input tax
credit was to be allowed.
33. To give effect to the above, amendment, recovery mechanism under Section 27(4) of the TN
VAT Act, 2006 was further strengthened by the same amendment Act. Section 27(2) and Section
27(4) of the TN VAT Act, 2006 as it read before and after amendment are extracted as under:-
TABLE-B
27 (2) of TNVAT Act, 2006
27(2)Where, for any reason, the input tax credit has been
availed wrongly or where any dealer produces false bills,
vouchers, declaration certificate or any other documents
with a view to support his claim of input tax credit or
refund, the assessing authority shall, at any time, within a
period of six years from the date of assessment, reverse
input tax credit availed and determine the tax due after
making such a enquiry, as it may consider necessary:
Provided that no order shall be passed under sub-sections
(1) and (2) without giving the dealer a reasonable
opportunity to show cause against such order.
Section 27(4) prior to 27(4) of TNVAT Act, 2006
amendment after amendment
In addition to the tax In addition to the tax
determined under sub- determined under sub-
section(2),the assessing section (2), the assessing
authority shall direct the authority shall direct the
dealer to pay as penalty a dealer to pay as penalty a
sum: sum which shal l be three
hundred percent of the tax
(which shall be in the case of due in respect of such
first such detection fifty claim.
percent of the tax due in
respect of such claim; and
27 (2) of TNVAT Act, 2006
(ii) which shall be in the case
of second or subsequent
detections, one hundred
percent of the tax due in
respect of such claim.
Provided that no penalty shall be levied without giving the
dealer a reasonable opportunity of showing cause against
such imposition.
34. Section 19 of the TN VAT Act, 2006 is inspired from Rule 4(7) of the CENVAT Credit Rules,
2004. Both the proviso to Section 19(1) of the TN VAT Act, 2006 before the amendment and
after the amendment are somewhat similar to Rule 4(7) of the CENVAT Credit Rules, 2004.

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 3 5 . As per Rule 4(7) of the CENVAT Credit Rules, 2004, CENVAT Credit in respect of input
service shall be allowed, on or after the day on which payment is made of the value of input
service and the service tax paid or payable as indicated in invoice, bill or, as the case may be,
challan referred to in Rule 9.
36. At the time of inception, Rule 4(7) of the CENVAT Credit Rules, 2004 reads as under:-
4. Conditions for allowing CENVAT credit.-
(1) .......
............
(7) The CENVAT credit in respect of input service shall be allowed, on or after the day
which payment is made of the value of input service and the service tax paid or payable
as is indicated in invoice, bill or, as the case may be, challan referred to in rule 9.
PROVIDED that in respect of input service where whole or part of the service tax is liable
to be paid by the recipient of service, credit of service tax payable by the service
recipient shall be allowed after such service tax is paid
37. The provisions of CENVAT Credit Rules, 2004 which replaced the CENVAT Credit Rules, 2002
were drafted with a lot of caution and care after having gained a rich experience since the
introduction of Proforma Credit under the provision of the Central Excise Rules, 1944 and under
the Modvat Credit Rules under the provision of the Central Excise Rules, 1944.
38. Several provisos to Rule 4(7) of CENVAT Credit Rules, 2004 were later periodically inserted
over a period of time to ensure that there was no leakage of revenue on account of input tax
credit facility being extended. After the insertion of provisos, Rule 4(7) of CENVAT Credit Rules,
2004 reads as under:-
4. Conditions for allowing CENVAT Credit.
(1)...........
...............
(7) The CENVAT credit in respect of input service shall be allowed, on or after the day on
which the invoice, bill or, as the case may be, challan referred to in rule 9 is received:
PROVIDED that in respect of input service where whole or part of the service tax
is liable to be paid by the recipient of service, credit of service tax payable by
the service recipient shall be allowed after such service tax is paid:
PROVIDED FURTHER that in case the payment of the value of input service and
the service tax paid or payable as indicated in the invoice, bill or, as the case
may be, challan referred to in rule 9 is not made within three months of the date
of the invoice, bill or, as the case may be, challan, the manufacturer or the
service provider who has taken credit on such input service, shall pay an amount
equal to the CENVAT credit availed on such input service, except an amount
equal to the CENVAT credit of the tax that is paid by the manufacturer or the
service provider as recipient of service, and in case the said payment is made,
the manufacturer or output service provider, as the case may be, shall be
entitled to take the credit of the amount equivalent to the CENVAT credit paid
earlier subject to the other provisions of these rules:
PROVIDED ALSO that in respect of services provided or agreed to be provided
by a person located in non-taxable territory to a person located in non-taxable
territory by way of transportation of goods by a vessel from a place outside
India up to the customs station of clearance in India where service tax is paid by

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 the manufacturer or the provider of output service being importer of goods, as
the person liable for paying service tax for the said taxable services, credit of
service tax paid by the person liable for paying service tax shall be allowed after
such service tax is paid:
PROVIDED ALSO that if any payment or part thereof, made towards an input
service is refunded or a credit note is received by the manufacturer or the
service provider who has taken credit on such input service, he shall pay an
amount equal to the CENVAT credit availed in respect of the amount so refunded
or credited:
PROVIDED ALSO that CENVAT credit in respect of an invoice, bill or, as the case
may be, challan referred to in rule 9, issued before the 1st day of April, 2011
shall be allowed, on or after the day on which payment is made of the value of
input service and the service tax paid or payable as indicated in invoice, bill or,
as the case may be, challan referred to in rule 9:
PROVIDED ALSO that the manufacturer or the provider of output service shall
not take CENVAT credit after one year of the date of issue of any of the
documents specified in sub-rule (1) of rule 9, except in case of services
provided by Government, local authority or any other person, by way of
assignment of right to use any natural resource:
PROVIDED ALSO that CENVAT Credit of Service Tax paid in a financial year, on
the one-time charges payable in full upfront or in instalments, for the service of
assignment of the right to use any natural resource by the Government, local
authority or any other person, shall be spread evenly over a period of three
years:
PROVIDED ALSO that where the manufacturer of goods or provider of output
service, as the case may be, further assigns such right assigned to him by the
Government or any other person, in any financial year, to another person
against consideration, such amount of balance CENVAT credit as does not
exceed the service tax payable on the consideration charged by him for such
further assignment, shall be allowed in the same financial year:
PROVIDED ALSO that unavailed CENVAT Credit in respect of services provided
by the Government, local authority or any other person by way of assignment of
the right to use any natural resources on the day immediately preceding the
appointed day may be availed of in full on that very day.
Explanation I:The amount mentioned in this Rule, unless specified otherwise,
shall be paid by the manufacturer of goods or the provider of output service by
debiting the CENVAT credit or otherwise on or before the 5th day of the
following month except for the month of March, when such payment shall be
made on or before the 31st day of the month of March.
Explanation II: If the manufacturer of goods or the provider of output service
fails to pay the amount payable under this rule, it shall be recovered, in the
manner as provided in rule 14, for recovery of CENVAT credit wrongly taken.
Explanation III:In case of a manufacturer who avails the exemption under a
notification based on the value of clearances in a financial year and a service
provider who is an individual or proprietary firm or partnership firm, the
expressions, "following month" and "month of March" occurring in sub-rule (7)
shall be read respectively as "following quarter" and "quarter ending with the
month of March".
Explanation IV:"unavailed CENVAT Credit" means the amount that remains after

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 subtracting the amount of CENVAT credit already availed in respect of any
service from the aggregate amount of CENVAT credit to which the recipient of
such service was entitled to in respect of such service.
Explanation V: "appointed day" means the date on which the provisions of the
Central Goods and Service Tax Act, 2017 (12 of 2017) shall come into force.
39. Modvat Credit allowed a manufacturer to avail input tax credit on the excise duty paid and
on the additional duty of customs paid on the import equivalent to the excise duty paid on the
like goods manufactured in India for being availed as credit and utilized at the time of removal of
goods for payment of excise duty under Section 3 of the Central Excise Act, 1994.
40. In 2004, there was further liberalization. Not only input tax credit on inputs but also on
input services as input tax credit were allowed for being utilized for discharging not only the
duty liability under the Section 3 of the Central Excise Act, 1944 and also service tax liability
under the provisions of the Finance Act, 1994 on the service provided.
41. Though, Section 19 of the TN VAT Act, 2007 was inspired from the first proviso to Rule 4(7)
of the CENVAT Credit Rules, 2004, Section 19 of the TN VAT Act, 2007 was not drafted properly,
when TN VAT Act, 2006 was enacted in the year 2006. As per Section 19(1) of the TN VAT, 2016
and Rule 10 of TN VAT Rule, 2007 input tax credit could be availed on the strength of the
original invoice alone.
4 2 . However, under the proviso as it stood prior to amendment, a registered dealer who
intended to claim input tax credit had to establish that tax due on such purchase was "paid by
him" in the manner prescribed. During the period prior to the amendment, the Rule 10 of the TN
VAT Rules.2007, also did not prescribe the manner for establishing how the tax due on such
purchases was to be paid by such a dealer like the petitioners/appellants purchasing goods who
availed input tax credit on the incidence of tax borne on the purchase made by them.
43. There was a legal impossibility in the proviso to Section 19(1) of the TN VAT Act, 2006 as
tax is not paid by the buyer. The buyer would pay tax only when "purchase tax" was payable
under Section 12 of the TN VAT Act, 2006. Thus, there was a defect in the proviso to Section
19(1) of the TN VAT Act, 2006. Proviso to Section 19(1) of the TN VAT Act, 2006 was incapable
of being complied by the petitioners/appellants when they availed credit.
44. The draftsmen while drafting proviso to Section 19(1) TN VAT Act, 2006 failed to capitalize
and borrow the wisdom from the rich experience gained by their counter parts from the Central
Excise Department who had successfully implemented Proforma Credit/ Modvat/CENVAT Credit
under the provisions of the erstwhile Central Excise Rules, 1944 and later under the CENVAT
Credit Rules, 2004.
45. The draftsmen while drafting Section 19(1) of the TN VAT Act, 2006 failed to fundamentally
take note of the fact that TN VAT Act, 2006 is an indirect tax and tax is paid by the dealer who
effects sale at the month end at the time of filing monthly returns and tax is not by the recipient
or the purchaser of the goods on reverse charge basis unless "purchase tax" was payable by the
purchaser under Section 12 of the TN VAT Act, 2006.
46. Like in the case of all indirect taxes, as dealers registered under the provisions of TN VAT
Act, 2006, the petitioners/appellants would have merely borne the incidence of tax paid/payable
by the dealer who effected such sale to them on purchase made by them. It is the registered
dealer who sold the goods to them who was liable to pay tax under the scheme of TN VAT Act,
2006. Likewise, the petitioners/appellants, while effecting further sale would have charged tax
on their buyers in their tax invoice on the value addition made by them on the goods and would
have only passed on the incidence of tax "payable" or "paid" by them to their customers/buyers.
47. The responsibility to pay tax (VAT) was on the registered dealer who effects sale within
State under the scheme of TN VAT Act, 2006. This crucial aspect which is so fundamental to any
indirect tax was missed out by the draftsmen who drafted proviso to Section 19(1) of the TN VAT

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 Act, 2006.
48. Proviso to Section 19(1) of the TN VAT Act, 2006 as it stood with effect from 1.1.2007, the
day on which it came into force thus had a congenital defect from the time of its birth. The
defect continued till the defect was removed in 2016. Strictly, this defect disabled a dealer to
avail input tax credit on the incidence of tax borne on the purchase unless tax was paid under
Section 12 of the TN VAT Act, 2006.
4 9 . The situation contemplated in the proviso to Section 19(1) of the TN VAT Act, 2006 as
extracted in the Column-1 to Table A was thus impossible of being complied by registered
dealers like the petitioners/appellants to avail input tax credit though the very purpose of
enacting TN VAT Act, 2006 was to allow input tax credit to a registered dealer on the incidence
of tax borne on each purchase by such dealer who intends to either effect further sale and use
the goods in the manufacture of some other taxable goods.
50. Proviso to Section 19(1) of the TN VAT Act, 2006 was rectified only in 2016 vide Second
Amendment Act (13 of 2015) with effect from 29.01.2016 after realizing that the proviso to
Section 19(1) of the TN VAT Act, 2006 as was not precise due to defective drafting and allowed
input tax credit facility being misused and abused by unscrupulous dealers leading to a large
scale leakage of revenue in the past. Thus, it made it mandatory for a dealer intending to avail
input tax credit to establish that was paid by the dealer who effected sale before availing input
tax credit. Either way, availing of input tax credit was contingent on the tax being paid by the
dealer effecting sale.
51. Likewise, Rule 10(2-A) to Rule 10 of the TN VAT Rules, 2007 was inserted to quell further
leakage of revenue. Section 27(4) was further strengthened to impose higher penalty where
credit was wrongly availed and utilized.
52. The provisions of TN VAT Act, 2006 were more evolved than CENVAT Credit Rules, 2004,
from which it is inspired, as TN VAT Act, 2006 contemplated recovery of input tax credit under
the following circumstances:-
a) when credit was wrongly availed; or
b) where any dealer produces false bills, vouchers, declaration certificate or any other
documents to avail input tax credit [Section 19(13)]; or
c) where the registration of the dealer who sold the goods was cancelled retrospectively
[Section 19(15)],
53. Yet, the manner in which the proviso to Section 19(1) of the TN VAT Act, 2006 was drafted,
allowed leakage of revenue in the form of credit being passed on the without a transaction of
sale.
54. Although, there was a defect in the manner in which proviso to Section 19(1) of the TN VAT
Act, 2006 was drafted, it should be borne in mind that the TN VAT, Act, 2006 was enacted like
every other VAT enactment to levy and collect tax at each stage of sale on the value addition by
allowing input tax credit on the incidence of tax borne at each stage of purchase for being set-
off. It was intended to reduce the outflow of cash from the hands of the purchaser dealer while
effecting subsequent sale.
55. It is also not our intention to deny credit although a strict reading of Section 19(1) of TN
VAT Act, 2006 and Rule 10 of TN VAT Rules, 2007, as it stood prior to the amendment would not
have allowed them to avail input tax credit in the manner in which proviso was drafted. There is
also no doubt in our mind that the petitioners/appellants were indeed entitled to input tax credit
on the incidence of tax borne by them, provided the transactions were bonafide and legitimate
and there was a transaction of "sale" and not a mere paper transaction of sale without movement
of goods.
56. There has to be delivery of possession of the goods. There should be proof of such delivery

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 of possession either the dealer purchasing the goods or to the consignee. Mere paper transaction
coupled with rotation of money through banking channel to a so called supplier/seller is not
sufficient to establish that the credit was validly availed, if the seller has disappeared or was a
dummy and a fly by night dealer whose endeavour for obtaining registration was merely to
facilitate fraudulent availing of input tax credit to defraud the State Revenue. The credit availed
which is provisional can therefore can be denied under the scheme of the Act.
57. As long as, transaction are bonafide and there are documents to establish sale coupled with
actual physical movement of goods and payment of consideration to the dealer who effecting
sale, input tax credit cannot be denied to the dealer who produces documents to show that the
goods were delivered to it or to its consignee.
58. At the same time we make it clear, the law also does not require unnecessary crisscross
movements of the goods to avail input tax credit validly. It is not necessary that the goods
should be delivered to person who has placed order. Goods can also be delivered to a consignee
identified by the buyer/registered dealer. Sine qua non for availing input tax credit is a
transaction of sale ie., couple with a movement of goods from the seller to the buyer or to a
consignee directly named in the invoice at instance of the dealer who placed such purchase order
only in absence of such proof, input tax credit can be denied under the machinery provided
under the Act.
5 9 . Input tax credit was a substantive right conferred on bonafide transaction of sale under
Section 19(1) of the TN VAT Act, 2006 although with a defective drafting.
60. Input tax credit was a form of a cash incentive. The tax borne on the purchase was given in
the form of credit to be set off on the sale. Input tax credit was intended to reduce the outflow of
cash to the exchequer to a dealer while effecting sale by allowing debiting the amount availed as
input tax credit in the books of account.
61. The Courts, registered dealers under the TN VAT Act, 2006, as also the Tax Administration in
the State, have also understood that input tax credit was to be allowed on the incidence of tax
borne by the such registered dealers such as the respective petitioner/appellants on purchase
made by them for being set-off against their liability tax on further sales made by them.
62. Like the CENVAT Credit under the provisions of the CENVAT Credit Rules, 2004 (formerly
under Modvat Credit Scheme under the Central Excise Rules, 1944), input tax credit was made
available without there being any one to one co-relation with between the purchase and the sale.
63. This is and was the philosophy behind all the value added tax enactment. TN VAT Act, 2006
is no exception to the above philosophy. Input Tax Credit under the Modvat Credit Scheme was
indented to reduce the cascading effect of the tax, although it has been euphemistically stated by
few Courts that it was intended to reduce the cascading effect of the tax for the benefit of
ultimate consumer.
64. In a free economy, where demand and supply determine the price and the price is charged
on the value addition, there is hardly any scope to draw an inference that the input credit system
was intended to benefit the consumers. Rather, it allowed the dealer and manufacturers to
restrict the cash outflow at the time of payment of tax at the time specified in the Rules to the
State Exchequer.
6 5 . Suffice to state the petitioner/appellants were entitled to avail input tax credit on the
incidence of tax borne by them on the purchase made for being utilized and being debited
against their tax ultimate liability in their monthly/annual returns as the case may be on further
sale of goods effected by them to their consumers as long as the credit availed by them preceded
a transaction of "sale" and incidence of tax was borne by them by making payments to their
seller.
6 6 . It is also the cases of the respective petitioner/appellants, they have indeed borne the
incidence of tax as their transaction were through normal banking channel. However, it is

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 submitted that they were not required to prove actual delivery of goods. This argument and the
stand of the petitioners/appellants is unacceptable.
67. Under the scheme of the TN VAT Act, 2006, the credit that is availed on the strength of the
original invoice containing the details specified in Rule 10(2) of the TN VAT Rules, 2007 is
provisional. Such input tax credit can be denied to a dealer, if the dealer fails to discharge the
burden of proof as under Section 17(2) of the Act.
6 8 . As long as credit was availed validly where there is not only a transaction of "sale" as
defined in the Act but also incidence of tax being borne, input tax credit was to be allowed to be
utilized as a set-off against the tax liability declared in the self assessment in the monthly/annual
return under the Scheme of the Act. If tax is not paid by the seller, machinery is prescribed to
recover the tax from such dealer.
69. The Hon'ble Supreme Court in CCE Vs. Dai Ichi Karkaria Ltd., MANU/SC/0467/1999 : (1999)
7 SCC 448, 1999 (112) ELT 353 has explained the above concept elegantly in the context of
Modvat Credit under Central Excise Rules, 1944.The decision of the Hon'ble Supreme Court in
CCE Vs. Dai Ichi Karkaria Ltd., MANU/SC/0467/1999 : (1999) 7 SCC 448 is relevant even in the
context of TN VAT Act, 2006. In fact, it will remain contemporary for all time to come, as long as
the concept of input tax credit exist and operates on similar line. Therefore, the principle must be
kept in mind.
70. Therefore, substantive rights under the Act cannot be whittled down merely because the
dealer who had effected sale fails to pay the tax, if indeed there was an actual transaction of
sale. In CCE Vs. Dai Ichi Karkaria Ltd., referred to supra, the Hon'ble Supreme Court held that
the Modvat credit was a contingent credit. It could be disallowed under certain circumstances. It
could not be withdrawn like a credit amount in a bank account. It held that the manufacturer did
not have any indefeasible right or title to it. This view applies to input tax credit under the TN
VAT Act, 2006 also. Likewise, a dealer under the TN VAT Act,2006 also did not have an
indefeasible right. It was contingent on the dealer establishing a transaction of sale and
movement of goods. Mere cash transaction was not sufficient.
71. The Hon'ble Supreme Court further held that once the credit was validly taken and its benefit
was available to the manufacturer without any limitation in time or otherwise unless the
manufacturer itself chooses not to use the raw material in its excisable product. The credit is,
therefore, indefeasible.
72. The Hon'ble Supreme Court further also held that once the credit was validly taken, it was
indefeasible. The Court further observed that there was no provision in the Central Excise Rules,
1944 which provided for a reversal of the credit by the Excise Authorities except where it has
been illegally or irregularly taken, in which event it stands cancelled or, if utilized, has to be paid
for. This ratio is equally applicable. If the dealers fails to discharge the burden of proof cast on
them under Section 17(2) of the TN VAT, Act, 2006, credit can be denied.
73. Therefore, even if credit was availed after complying with the requirement of Section 19(1)
& (10)(a) of TN VAT Act, 2006 and Rule 10 of the TN VAT Rules, 2007, it could be asked to be
paid back under the circumstances specified in Section 19(13) and Section 19(15) of the TN VAT
Act,2006 under the machinery provided under Section 27 of the Act for credit that is allowed is
provisional under Section 19(16) of the TN VAT Act, 2006. In appropriate case, credit can be
revoked.
74. The Hon'ble Supreme Court further held that it should also be noted that there is no co-
relation of the raw material and the final product; that is to say, it is not as if credit can be taken
only on a final product that is manufactured out of the particular raw material to which the credit
is related. The credit may be taken against the excise duty on a final product manufactured on
the very day that it becomes available.
75. Section 19(10) of the TN VAT Act, 2006 states that a registered dealer could claim ITC only
on the receipt of the original tax invoice duly filled, signed and issued by a registered dealer

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 from whom the goods are purchased containing such particulars as are prescribed. This is similar
to Rule 9 of the Cenvat Credit Rules, 2004. The details required in the invoice are prescribed in
Rule 10(2) of TN VAT Rules, 2007.
76. Under Rule 10(2) of the TN VAT Rules, 2007, a dealer intending to avail input tax credit was
required to produce the original tax invoice duly filled, signed and issued by a registered dealer,
in support of his claim of the input tax credit. Invoices were to contain the details specified
therein. Section 19(10)(a) & (b) of TNVAT Act, 2006 and Rule 10(2) of the TN VAT Rules, 2007
are reproduced below for comparison:-
TABLE-C
Section 19(10) of TNVATRule 10(2) of the TNVAT Rules,
Act, 2006 2007
(a) The registered dealer Every registered dealer who
shall not claim input tax claims input tax credit under
credit until the dealer sub-section (1) of Section 19
receives an original tax shall, produce the original tax
invoice duly filled, signed invoice, in support of his claim
and issued by a registered of the input tax credit,
dealer from whom the containing the following details,
g o o d s are purchased, namely:-
c o n t a i n i n g such
particulars, as may be a) A consecutive serial number;
prescribed, of the sale b) The date on which the
evidencing the amount of invoice is issued;
input tax. c) The name, address and the
Taxpayer Identification Number
(b) If the original tax of the seller;
invoice is lost, input tax (d)The name, address and the
credit shall be allowed Taxpayer Identification Number
only on the basis of of the buyer;
duplicate or carbon copy (e) The description of the
of such tax invoice goods;
obtained from the selling (f) The quantity or volume of
dealer subject to such the goods;
conditions as may be (g) The Value of the goods;
prescribed. (h) The rate and amount of tax
charged; and
(i) The total value of the goods.

77. As mentioned above, Rule 10(2A) was inserted after proviso to Section 19(1) was amended
vide Second Amendment Act (13 of 2015) with effect from 29.01.2016.
78. A close reading of the above provisions indicates that for a dealer to validly avail Input Tax
Credit, the dealer should be in possession of the original invoice containing the details
prescribed under Rule 10(2) of the TN VAT Rules, 2007. However, credit availed was always
provisional under Section 19(16) of the TN VAT Act, 2006 and could be denied under any of the
circumstances specified and situations contemplated in Section 19(13), 19(15) and 19(16) of the
TN VAT Act, 2006 and recovered under the machinery provided under Section 27(2) of TN VAT
Act, 2006.
79. In these cases, we are not concerned with the circumstances contemplated under Section
19(10)(b) of TN VAT Act, 2006 which deals with the situation where original invoice is lost.
Suffice to keep in mind that Section 19(1), Section 19(10)(a) and 19(10)(b) of the TN VAT Act,
2006 have to be read along with Rule 10(2) of the TNVAT Rules, 2007 and input tax credit avail
can be denied as credit availed is provisional and the burden is always under Section 17(2) of
the TN VAT Act, 2006 on such person availing input tax credit to establish that input tax credit

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 was validly availed.
80. Section 17, Section 19(15) & 19(16) of the TN VAT Act, read as under:-
TABLE-D
Section 17: Burden ofSection 19(13), 19(15) & 19(16)
Proof
(i) For the purpose of 19(13)Where a registered dealer
assessment of tax under without entering into a transaction
this Act, the burden of of sale, issues an invoice, bill or
proving that any cash memorandum to another
transaction or any turnover registered dealer, with the
of a dealer is not liable to intention to defraud the
tax, shall lie on such Government revenue, the assessing
dealer. authority shall, after making such
enquiry as it thinks fit and giving a
(ii) For the purpose of reasonable opportunity of being
assessment of tax under heard, deny the benefit of input tax
t h i s Act, the burden of credit to such registered dealer
proving that any who has claimed input tax credit
transaction or any turnover based on such invoice, bill or cash
of a dealer is not liable to memorandum from such date."
tax, shall lie on such
dealer. 19(16)The input tax credit availed
by any registered dealer shall be
(iii)Notwithstanding only provisional and the assessing
anything contained in this authority is empowered to revoke
Act or in any other law for the same if it appears to the
the time being in force, a assessing authority to be incorrect,
dealer in any of the goods incomplete or otherwise not in
specified in the second order.
schedule liable to pay tax
in respect of the first sale 19(15) Where a registered dealer
in the State shall be the has purchased any taxable goods
first seller of such goods from another dealer and has
and shall be liable to pay availed input tax credit in respect
tax at the rate specified in of the said goods and if the
t h e Second Schedule onregistration certificate of the selling
his turnover of sale d e a l e r is cancelled by the
relating to such goods, appropriate registering authority,
unless he proves that the such registered dealer, who has
sale or purchase, as the availed by way of input tax credit,
case may be, of such shall pay the amount availed on
g o o d s had already been the date from which the order of
subjected to tax under this cancellation of the registration
Act. certificate takes effect. Such dealer
shall be liable to pay, in addition to
the amount due, interest at the rate
of two per cent, per month, on the
amount of tax so payable, for the
period commencing from the date
of claim of input tax credit by the
dealer to the date of its payment.
81. Section 19(16) of TN VAT Act, 2006 also makes it clear, that input tax credit availed by any
registered dealer shall be only provisional. Section 19(16) of TN VAT Act, 2006 empowers an
Assessing Officer to revoke input tax credit, if it appears to the Assessing Authority that such

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 credit availed was incorrect, incomplete or otherwise not in order. Further under Section 17(2) of
the TNVAT Act, 2006, the burden to prove that the dealer was entitled to avail input tax credit
lies with the dealer claiming such input tax credit.
82. Thus, wide powers have been vested with the Assessing Officer to revoke the credit availed.
Credit can be denied, if it appears to the assessing authority, to be i) incorrect, or ii) incomplete;
or iii) otherwise not in order, in which case machinery has been provided under Section 27 of
the TN VAT Act, 2006 will be attracted if an assessee/registered dealer fails to establish the same
83. Section 19(13) of the TN VAT Act, 2006 deals with specific situations where a registered
dealer without entering into a transaction of sale, issues an invoice, bill or cash memorandum to
another registered dealer, with the intention to defraud the Government revenue to facilitate
input tax credit being wrongly availed.
84. Under Section 19(13) of the TN VAT Act, 2006, an assessing authority can deny input tax
credit availed by a registered dealer who has claimed input tax credit based on such invoice, bill
or cash memorandum from such date, where such invoice, bill or cash memorandum were raised
by a registered dealer without entering into a transaction of sale with an intention to defraud the
Government revenue. This can happen only after investigation at the sellers/dealers end.
Therefore, although credit can be availed on the strength of original copy of the invoice, it can
be denied at a later point of time as credit availed is provisional.
85. However, before denying input tax credit under Section 19(13) of the TN VAT Act, 2006, the
assessing authority has to make an enquiry as it thinks fit and give a reasonable opportunity of
being heard to a dealer who has availed such input tax credit being denying the benefit of such
input tax credit to such registered dealer. Enquiry has to be in consonance with the machinery
under Section 27(2) of TN VAT Act, 2006. If on enquiry the dealer fails to discharge the proof, it
has to be construed that there was jurisdictional fact to deny credit under Section 27(2) of the
TN VAT Act, 2006.
8 6 . Under Section 19(15) of the TN VAT Act, 2006, where the registration certificate of the
selling dealer is cancelled by the appropriate registering authority input credit availed by a
registered dealer, who has availed by way of input tax credit can be denied. This will apply to a
situation where registered dealer has not paid the tax after collecting the incidence of the from
his buyer.
87. As per Section 19(15) of the TN VAT Act, 2006, a dealer who has availed input tax credit is
required to pay the amount of credit availed on the date from the date on which cancellation of
the registration certificate takes effect by an order. Such a dealer is also liable to pay, in addition
to the amount due, interest at two per cent, per month, on amount of tax so payable, for the
period commencing from the date of claim of input tax credit by the dealer to the date of its
payment. Section 17(2), Section 19(3), Section 19(15) and Section 19(16), Section 27(2) and
Section 27(4) of TN VAT Act, 2006 forms a code when read along with Rule 10 of TN VAT Rules,
2007. Following chart explains the position. Thus, Credit availed under Section 19(1) can be
denied.
Section 17(2) For the purpose of claim of input tax credit, the burden of
proving such claim shall lie on such dealer.
19(16)The input tax credit availed by any registered dealer shall be only
provisional and the assessing authority is empowered to revoke the same if
it appears to the assessing authority to be incorrect, incomplete or otherwise
not in order.
19(13)Where a registered 19(15) Where a registered dealer has purchased
dealer without entering into any taxable goods from another dealer and has
a transaction of sale, issues availed input tax credit in respect of the said
an invoice, bill or cash goods and if the registration certificate of the
memorandum to another selling dealer is cancelled by the appropriate
registered dealer, with the registering authority, such registered dealer,
i ntenti on to defraud the who has availed by way of input tax credit, shall

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 Government revenue, the pay the amount availed on the date from which
assessing authority shall, the order of cancellation of the registration
after making such enquiry certificate takes effect. Such dealer shall be
as it thinks fit and giving a liable to pay, in addition to the amount due,
reasonable opportunity of interest at the rate of two per cent, per month,
b e i n g heard, deny the on the amount of tax so payable, for the period
benefit of input tax credit commencing from the date of claim of input tax
to such registered dealer credit by the dealer to the date of its payment.
who has claimed input tax
credit based on such
invoice, bill or cash
memorandum from such
date."
Section 27(2) of TN VATAct, 2006
Where, for any reason, the input tax credit has been availed wrongly or
where any dealer produces false bills, vouchers, declaration certificate or
any other documents with a view to support his claim of input tax credit or
refund, the assessing authority shall, at any time, within a period of six
years from the date of assessment, reverse input tax credit availed and
determine the tax due after making such a enquiry, as it may consider
necessary:
Provided that no order shall be passed under sub-sections (1) and (2)
without giving the dealer a reasonable opportunity to show cause against
such order.
27(4) of TN VAT Act, 200627(4) of TN VAT Act, 2006 after
prior to
amendment amendment
In addition to the tax In addition to the tax determined under sub-
determined under sub- section (2), the assessing authority shall direct
section(2),the assessing the dealer to pay as penalty a sum which shall
authority shall direct the b e three hundred percent of the tax due in
dealer to pay as penalty a respect of such claim.
sum:
(i) which shall be in the
case of first such detection
fifty percent of the tax due
in respect of such claim;
and
(ii) which shall be in the
case of second or
subsequent detections, one
hundred percent of the tax
due in respect of such
claim.
88. Prior to the Second Amendment Act (13 of 2013), 2013, with effect from 28.5.2013, the rate
of interest was one and one quarter percent per month, on amount of tax so payable, for the
period commencing from the date of claim of input tax credit by the dealer to the date of its
payment.
8 9 . In the case of Jinsasan Distributors vs. Commercial Tax Officer, Chennai,
MANU/TN/1771/2012 : (2013) 59 VST 256, which was rendered in the context of Section 19(15)
of TN VAT Act, 2006, a learned Single Judge of this Court held that the retrospective cancellation

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 of registration certificate of the selling dealers cannot affect the right of the petitioners/assesses
therein who have paid the tax on the basis of invoices and thereafter claimed ITC under Section
19 of TNVAT Act, 2006.
90. In Jinsasan Distributors vs. Commercial Tax Officer, Chennai, a Single Judge of this Court
MANU/TN/1771/2012 : (2013) 59 VST 256, held as follow:-
1 1 . Section 19(15) of the TNVAT Act, 2006 provides that the registered dealer who
availed the input tax credit should pay the amount availed on the date from which the
order of cancellation of the registration certificate takes effect. In all these cases,
without dispute, the orders cancelling the registration certificates of the selling dealers is
given with retrospective effect, That is to say, after the assessment orders have been
passed granting the benefit of input tax credit.
12. Insofar as the cancellation of the registration certificates of the selling dealers is
concerned, it is for those selling dealers to canvas the plea as to when it will take effect
either on the date of the order or with retrospective effect. Insofar as the petitioners are
concerned, they have purchased the taxable goods from registered dealers who had valid
registration certificates; paid the tax payable thereon; availed input tax credit; and the
assessing officers have passed orders granting such benefit. Therefore, the assessment
orders granting input tax credit were validly passed. There was no cancellation of the
registration certificates of the selling dealers at that point of time. The
petitioners/assessees have paid input tax based on the invoices issued by registered
selling dealers and availed input tax credit. The retrospective cancellation of the
registration certificates issued to the selling dealers cannot affect the right of the
petitioners/assessees, who have paid the tax on the basis of the invoices and thereafter
claimed the benefit under Section 19 of the TNVAT Act, 2006. They have utilized the
goods either for own use or for further sale. At the time when the sale was made, the
selling dealers had valid registration certificates and the subsequent cancellation cannot
nullify the benefit that the petitioners/assessees availed based on valid documents.
91. The learned Single Judge of this Court referred to the decision of the Hon'ble Supreme Court
in State of Maharashtra Vs. Suresh Trading Company, MANU/SC/1740/1997 : (1997) 11 SCC
378. However, the Hon'ble Supreme Court dealt with a specific situation. It was rendered in the
context of a statement given by the learned Advocate General of the State. There the transaction
was neither in doubt nor disputed by the State Government. Para 6 in State of Maharashtra vs.
Suresh Trading Company, MANU/SC/1740/1997 : (1997) 11 SCC 378 is useful. It reads as
under:-
"6. It must also be noted that the learned Advocate General, appearing for the
department before the High Court, stated that the genuineness of the transactions
between the registered dealer and the respondents was not in doubt and not disputed.
This being so, it is difficult to see how there could have been a cancellation of
registration with effect from a date that preceded the dates of the transactions and how,
accordingly, the respondents could be made liable to pay tax."
9 2 . While allowing the case of the dealers under a somewhat similar circumstances under
Section 19(15) of the TN VAT Act, 2006, the learned Single Judge of this Court in Jinsasan
Distributors Vs. Commercial Tax Officer, Chennai, MANU/TN/1771/2012 : (2013) 59 VST 256,
appears to have been influenced by the ratio of the Hon'ble Supreme Court in State of
Maharashtra Vs. Suresh Trading Company, MANU/SC/1740/1997 : (1997) 11 SCC 378.
93. Paras. 4 & 5 of State of Maharashtra Vs. Suresh Trading Company, MANU/SC/1740/1997 :
(1997) 11 SCC 378 are reproduced as under:-
"4. The High Court answered the question in the negative in favour of the respondents.
The High Court noted that the effect of disallowing the deductions claimed by the
respondents was, in substance, to tax transactions which were otherwise not taxable.
The condition precedent for becoming entitled to make a tax free resale was the

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 purchase of the goods which were resold from a registered dealer and the obtaining
from that registered dealer of a certificate in this behalf. This condition having been
fulfilled, the right of the purchasing dealer to make a tax free sale accrued to him.
Thereafter to hold, by reason of something that had happened subsequent to the date of
the purchase, namely, the cancellation of the selling dealers' registration with
retrospective effect, that the tax free resales had become liable to tax, would be
tantamount to levying tax on the resales with retrospective effect.
5. In our view, the High Court was right. A purchasing dealer is entitled by law to rely
upon the certificate of registration of the selling dealer and to act upon it. Whatever may
be the effect of a 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 the
registration was current. The argument on behalf of the department that it was the duty
of persons dealing with registered dealers to find our whether a state of facts exists
which would justify the cancellation of registration must be rejected. To accept it would
be to notify the provisions of the statute which entitle persons dealing with registered
dealers to act upon the strength of registration certificates."
9 4 . The decision of this Court in Sri Vinayaga Agencies Vs. Assistant commissioner (CT),
Vadapalani-I Assessment Circle, Chennai and Another, MANU/TN/1386/2013 : (2013) 60 VST
283 (Mad) rendered on 29.01.2013 which is another case, which has been followed all along has
to read along with decision of the Hon'ble Supreme Court gave its verdict in The State of
Karnataka vs. M/s.Ecom Gill Coffee Trading Private Limited, dated 13.03.2023 in Civil Appeal.
No. 230 of 2023.
95. In Sri Vinayaga Agencies Vs. Assistant commissioner (CT), Vadapalani-I Assessment Circle,
Chennai and Another, MANU/TN/1386/2013 : (2013) 60 VST 283 (Mad), the allegation was that
the selling dealer had not paid tax and therefore, credit availed was to be denied. The first
respondent therein namely the Assistant Commissioner (CT) had however held that the said
sellers was still existing and doing business at Palayamkottai.
96. There the Enforcement Wing Officials had conducted an inspection on 13.07.2010 and on
verification of the returns, found that the dealer at Palayamkottai Assessment Circle, namely,
M/s.Classic Enterprises, had not filed the monthly returns in Form-I and also not paid the tax to
the Department for the relevant period. This was not a case which dealt with cancellation of
registration or where registration was obtained to defraud the revenue by issuing invoices to
wrongly avail ineligible input tax credit. This was a case when tax was not paid by the selling
dealer.
97. Interpreting Section 19(1) read with Section 19(16) of TN VAV Act, 2006 as it stood then,
the learned Single Judge went on to hold that Section 19(1) clearly states that input tax credit
can be claimed by the registered dealer, provided if the registered dealer establishes that the tax
due on such purchase has been paid by him in the manner prescribed.
98. As mentioned in the beginning of the discussion in this order, a registered dealer selling
goods merely passes on the incidence of tax to the buyer. The buyer merely bears the incidence
of tax charged and reflected in the sales invoice. The buyer never pays tax to the exchequer
unless the buyer is liable to pay purchase tax under Section 12 of the TN VAV Act, 2006
otherwise. It is the seller who pays the tax.
99. The learned Single Judge however observed that it is another matter if the selling dealer has
not paid the collected tax and that liability has to be fastened on the selling dealer. Liability
cannot be however mulcted on the purchasing dealer who had shown proof of payment of tax on
the purchases made.
100. To an extent we are in agreement with the view of the learned single judge in Sri Vinayaga
Agencies Vs. Assistant commissioner (CT), Vadapalani-I Assessment Circle, Chennai and
Another, MANU/TN/1386/2013 : (2013) 60 VST 283 (Mad). However, the view cannot be applied
universally where the selling dealer continued to exist where there was no transaction of "sale"

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 or that the registration was obtained only for the purpose of facilitating credit of tax being
availed without a transaction of sale. We cannot uphold the view in Sri Vinayaga Agencies Vs.
Assistant commissioner (CT), Vadapalani-I Assessment Circle, Chennai and Another,
MANU/TN/1386/2013 : (2013) 60 VST 283 (Mad) in all cases merely because the registration of
the selling dealer was not cancelled if indeed the registration was obtained to create paper
transaction without actual sale. The burden to prove that there was indeed a transaction of sales
is with the registered dealer availing credit. Till such burden is proved, the credit availed under
the proviso to Section 19(1) of the TN VAT Act, 2006 can be denied.
101.We have to state that ratio of this Court both in Jinsasan Distributors vs. Commercial Tax
Officer, Chennai, MANU/TN/1771/2012 : (2013) 59 VST 256 and Sri Vinayaga Agencies vs.
Assistant Commissioner (CT), Vadapalani-I Assessment Circle, Chennai and Another,
MANU/TN/1386/2013 : (2013) 60 VST 283 (Mad) are no longer a good law in the light of the
recent decision of the Court in The State of Karnataka vs. M/s.Ecom Gill Coffee Trading Private
Limited, dated 13.03.2023 in Civil Appeal. No. 230 of 2023. We shall deal with the same in due
course of discussion.
102.The ratio in Sri Vinayaga Agencies vs. Assistant commissioner (CT), Vadapalani-I
Assessment Circle, Chennai and Another, MANU/TN/1386/2013 : (2013) 60 VST 283 (Mad)
cannot be applied in all cases. Likewise, the ratio in Jinsasan Distributors Vs. Commercial Tax
Officer, Chennai, MANU/TN/1771/2012 : (2013) 59 VST 256, cannot be applied any longer in
view of the recent decision of the Hon'ble Supreme Court in The State of Karnataka vs. M/s.Ecom
Gill Coffee Trading Private Limited, dated 13.03.2023 in Civil Appeal. No. 230 of 2023.
103.While placing reliance on the aforesaid decision of the Hon'ble Supreme Court in State of
Maharashtra Vs. Suresh Trading Company, MANU/SC/1740/1997 : (1997) 11 SCC 378, the Court
in Jinsasan Distributors vs. Commercial Tax Officer, Chennai, MANU/TN/1771/2012 : (2013) 59
VST 256, failed to note the expression in Section 19(15) of the TNVAT Act, 2006 which
specifically deals with the situation. Section 19(15) in the TN VAT Act, 2006 is an innovation
which was not contemplated under Section 70 of the Karnataka Value Added Tax, 2003. The said
decision of a learned Single Judge of this Court, has been followed in the past.
104.If there is a cancellation of registration, the assessing officer can call upon the dealer to
repay to the input tax credit availed and utilized if indeed there was no evidence of sale. It may
result in denial in the credit. However, it cannot be helped, where registration itself was obtained
by such dealer to facilitate input tax credit being availed on such bogus invoice without a
corresponding transaction of sale.
105.Therefore, the decision of the learned Single Judge in Jinsasan Distributors Vs. Commercial
Tax Officer, Chennai, placing reliance on State of Maharashtra vs. Suresh Trading Company,
MANU/SC/1740/1997 : (1997) 11 SCC 378 cannot be held to have an universal application in all
cases of cancellation of VAT registration of the selling dealer with retrospective date, if
registration itself was obtained only to facilitate bogus input tax credit being claimed availed and
utilized without actual transaction of "sale" and supply of goods to cheat the revenue as is
contemplated under Section 19(13) of the TN VAT Act, 2006.
106.Therefore a registered dealer claiming input tax credit has to discharge the burden of proof
required to be discharged under Section 17(2) of the TN VAT Act, 2006 by showing documents to
prove that indeed there was a transaction of sale and payment of amount was made for supply
made to the dealer who supplied the goods.
107.Thus, it was incumbent on the part of a registered dealer like petitioner/appellants availing
input tax credit to prove that indeed a transaction of "sale" had taken place. They should not
only preserve but also produce collateral evidence in the form of transport documents, such lorry
receipts or consignment note, etc. when called upon failing which it cannot be said they have
discharged the burden of proof required to be discharged under Section 17(2) of the TN VAT Act,
2006.
108.In absence of such document, where there was also a failure on the part of the dealer which

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 raised invoice on the petitioner/appellants for the goods allegedly supplied, either on account of
cancellation of registration or on account of such dummy dealers have disappeared, input tax
credit availed and utilized has to be repaid together with interest under the scheme of TN VAT
Act, 2006.
109.Till such time the burden of proof is properly discharged, the credit availed has to be held
to be provisional under the Scheme of Section 19(16) of the TN VAT Act, 2006 and the assessing
officer is empowered to revoke the credit if a dealer fails to discharge the burden.
110.That apart, the decision in Jinsasan Distributors Vs. Commercial Tax Officer, Chennai, was
rendered on 22.11.2012. It was rendered after regular assessments were completed after a
thorough scrutiny of the returns by the assessing officers.
111.Whereas, in all these cases with which we are concerned, no assessment orders would have
been passed. The assessments were deemed to have been completed in view of amendment to
Section 22(2) of the TN VAT Act, 2006 with effect from 19.06.2012 by the Fifth Amendment Act
(23 of 2012), 2012.
112.Even for the period prior to 2011-2012, the assessments would have been deemed
assessments under proviso to the amended Section 22(2) of the TN VAT Act, 2006 in view of
Fifth Amendment Act (23 of 2012), 2012. Section 22(1) & (2) of the TN VAT Act, 2006 are
reproduced below:-
TABLE-E
Section 22(1) & (2) of the Section 22(1) & (2) of the TN VAT Act,
TN VAT Act, 2006 before2006 after amendment, w.e.f.
amendment, i.e. 19.06.2012
19.06.2012
22.Deemed Assessment and procedure to be followed by the
assessing authority.-
(1)The assessment in respect of the dealer shall be on the basis of
return relating to his turnover submitted in the prescribed manner
within the prescribed period.
(2)The assessing authority (2)The assessing authority shall accept
shall accept the returns the returns submitted for the year, by
submitted for the year, by the dealer, if the returns are in the
the dealer, if the returns prescribed form and accompanied with
are accompanied by the the prescribed documents and proof of
proof of payment of tax and payment of tax. Every such dealer shall
the documents prescribed, be deemed to have been assessed for
and on such acceptance, the year on the 31st day of October of
the assessing authority the succeeding year:
s h al l pass an assessment
order. Provided that in respect of such returns
submitted for the years 2006-2007,
2007-2008, 2008- 2009, 2009-2010 and
2010-2011, on which assessment order
are not passed shall be deemed to have
been assessed on the 30th day of June
2012.

113. The Hon'ble Supreme Court has now categorically held in the case of M/s.Ecom Gill Coffee
Trading Private Limited referred to supra that "Mere production of the invoices or the payment
made by cheques is not enough and cannot be said to be discharging the burden of proof cast
under Section 70 of the KVAT Act, 2003.
114.The decision in in The State of Karnataka vs. M/s.Ecom Gill Coffee Trading Private Limited

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 was rendered which recently was in the context of Section 70 of the Karnataka VAT Act, 2003.
Section 70 is a amalgam for the Section 17(2), 19(13) and Section 27 of the TN VAT Act, 2006.
It will be useful to refer to Paragraph 9.1 from the said decision reads as under:-
"9.1 Thus, the provisions of Section 70, quoted hereinabove, in its plain terms clearly
stipulate that the burden of proving that the ITC claim is correct lies upon the purchasing
dealer claiming such ITC. Burden of proof that the ITC claim is correct is squarely upon
the assessee who has to discharge the said burden. Merely because the dealer claiming
such ITC claims that he is a bona fide purchaser is not enough and sufficient. The
burden of proving the correctness of ITC remains upon the dealer claiming such ITC.
Such a burden of proof cannot get shifted on the revenue. Mere production of the
invoices or the payment made by cheques is not enough and cannot be said to be
discharging the burden of proof cast under Section 70 of the KVAT Act, 2003. The dealer
claiming ITC has to prove beyond doubt the actual transaction which can be proved by
furnishing the name and address of the selling dealer, details of the vehicle which has
delivered the goods, tax invoices and payment particulars etc. The aforesaid information
would be in addition to tax invoices, particulars of payment etc. In fact, if a dealer
claims Input Tax Credit on purchases, such dealer/purchaser shall have to prove and
establish the actual physical movement of goods, genuineness of transactions by
furnishing the details referred above and mere production of tax invoices would not be
sufficient to claim ITC. In fact, the genuineness of the transaction has to be proved as
the burden to prove the genuineness of transaction as per Section 70 of the KVAT Act,
2003 would be upon the purchasing dealer. At the cost of repetition, it is observed and
held that mere production of the invoices and/or payment by cheque is not sufficient and
cannot be said to be proving the burden as per Section 70 of the Act, 2003."
115. Section 70 of the K VAT Act, 213 is pari materia to the provisions of the TNVAT Act, 2006.
For illustration Section 70 of the KVAT Act, 2013 and Section 17(2), 19(3) and 19(15) of the
TNVAT Act, 2006 is reproduced below:-
TABLE-F
Tamil Nadu Value Added Tax Act, Karnataka Value Added Tax Act,
2006 2003
Burden of Proof:- 70. Burden of proof-
"17(2) For the purpose of claim of (1)For the purposes of payment or
input tax credit, the burden of assessment of tax or any claim to
proving such claim shall lie on such input tax under this Act, the burden
dealer." of proving that any transaction of a
dealer is not liable to tax, or any
claim to deduction of input tax is
correct, shall lie on such dealer.
Bogus Invoice:- (2)Where a dealer knowingly issues
or produces a false tax invoice,
19(13) Where a registered dealer credit or debit note, declaration,
without entering into a transaction certificate or other document with a
o f sale, issues an invoice, bill or view to support or make any claim
cash memorandum to another that a transaction of sale or
registered dealer, with the intention purchase effected by him or any
to defraud the Government revenue, other dealer, is not liable to be
the assessing authority shall, after taxed, or liable to tax at a lower
making such enquiry as it thinks fit rate, or that a deduction of input tax
and giving a reasonable opportunity is available the prescribed authority
of being heard, deny the benefit of shal l , o n detecting such issue or
input tax credit to such registered production, direct the dealer issuing
dealer who has claimed input tax o r producing such document t o pay
credit based on such invoice, bill or as penalty:

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 cash memorandum from such date. (a)in the case of first such detection,
three times the tax due in respect of
such transaction or claim; and
(b)in the case of second or
subsequent detection, five times the
tax due in respect of such
transaction or claim.
(3) Before issuing any direction for
the payment of the penalty under
this Section, the prescribed authority
shall give to the dealer the
opportunity of showing cause in
writing against the imposition of
such penalty."
116. Section 19(15) in the TN VAT Act, 2006 was an innovation which was not contemplated in
under Section 70 of the Karnataka Value Added Tax Act, 2003.Under Section 70 of the Karnataka
Value Added Tax Act, 2003, the consequence was on the dealer issuing such false invoice to
cheat revenue by imposing penalty.
117. A close reading of the above provisions indicate that for a dealer to avail input tax credit,
the dealer should be not only in possession of the original invoice containing the details
prescribed under Rule 10(2) of the TN VAT Rules, 2007 but also other documents establishing
movement of goods whether to the buyer or to the consignee. However, such credit is
provisional under Section 19(16) of the TN VAT Act, 2006 and could be denied under the
circumstances specified in any of the situation contemplated under Section 19(13), 19(15) and
19(16) of the TN VAT Act, 2006 under the machinery provide under Section 27(2) of the Act.
118. In our view, Sections 19(13) and 19(15) of the TN VAT Act, 2006 cannot be considered in
a separate compartment. They are complementary and are to be read in conjunction with each
other along with Section 19(6) of the TN VAT Act, 2006.
119. We are of the view that what was implicit in proviso to Section 19(1) of the TN VAT Act,
2006 at the time of inception was made explicit in the year 2016 with effect from 29.01.2016.
The amendments are merely clarificatory in nature.Rule 10(2-A) of the TN VAT Rules, 2007 was
incorporated vide G.O.Ms. No. 18, dated 29.01.2016 with effect from 29.01.2016 which shifted
the burden on the dealer purchasing the taxable goods to prove that the tax due on such
purchase of goods have actually been remitted in the Government Account is unnecessary if
there is sufficient proof of movement of goods and payment of amount.
120. It is only under those circumstances mentioned in Section 19(13), 19(15) or where credit
is availed contrary to Section 19(1) of the TN VAT Act, 2006, the machinery provided to recover
the amount, Section 27(2) of the TNVAT Act, 2006 can be pressed where Input Tax Credit has
been either wrongly availed or where a dealer produced a bogus invoice bills, vouchers etc. with
a view to wrongly claim input tax credit can be pressed into.
121. Under Section 19(13), consequence, is on the person who has availed input tax credit
wrongly on the strength of such invoice, bill or cash memorandum which issued with an
intention to defraud the Government Revenue. Whereas, under Section 70 of the KVAT Act, 2003,
the consequence was on the person raising such invoice.
122. If Input Tax Credit was availed on the strength of invoice of the dealers merely satisfying
the requirements of the Rule10(2) of the TNVAT Rules, 2007 without a corresponding transaction
of sale with the intention to defraud the Government revenue, the assessing officer can certainly
after making such enquiry and after giving a reasonable opportunity of being heard deny the
input tax credit to such registered dealer under Section 19(13) of the TN VAT Act, 2006 to such a
dealer who has availed Input Tax Credit based on such invoice, bill or cash memorandum under

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 the machinery prescribed under Section 27(2) of the TNVAT Act, 2006.
1 2 3 . Section 19(15) of the TN VAT Act, 2006 is an innovation as compared to other VAT
enactments in the rest of the states in the country as it also contemplates revocation of credit
availed even in the event of cancellation of Registration of the dealer who issued such invoices,
bill or cash memorandum to defraud the State Revenue. However, not in all cases of cancellation
of registration certificate, Section 19(15) of TNVAT Act, 2006 can be pressed into services.
124. On the other, hand, if the registration of the dealer who is stated to have supplied goods is
canceled, credit can be denied under Section 19(15) of the TN VAT Act, 2006 to a dealer who has
availed input tax credit based on such invoice, bill or cash memorandum with retrospective effect
from the date on which such registration is cancelled. As mentioned above, a mere cancellation
of registration is not sufficient. It should be proved that the said dealer who issued invoice to the
purchasing dealer was a dummy dealer and a fly by night entity and was conceived and
registered only to facilitate availing of input tax credit without actual transaction of sale.
125. Section 19(15) of TN VAT Act, 2006 can be pressed into services only where circumstances
under Section 19(13) of TN VAT, Act, 2006 are also attracted. Even, if registration is not
cancelled, credit availed on the strength of bogus invoices or without a transaction of sale can be
denied if such an invoice was issued to facilitate fraudulent credit being availed. Under these
circumstances, credit availed can be recovered under Section 27(2) of the Act.
126. Similarly, if tax was paid at the sellers end, the input tax credit cannot be denied merely
because registration is cancelled subsequently with retrospective effect. Similarly, as long as
there is sufficient proof of delivery goods showing a transaction of sale, input tax credit cannot
be denied as the very purpose of enacting the TN VAT Act, 2006 was to allow input tax credit to
reduce the cascading effect of the tax.
127. If there was indeed a sale but the registered dealer who had sold goods but had failed to
pay the tax from his end, notwithstanding cancellation of registration of such dealer, a dealer
who has availed input tax credit on the strength of the original invoice and has documents to
establish the transaction of sale, credit cannot be denied. The remedy that is available to the
authorities under the Act is only to recover the tax not paid under Section 27(1) of the TN VAT
Act, 2006 from such dealer.
128. The Hon'ble Supreme Court in M/s.Ecom Gill Coffee Trading Private Limited referred to
supra also held that the burden to prove the genuineness of transaction as per Section 70 of the
KVAT Act, 2003 (Karnataka Value Added Tax Act, 2003) would be upon the purchasing dealer.
129. The ratio of the Hon'ble Supreme Court in M/s.Ecom Gill Coffee Trading Private Limited will
apply in a full vigor even in the context of TN VAT Act, 2006. It is not open for the dealer to
merely claim that they are bonafide purchasers of goods who have discharged the burden by
merely paying the amounts to their selling dealers in view of the above decision of the Hon'ble
Supreme Court.
130. As far as mismatch between the credit availed on the strength of the invoice issued and the
tax paid at the registered dealers end is concerned, a circular has been issued on 24.02.2021 by
the Office of the Principal Secretary Commissioner of Commercial Taxes, Chepauk, Chennai-600
005 in the light of the direction of a learned Single Judge of this Court in the case of M/s.JKM
Graphics Solutions Private Limited vs. The Commercial Tax Officer, Vepery Assessment Circle,
Chennai in W.P. No. 105 of 2016 vide order dated 01.03.2017 and another order dated
12.02.2021 in Review Petition No. 173 of 2018 in W.P. No. 5007 of 2016 dated
12.02.2021.Following guidelines has been issued:-
"3.3 Procedure to be followed in the cases of Mis-match
3.3.1 The assessing authority who has raised the dispute of mismatch (herein after
called as Original Assessing Authority) shall list out all such pending mismatch cases in
respect of his/her assessment circle and report to the DC/JC as well as in the next

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 statistics to be furnished after this circular comes into effect, for which suitable table is
being prescribed and thereafter the report the progress every month.
3.3.2 The Original Assessing Authority shall undertake verification mismatch transaction
report in the department intranet website (tnvat.gov.in) with reference to the data
available at both the ends i.e., buyer and seller. On verification of the data, if the
Original Assessing Authority could reconcile the mismatch and finds that the mismatch is
due to clerical or inadvertent error the Assessing Authority shall pass appropriate orders
dropping further action.
3.3.3 If the Original Assessing Authority is unable to resolve either the whole or part of
the mismatch, then the Original Assessing Authority shall issue notice to the dealer
concerned indicating the discrepancy with an opportunity to show cause to reconcile the
same. After the receipt of reply and after due enquiry, the Original Assessing Authority
finds that the sing has effected the transaction shall make a request to Other End
Assessing Authority through email (zimbra mail) marking copy to concerned DC and JC
and seek for the requisite details of verification. If on enquiry Original Assessing
Authority is of the view buyer has made bogus claim/wrong claim, by being involved in
bill trading by producing bogus invoice, etc., the buyer shall be assessed to tax/reversal
of ITC, as the case may be, then the Original Assessing Authority shall pass appropriate
orders in accordance with provisions of the TNVAT Act, 2006.
3.3.4 The Other End Assessing Authority shall verify the details provided to him/her
with reference to the manually filed original/revised returns or by issuing show cause
notice and calling for the details from the dealer. After the receipt of reply and after due
enquiry, the Other End Assessing Authority finds that the seller has reported the
transaction and paid the tax due shall report the same to original Assessing authority
and both of them shall drop further proceedings and on the other hand that if the whole
or part of the transactions are not reported by the seller, then shall initiate assessment
proceedings against the seller and shall pass appropriate orders in accordance with
provisions of the TNVAT Act, 2006. The result of such action shall be reported to the
Original Assessing Authority.
3.3.5 The Assessing Authority should issue show cause notice along with all the
connected to the assessment seeking objections. On receipt of objections, the Assessing
Authority shall fix a date and time of personal hearing (either physical or virtual
hearing). The assessing officer shall grant adequate opportunity to the dealer to put
forth their objections by duly following the principles of natural justice. During the
course of enquiry, either on a request made by the assessee or suo motu, the Assessing
Authority can summon the other end dealer and on request, a cross examination may be
provided to the assessee if such dealer is available. However, if the dealer is non-
existent the Assessing Officer may proceed to make an assessment on the basis of
material on record in accordance with law. The entire process involving issue of show
cause notice till final order may be completed within a period of 180 days.
3.3.6 The Territorial Deputy Commissioners shall oversee the work and ensure that the
verification reports are promptly be sent and the cases are finalized without any undue
delay."
1 3 1 . In our view, input tax credit can be denied only if the invoices issued to the
petitioners/appellants by the registered dealers were bogus invoices and/or invariance with the
office copy of the invoice maintained at the registered dealers end who effected such sale to the
petitioners/appellants and where there was no movement of goods for the corresponding value
declared in the original copy of invoice contemplated under Rule 10(2) of TN VAT Rules, 2007.
132. However, if the petitioners/appellants have paid for value of goods reflected in the original
copy of the invoice in their custody and there is no dispute on the same, mere mismatch in credit
information gathered at the registered dealers end who effected sale to petitioners/appellants is
of no consequence if there are collateral evidence to show the movement of goods for the value

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 to the petitioners/appellants or their consignees directly. Under these circumstances, we are of
the view that credit cannot be denied to that extent and the only option available for the
authorities is to recover tax not paid by such dealer by invoking the machinery under TN VAT
Act, 2007.
133. If a dealer claims input tax credit on purchases, such dealer/purchaser will have to prove
and establish the actual physical movement of goods, genuineness of transactions by furnishing
the details referred above and mere production of tax original invoices would not be sufficient to
claim ITC in the light of the decision of the Hon'ble Supreme Court in M/s.Ecom Gill Coffee
Trading Private Limited.
134. Therefore a dealer claiming ITC has to prove the actual transaction of sale by furnishing
the name and address of the selling dealer, details of the vehicle which was/were used for
delivery of the goods, tax invoices and payment particulars etc. The above information would be
in addition to tax invoices, particulars of payment etc., as held by the Hon'ble Supreme Court in
M/s.Ecom Gill Coffee Trading Private Limited.
135. In the light of the above decision of the Hon'ble Supreme Court and in the light of the
above discussion, we hold that the challenge to the impugned orders in T.C. Nos. 19 to 21 of
2022 has to fail. Considering the fact that there is no challenge by the Commercial Tax
Department insofar as the benefit of decision of this Court in Jinsasan Distributors case referred
to supra has been conferred the rights that have already crystallized in favour of the
assessees/petitioners in T.C. Nos. 19 to 21 of 2022 alone are not disturbed. Since the cases have
been remitted back, these petitioners shall file their reply within 30 days. The authority shall
pass orders in the light of the observation contained herein.
1 3 6 . Having dealt with main issues arising out of denial of input tax credit and in the
background of the amendment to Section 19 of TN VAT Act, 2006 vide Tamil Nadu Act, 13 of
2015 with effect from 29.01.2016. We now proceed to deal with the cases of the respective
appellants and writ petitioners and answer the issue. Writ Appeals (W.A.):
137. The Writ Appeals have been filed against the separate common order dated 15.06.2021 in
W.P. No. 23200 of 2016 etc. batch and W.P. No. 7517 of 2015 etc. batch.
138. The details of the assessment orders and the corresponding Writ Petitions corresponding to
Writ Appeals are detailed as under:-
TABLE:II

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 139. The operative portion in the impugned order in these Writ Petitions are almost identical.
Relevant portion of the common order dated 15.06.2021 passed in one of the batch are
reproduced below:-
15. Jurisdictional error should not result in exoneration of liability. Jurisdictional error,
if any committed, is technical, and thus, rectifiable. In such circumstances, the Courts
are expected to quash the order passed by an incompetent authority and remand the
matter back for fresh adjudication. Contrarily, if an assessee is exonerated from liability,
undoubtedly, the purpose and object of the Act is defeated.
16. The growing practice in the High Court is to file writ petitions under Article 226 of
the Constitution of India without exhausting the statutory remedies provided under the
Act. The points raised in this regard are statutory violations. However, even such
statutory violations can be dealt with by the Appellate authorities or the Appellate
Tribunals. This apart, in a writ petition, if such orders are passed with jurisdictional
errors and quashed without any remand, then an injustice would be caused to the very
spirit of the statute enacted for the benefit of the public at large. Thus, Courts are
expected to be cautious, while granting exoneration of liability merely on the ground of
jurisdictional errors, if any committed by the authorities competent. On some occasions,
jurisdictional errors are committed wantonly or in collusion with the assessees,
knowingly that there is a possibility of escaping from the clutches of law. Thus, the

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 higher authorities of the Department are expected to be watchful and review the orders
passed by the subordinate authorities and in the event of any negligence, dereliction of
duty, collusion or corrupt activities, then such officials are liable to be prosecuted apart
from initiation of departmental disciplinary proceedings. The procedures to be followed
in the department for assessment are well settled. Thus, the authorities competent are
not expected to commit such jurisdictional errors in a routine manner. In these
circumstances, review of such orders by the higher authorities are imminent to form an
opinion that there is willful or intentional act for commission of such jurisdictional
errors, enabling the assesses to get exonerated from the liability. Liability and
jurisdictional errors are distinct factors, and therefore, Courts are expected to provide an
opportunity to the Department to decide the liability on merits and in accordance with
law with reference to the provisions of the Act and Rules and guidelines issued by the
Department.
1 7 . Large number of writ petitions are filed without exhausting the statutory appeal
remedies and High Court is also entertaining such writ petitions in a routine manner.
Keeping such writ petitions pending for long time would cause prejudice to the interest
of the assessee also. Thus, such statutory provisions regarding the appeal are to be
decided at the first instance, enabling the litigants to avail the remedy by following the
procedures as contemplated under law. Such writ petitions are filed may be on the
ground of jurisdiction or otherwise. However, the Courts are expected to ensure that all
such legal grounds available to the parties are adjudicated before the proper forum and
only after exhausting the statutory remedies, writ petitions are to be entertained. In the
absence of exhausting such remedies, High Court is losing the benefit of deciding the
matter on merits, as the High Court cannot conduct a trial or examine the original
records in the writ proceedings under Article 226 of the Constitution of India. Thus, the
Courts shall not provide unnecessary opportunities to the assessee to escape from the
liability merely on the ground of jurisdictional error, which is rectifiable.
18. These being the principles to be followed, this Court has no hesitation in arriving a
conclusion that the petitioners are bound to exhaust the statutory appellate remedy as
contemplated under the provisions of the TNVAT Act. Thus, the petitioners are at liberty
to approach the appellate authority by filing appeal/revision and by following the
procedures contemplated. The delay, if any occurred, for filing the appeal, shall be
condoned by the appellate authority and the appeal shall be taken on file to be
adjudicated on merits and in accordance with law and by affording opportunity to all the
parties concerned.
19. With the above observations and directions, these writ petitions stand disposed of.
No costs. Consequently, connected miscellaneous petitions are closed."
140. The learned Single Judge has not dismissed the Writ Petition on the merits of the case. The
learned Single Judge has merely directed the appellants who were the petitioners before the writ
court to work out their remedy before the Appellate Authority against the Assessment Orders
impugned under TN VAT Act, 2006.
141. A reading of the above table would indicate that in the case of Writ Appeals in Sl. Nos.
1,14 & 17, predate amendment to Section 19 of the TN VAT Act, 2006 and Rule 10 of the TN VAT
Rules, 2007vide Tamil Nadu Act, 13 of 2015 with effect from 29.01.2016.
142. The view to be taken in the above Tax Cases has to be followed as rest of the cases deal
with the orders passed subsequent to the amendment though for the period prior to the aforesaid
amendment.
143. We shall however give details of the cases and the order passed by the Assessing officers
which were subject matter of the Writ Petitions.

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 1 4 4 . This Writ Appeal has been filed by the appellant against the Common Order dated
15.06.2021 passed by the learned Single Judge of this Court in W.P. No. 23200 of 2016
etc.,batch & W.P. No. 7517 of 2015 etc., batch, dismissing the writ petition of the appellant
challenging the assessment order dated 27.02.2015 for the assessment year 2011-2012.
145. The appellant had earlier suffered an assessment order for the aforesaid assessment year
on 27.11.2014. On the issue relating to ITC on purchase effected from dealers whose registration
were cancelled, the issue was answered against the petitioner on the ground that the appellant
had not furnished any records to substantiate the inward movement of goods. The registration of
the suppliers who had purportedly supplied the goods to the appellant were cancelled. Therefore,
issue was answered against the petitioner.
146. The petitioner had preferred a Writ Petition before this Court in W.P. No. 34743 of 2014. By
an order dated 23.12.2014, the cases were remanded back to the Assessing Officer after
referring to the decision of this Court in the following cases:-
i. Sri Vinayaga Agencies vs. Assistant Commissioner (CT), Vadapalani-I Assessment
Circle, Chennai and Another, MANU/TN/1386/2013 : (2013) 60 VST 283 (Mad);
ii. Jinsasan Distributors vs. Commercial Tax Officer (CT), Chintadripet Assessment Circle,
Chennai, MANU/TN/1771/2012 : (2013) 59 VST 256 (Mad).
147. Pursuant to the above, a revised assessment order came to be passed by the Assessing
Officer on 27.02.2015. The appellant however was unable to produce necessary documents to
substantiate movement of goods such as lorry receipts. It was held that mere payment of
amounts to the supplier/dealer was not sufficient to prove the transactions were genuine to claim
input tax credit.
148. Since the appellant had failed to furnish the required documents, we see no merits in the
present Writ Appeal. We leave it open to the appellant to file statutory appeal before the
appellate authority to be decided in the light of the observation in this order.

149. The above Writ Appeals have been filed by the appellant against the Common Order dated
15.06.2021 passed by the learned Single Judge of this Court in W.P. No. 23200 of 2016 etc.,
batch & W.P. No. 7517 of 2015 etc., batch, dismissing the writ petitions of the appellants
challenging the assessment order passed by the Commercial Tax Officer dated 27.05.2016 for the
assessment years 2011-2012 to 2014 to 2015.
150. The allegation of the petitioner is that the petitioner was making name sake purchase of
Timber and effecting immediate name sake sales to another dealer and thereby creating a trail to
claim ITC to be availed by the subsequent buyers for being offset against the tax liability. The
purchase and the sale have been found to be bogus in the impugned order.
151. That apart the issue also involved sales suppression and etc. as detailed below:
TABLE:II
Particulars 2011-2012 2012-2013 2013-2014 2014-2015
Sales . Rs.3,36,58,889Rs.6,71,62,531
suppression
estimated on

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 the basis of
excess
payments
Sales Rs.1,16,16,175Rs.5,25,02,540
suppression
proposed on
the basis of
excess receipts
Sales Rs.97,27,496 Rs.1,65,62,291 Rs.4,52,75,064 Rs.11,96,65,071
suppression at 14.5% taxable at at 14.5%
determined on 14.5%
the basis of
excess
p ay men ts and
determined
under Section
27(1)
Tax due levied Rs.14,10,487Rs.24,01,532 -
at 14.5%
Taxable Rs.97,27,496 Rs.42,63,346 -
turnover at 14.5%
proposed under
Section 27(1)
Tax Proposed
Total Tax turn - Rs.2,08,25,637 -
over
determined
under Section
27(1)
Total Tax - Rs.30,19,717 -
determined
under Section
27(1)
Tax levied 14,10,487 Rs.30,19,717 Rs.65,64,884 Rs.1,73,51,435
ReversalofInput Rs.36,88,954Rs.1,26,60,4378Rs.31,58,544 Rs.1,04,45,462
Tax Credit
determined
under Section
27(2)
Penalty under Rs.21,15,731Rs.45,29,576 Rs.98,47,326 Rs.2,60,27,153
Section 27(3):
It is also levied
at 150% of
Penaltyunder Rs.18,44,477Rs.1,26,60,438 Rs.31,58,544 Rs.1,04,45,462
S e c t i o n 27(4)
levied at 50%
152. There are several disputed questions of facts which are involved. Therefore, the order
passed by the learned Single Judge cannot be interfered. We are therefore of the view, the Writ
Appeals are liable to be dismissed. However, we give liberty to the appellant to file a statutory
appeal before the Appellate Authority. The Appellate Authority shall dispose such appeal in the
light of the law declared by us.

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 153. These Writ Appeals have been filed by the appellant against the Common Order dated
15.06.2021 passed by the learned Single Judge of this Court in W.P. No. 23200 of 2016 etc.,
batch & W.P. No. 7517 of 2015 etc., batch, dismissing the writ petitions of the appellants
challenging the impugned assessment order passed by the Commercial Tax Officer dated
23.05.2016 for the assessment years 2011-2012 to 2014-2015.
154. The issue involved in the respective assessment orders dated 23.05.2016 deals with Input
Tax Credit Adjustment Register not maintained at the place of business of the petitioner. The
place of business was found empty and that the petitioner was indulging in bill trading and
raising fictitious bills to facilitate fraudulent input tax credit being availed by their purchasers.
155. Apart from the above, the assessment orders also deals with sales suppression determined
in the light of bank statement etc., as detailed below:
TABLE:II
Particulars 2011-2012 2012-2013 2013-2014 2014-2015
Sales Rs.59,40,000 Rs.9,64,30,697 Rs.12,33,72,422Rs.30,00,74,473
suppression
estimated
on the
basis of
excess
payments
and
proposed
Sales Rs.45,43,326 Rs.1,07,30,000 Rs.6,99,91,865 Rs.26,17,66,888
suppression
proposed
on the
basis of
excess
receipts
Total Sales - Rs.10,71,60,697 Rs.20,24,64,830 Rs.56,18,41,361
suppression taxable at taxable at taxable at
proposed 14.5% 14.5% 14.5%
U/s.27(1)
Tax levied Rs.15,21,532 Rs.1,55,38,301 Rs.2,93,57,400 Rs.8,14,66,991
Taxable Rs.1,04,93,326 -
turnover at 14.5%
proposed
under
Section
27(1) Tax
Proposed
Tax -
determined
Reversal of Rs.40,93,763 Rs.3,20,57,234 Rs.4,55,11,445 Rs.1,91,49,060
Input Tax
Credit

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 determined
under
Section
27(2)
Penalty Rs.22,82,298 Rs.2,33,07,451 Rs.4,40,36,100 Rs.12,22,00,495
under
Section
27(3): It is
also levied
at 150% of
Penalty Rs.20,46,881 Rs.3,20,57,234 Rs.4,55,11,445 Rs.1,91,49,060
under
Section
27(4)
levied at
50%
156. Here also there are several disputed questions of facts which are involved apart from denial
of input tax credit availed and utilized. Therefore, the order passed by the learned Single Judge
cannot be interfered.
157. We are therefore of the view, the Writ Appeals are liable to be dismissed. However, we
give liberty to the appellant to file a statutory appeal before the Appellate Authority. The
Appellate Authority shall dispose such appeal in the light of the law declared by us.

1 5 8 . These Writ Appeals have been filed the appellant against the Common Order dated
15.06.2021 passed by the learned Single Judge of this Court in W.P. No. 23200 of 2016 etc.,
batch & W.P. No. 7517 of 2015 etc., batch, dismissing the Writ Petitions of the appellants
challenging the assessment order dated 25.07.2016 passed by the Commercial Tax Officer for the
respective assessment years 2011-2012 to 2014-2015.
159. The Assessment Orders not only deal with issues arising out of ITC wrongly availed by the
petitioner but also on account of sales suppression etc as detailed below:
TABLE: II C:
Particulars 2011-2012 2012-2013 2013-2014 2014-2015
Sales Rs.83,46,934 Rs.1,99,45,272Rs.16,83,05,257Rs.52,56,14,740
suppression
estimated
on the
basis of
excess
payments
and
proposed
Sales Rs.27,00,000 Rs.34,58,637 Rs.9,46,61,518 Rs.25,63,51,154
suppression
proposed
on the
b a s i s of
excess
receipts
Total Sales- - Rs.26,29,66,775Rs.78,19,65,894

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 Total Sales - - Rs.26,29,66,775 Rs.78,19,65,894
suppression taxable at taxable at
proposed 14.5% 14.5%
U/s.27(1)
Tax levied - - Rs.3,81,30,182 Rs.11,33,85,054
Taxable Rs.1,10,46,934 Rs.2,34,03,909 -
turnover at 14.5% at 14.5%
proposed
under
Section
27(1) Tax
Proposed
Tax Rs.16,01,805 Rs.33,93,567 -
determined
Reversal of Rs.28,53,948 Rs.28,53,948 Rs.3,10,13,965 Rs.62,84,609
Input Tax
Credit
determined
under
Section
27(2)
Penalty Rs.24,02,707 Rs.50,90,350 Rs.5,71,95,273 Rs.17,00,77,581
under
Section
27(3): It is
also levied
at 150% of
Penalty Rs.14,26,974 Rs.28,53,948 Rs.3,10,13,965 Rs.62,84,609
under
Section
27(4)
levied at
50%
160. The place of business of the appellant was inspected by the enforcement wing on various
dates, wherein it was found that a place of business was empty and no books of account were
maintained and that the appellant was found indulging in bill trading by making fictitious bill to
legitimize bogus purchase and sales in the chain transactions.
161. The allegations against the appellant is that the appellant has made name sake purchases
and effected immediate name sake to another and thereby creating a trial of claim of input claim
of input to be used by subsequent buyers to offset output tax on unaccounted purchase as
detailed above.
162. There are several disputed questions of facts which are involved apart from denial of input
tax credit availed and utilized. The appellant is therefore not entitled for any relief in these Writ
Appeals. It would be neither prudent for us to sit as appellate authority for desirable to get into
disputed questions of facts.
163. We are therefore of the view, these Writ Appeals are liable to be dismissed. However, we
give liberty to the appellant to file a statutory appeal before the Appellate Authority. The
Appellate Authority shall dispose such appeal in the light of the observation in this order.

1 6 4 . This Writ Appeal has been filed by the appellant against the Common Order dated

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 15.06.2021 passed by the learned Single Judge of this Court in W.P. No. 23200 of 2016 etc.,
batch & W.P. No. 7517 of 2015 etc., batch, dismissing the writ petitions of the appellants
challenging the assessment order dated 06.07.2015 passed by the Commercial Tax Officer for the
respective assessment years 2010 to 2011.
165. The appellant herein had purchased goods from three dealers whose registrations were
cancelled prior to the date of purchase of the goods. Thus, a notice was issued to the appellant
on 08.12.2014 and on 22.05.2014.
166. The appellant replied to the same stating that the registration of the dealers who supplied
the goods were active at the time of purchase and had also enclosed copies of Bank Statement to
substantiate the payments. The appellant was called upon to furnish the documents. The
appellant was unable to substantiate movement of goods to the worksite and freight and
transportation charges.
167. It was observed that on verification of purchase that each and every consignment consisted
of more than 4000cement bags which would require proper transportation documents like lorry
receipts to the appellant at the site at Pallavaram and payment of freight charges the appellant
had failed to produce any proof of inward movement of goods from a supplier from
Virugambakkam, Koratur, Chennai to the appellants site at Pallavaram.
168. The appellant has not furnished proof of delivery of goods. Therefore, we are not inclined
to interfere with the impugned order. The appellant is given liberty to file a statutory appeal
before the Appellate Authority.

169. These Writ Appeals have been filed by the appellant against the Common Order dated
15.06.2021 passed by the learned single Judge of this Court in W.P. No. 6807-609 of 2015. By
the impugned Order, the learned Single Judge dismissed these writ petitions of the appellants
against the assessment order dated 14.01.2015 passed by the Commercial Tax Officer for the
assessment years 2011-2012 to 2013-2014.
170. The appellant herein had availed Input Tax Credit for the respective Assessment Years as
detailed below:
TABLE: II D:

171. The purchases were allegedly made from a dealer who evaded tax from the bill traders and
effected circular transaction among themselves to evade tax. Relevant portion of the orders dated
14.01.2015 of the Commercial Tax Officer for the three years read identically. They read as
under:-
"Objections filed by the dealers have been carefully examined. Regarding the claim of
ITC on the purchases made by the dealers, they have not produced documents for the
following particulars.
i. Purchase orders

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 ii. Movement of goods
iii. Bank Statements
iv. Closing stock at the end of the each financial year.
v. Godown for keeping the goods towards claim of ITC on the closing stock.
Sec. 2(33)(i) provides for the sales will be taken into account only on a transfer in any
goods for cash, deferred payment or other valuable consideration. Sec. 2(29) provides
for place of business of the dealers and Sec. 19(13) provides for denial of ITC where a
registered dealer without entering into a transfer of sale. The provisions are extracted
below:
Sec. 2(33)(i):
Sale with all its grammatical variations and cognate expressions means every
transfer of the property in goods (other than by way of a mortgage,
hypothecation, charge or pledge) by one person to another in the course of
business for cash, deferred payment or other valuable consideration and
includes
A transfer, otherwise than in pursuance of a contract of property in any goods
for cash, deferred payment or other valuable consideration.
Sec. 2(29):
Place of business' means any place in the State where a dealer purchases or sells goods
and includes
i. a warehouse, godown or other place where a dealer stores his goods;
ii. a place where the dealer processes, produces or manufactures goods; and
iii. a place where the dealer keeps his accounts, registers and documents.
Sec. 19(13):
Where a registered dealer without entering into a transaction of sale, issues an invoice,
bill or cash memorandum to another registered dealer, with the intention to defraud the
Government revenue, the assessing authority shall, after making such enquiry as it
thinks fit and giving a reasonable opportunity of being heard, deny the benefit of input
tax credit to such registered dealer who has claimed input tax credit based on such
invoice, bill or cash memorandum from such date."
172. The last paragraph of the orders dated 14.01.2015 of the Commercial Tax Officer in the
respective assessment orders are also identical except for the amount involved. We reproduce
the last para with the details of the amount for the sake of the record as under:-
In the above circumstances objections filed by the dealers are overruled and confirmed the
proposals made in the notice

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 173. In the impugned order of the Commercial Tax Officer, there is a mere reproduction of the
reply of the appellant. If what was stated in the notices which preceded the Assessment order
dated 14.01.2015 passed by the Commercial Tax Officer, are true, the demand has to be
confirmed.
174. However, the above extracted portion of the impugned Orders of the Commercial Tax
Officer indicates that the respective orders passed are non speaking order. There is no discussion
in it.
175. We are therefore, inclined to set aside the impugned order and remit the case back to the
Commercial Tax Officer or such other officer authorized in their behalf to pass a speaking order
on merits in the light of the observation and the position of law that is clarified by us in this
detailed order.
Writ Petitions (W.P):
176. We shall now deal with the respective Writ Petitions.
177. The table below gives the details of the respective writ petitions challenging the respective
Impugned Order/Assessment Order:-
TABLE-III

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 1 7 8 . In all these Writ Petitions, instead of filing a statutory appeal against the respective
Impugned Orders/Assessment Orders, the respective petitioners like the writ appellants in the

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 above cases have filed these writ petitions by placing reliance.
179. It is the case of the respective writ petitioner that the requirements in the proviso to
Section 19 (1) of the TNVAT Act, 2006 as amended vide with effect from 29.01.2016 vide Tamil
Nadu Act, 13 of 2015 cannot be retrospectively imposed on these petitioners for the transactions
which took place during prior to the period in dispute.
180. We shall briefly narrate the facts of each of the cases individually though these cases were
argued as if common issue arises for consideration before us.

181. In the above Writ Petition, the petitioner has challenged the impugned assessment order
dated 24.1.2019 passed by the respondent Commercial Tax Officer for the assessment year
2015-2016.
182. The impugned order invokes best judgment assessment notice under section 22(4) of the
Tamil Nadu Value Added Tax Act, 2006 and confirms to tax liability.
183. In support of the case of the petitioner in W.P. No. 9372 of 2019 (M/s.Tvl.Lathika Oil
Trading,Represented by its Proprietrix, V.Juliet Prema Arputham), learned Counsel
Mr.R.Seniappan submitted as follows:-
"The seller and the purchaser both of them are doing business in the same complex and
assess on the files of the respondent herein. As requested through reply dated
10.10.2016 in response to the notice dated 26.08.2016, the respondent fairly verified
and accepted and certified in the impugned order itself page no 22 and inner page no 3
of the impugned order ) that the seller has filed monthly returns with payment of
disputed tax, however rejected his claim of ITC on the ground that the proof of
movement was not produced despite the fact that the goods has in fact been moved by
own arrangements as evidenced from the letter dated 09.10.2016 given by SALATH
MADHA TRANSPORT which is available in page no 13 in the Typed Set . The impugned
assessment is undoubtedly nothing but double time tax on a single transaction. Further,
the impugned order is in relevance to the assessment year 2015-16 prior to section 8 of
Second Amendment Act (13 of 2015) effective from 29th January 2016."
184. It was argued as if the impugned order deals only with the denial of input tax credit under
Section 19 of the TN VAT Act, 2006, when indeed the case also pertains to sales suppression and
other issues.
185. The petitioner has declared total purchase turnover of Rs. 47,06,78,317/-and has claimed
input tax credit of Rs. 2,32,22,792/-. This ITC has been utilized by the petitioner for discharging
the tax liability on the taxable turnover of Rs. 48,15,14,239/-declared in the returns.
186. We have perused the impugned assessment order. We are of the view that the invocation
of section 22(4) of the Act TN VAT Act,2006 was prima facie warranted as there is suppression of
purchase turnover by the petitioner in the returns filed for the assessment year 2015-2016. The
case was not actually confined to denial of input tax credit alone. As far as demand for ITC of Rs.
3,08,110/-on purchase turnover of Rs. 61,62,195/-.
187. Thus, there was no justification on the part of the learned counsel to have clubbed the
present case along with the present batch as other issues were also involved. Had we taken a
favourable view in favour of these petitioners in so far as denial of Input Tax Credit was
concerned, we may have committed a grave injustice to the State Revenue by assuming the issue
involved was confined only to denial of Input Tax Credit. We are therefore of the view, the Writ
Petition is liable to be dismissed. However, we give liberty to the appellant to file a statutory
appeal before the Appellate Authority. The Appellate Authority shall dispose such appeal in the

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 light of the observation contained in this order.
188. A reading of the impugned order passed also indicates that in the returns filed under the
provisions of the TNVAT Rules, 2007, the petitioner had wrongly declared inter-state purchase of
edible oil of as Rs. 62,22,482/-only transported from Krishnapattinam to Chennai by M\S.Salok
Matha Transport as against Rs. 3,81,44,280/-
189. Thus, there was a suppression of taxable turnover of Rs. 3,19,21,798/-(Rs. 3,81,44,280-
Rs. 62,22,482) in the returns filed. The total purchase turnover of the petitioner should have
been actually Rs. 50,26,00,106/-(Rs. 47,06,78,317 + Rs. 3,19,21,789) instead of mere Rs.
47,06,78,317/-as was declared by adding only a sum of Rs. 62,22,482/-in interstate purchase to
the local purchase of edible oil of Rs. 47,06,78,317/-.
190. The petitioner is prima facie liable to pay differential tax of Rs. 16,24,262/-on the local
sales effected on the balance purchase turnover of Rs. 3,19,21,798/-(Rs. 3,81,44,280-Rs.
62,22,482) which escaped assessment.

191. These Writ Petitions pertains to the above mentioned assessment years. The petitioner has
challenged the assessment orders passed by the Assessing Officer/Respondent therein on
31.01.2019. The dispute pertains to the period partly before the amendment and partly after the
amendment to Section 19 of the TNVAT Act, 2006.
192. Apart from the main issue relating to denial of input tax credit, there are several other
issues. For the purpose of clarity, the following chart may be referred to. It indicates that there
as other issues as well as detailed below:
TABLE-III A:
A.Y. A. B. C. D. E. F G
2012- Sales Purchase Transit sale Input tax Mismatch
2013 suppression suppression not reversal for on cross
when and supported bogus verification
compared estimated by purchases of
with sales documents Annexure I
Balance omission and of buyer
Sheet declaration and
forms Annexure
II of seller
2013- Sales Purchase Purchase Reversal of Reversal of Input tax Mismatch
2014 suppression suppression suppression input tax on i n p u t tax revers al for on cross
when and and sales to on bogus verification
compared estimated estimated unregistered interstate purchases of
with sales sales dealers s a l e s u/s. Annexure I
Balance omission omission 19(2)(v) o f buyer
Sheet from and
01.11.2014 AnnexureII
of seller
2014- Sales Sales Reversal of Reversal of Reversal of Disallowance Input tax
2015 suppression suppression input tax on input tax on Input tax of claim of reversal
when when sales to interstate on excess purchase for bogus
compared compared unregistered sales u/s. claim of and sales purchases

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 with with dealers 19(2)(v) Input tax return
Balance Balance from
Sheet Sheet 01.11.2014
2015- Purchase Purchase Input tax Mismatch Wrong
2016 suppression suppression reversal for on cross claim of
and and bogus verification Input tax'
estimated estimated purchases of Annexure
sales sales I of buyer
omission omission and
Annexure II
of seller
2016- Input tax Reversal of
2017 reversal for i n p u t tax
bogus on bogus
purchases purchases
193. As far as reversal of ITC is concerned with which we are primarily concerned in these Writ
Petitions and Writ Appeals, the petitioner has availed ITC from the alleged purchase of goods
from M/s.Megha Trading Corporation and M/s.South India Trading Corporation.
194. There are no documents that were filed to substantiate any transfer of goods or movements
of goods. Thus, the Assessing Officer has concluded that the ITC availed on the alleged sale from
these two concerns were bogus.
1 9 5 . The Assessing Officer noted that these are closely connected trading concerns of the
petitioner. M/s.Megha Trading Corporation is owned by none other than the mother of the
Director Thiru.Ashutosh Goel and wife of another director Thiru.Rajesh Goel of Tvl.Atmosfaira
Impex Private Limited.
196. Tvl.South India Trading Corporation is owned by none other than one of the Director
(Thiru.Rajesh Goel) of Tvl.Atmosfaira Impex Private Limited. The residential places of the
Proprietors Tmt.Deepika Goel (Tvl.Megha Trading Corporation) and Thiru.Rajesh Goel (Tvl.South
India Trading Corporation) is none other than the Residential Address No. 115/C-16, Nelson
Chamber, Nelson Manickam Road, Aminjikarai, Chennai-29 of the Director of Thiru.Ashutosh
Goel (Tvl.Atmosfaira Impex Private Limited).
197. It has been further observed that there is no storing place for the goods purchased by
Tvl.Megha Trading Corporation and Tvl.South India Trading Corporation. The sellers Tvl.Megha
Trading Corporation and Tvl.South India Trading Corporation have therefore not at all handled
the goods. Therefore, it has been concluded that there was only transfer of money with no
corresponding transfer of goods and movement of goods.
198. The details of ITC availed by the petitioner on the strength of invoices raised by these
concerns are as under:-
TABLE-III B:

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 199. A reading of the assessment orders indicate that the petitioner had purchased goods from
M/s.Megha Trading Corporation and M/s.South India Trading Corporation. M/s.Megha Trading
Corporation is owned by wife of one of the Director and the mother of another Director.
M/s.South India Trading Corporation which is owned by the Director Rajesh Goel. There are only
trails of money transfers.
200. We do not wish to express any opinion on the merits of the case. Suffice to state that the
petitioner has to challenge the impugned order before the Appellate authority like others.
Therefore, the above writ petition is dismissed with the above observation.

201. In the above Writ Petition, dispute pertains to the following four heads:-

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 202. In our view, the petitioner has not made out a case for interference. The petitioner has not
produced any documents to substantiate movement of goods. Therefore we given liberty to the
petitioner to challenge the impugned orders, if advised before the Appellate within the time
stipulated in this order. The Appellate Authority shall dispose such appeal in the light of the
observations in this order.

203. In these Writ Petitions the dispute pertains to pre-amendment to Section 19 of the TNVAT
Act, 2006 and Rule 10 of the TNVAT Rules, 2007.
204. The details of the ITC that has been sought to be reversed for the respective assessment
years are as follows:-
TABLE-III C:
For the Assessment Year 2010-2011

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19-06-2024 (Page 86 of 92) www.manupatra.com NATIONAL LAW INSTITUTE UNIVERSITY, BHOPAL
 205. The reasons given in the respective assessment years are as follows:-
i. Mere possession of TIN No by the unethical sellers is not a proper proof.
ii. The continuous stated in their objections that they have reported the purchases in the
returns and all payments were made through cheques and bank transfer but for the
above transaction, no proof has been produced, and hence disallowed, Further the Lorry
Vouchers were fabricated after the issue of Notice.
206. The petitioner has no documents to substantiate that the dealers to whom payments were
made at that the supplies effected by them accompanied in other collateral documents to
substantiate the movement of goods.
207. The petitioner has relied on the decision of this Court in the case of Althaf Shoes Private
Limited vs. Assistant Commissioner (CT), Valluvarkottam Assessment Circle, Chennai,
MANU/TN/5302/2011 : (2012) 50 VST 179 (Mad) and in the case of Sri Vinayaga Agencies vs.
Assistant Commissioner (CT), Vadapalani-I Assessment Circle, Chennai and another,
MANU/TN/1386/2013 : (2013) 60 VST 283 (Mad).
208. In our view, the petitioner has not made out a case for interference. The petitioner has no
documents to establish movement of goods. Therefore, we give liberty to the petitioner to
challenge the impugned orders, if advised before the Appellate Authority, within the time
stipulated in this order. The Appellate Authority shall dispose such appeal in the light of the law
declared by us.

209. In these Writ Petitions the petitioner has challenged assessment orders dated 30.11.2020
for the above mentioned assessment years. The premises of the petitioner were inspected on
19.09.2016.During the course of inspection the petitioner, admitted to the lapse pointed and
paid a sum of Rs. 24,80,841/-.
210. The petitioner paid the aforesaid amount by way of cheque. After paying the aforesaid
amount, the petitioner filed W.P. No. 35235 of 2016 before this Court stating that the
enforcement wing officers had no power to collect cheque at the time of inspection. The Writ
Petition was disposed on 05.10.2016 with the direction to return the cheque. Thus, the cheque
which was given during the inspection could not be honored.
2 1 1 . On 26.06.2019, for the respective assessment years, assessment orders were passed.
These assessment orders were challenged by the petitioner before this Court in W.P. Nos. 27163,
27165 & 27167 of 2019. By an order dated 25.10.2019, these assessment orders were set aside
with the direction to the Assessing Officer to redo the assessment once again after giving an
opportunity to personal hearing to the petitioner. Thus, the impugned assessment orders for the
respective assessment years have been passed.

212. The Assessing Officer has concluded that the petitioner has not discharged the burden of
proof. The petitioner had purchased the goods from genuine dealers and thus, it has been
concluded that credit availed on the strength of bogus invoices cannot be allowed.

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 213. The petitioner has also not produced the purchase bill. Thus, the credit has been denied.
214. In our view, the petitioner has not made out a case for interference. The petitioner has no
documents to establish movement of goods. Therefore, we give liberty to the petitioner to
challenge the impugned orders, if advised before the Appellate Authority within the time
stipulated in this order. The Appellate Authority shall dispose such appeal in the light of the law
declared by us.

215. In these Writ Petitions the petitioner had challenged the impugned assessment order dated
30.07.2021 passed by the respondent Sales Tax Officer for the assessment year 2012-2013 to
2014-2015.
2 1 6 . The reading of the notice issued to the petitioner on 10.03.2016 and the reply filed
indicates that the petitioner is a partnership concern which is a Registered dealer under the
provisions of the TNVAT Act, 2006 read with TNVAT Rules, 2007.
217. The petitioner has an office in T.Nagar and obtained a registration for dealing in Food
Processor (mixie), Wet Grinder and Cotton Yarn.The petitioner claims to have purchased cotton
yarn from six different dealers as detailed below:-

218. One of the dealer namely M/s.Aassaan Global Trade is a proprietary concern which is
owned by one of the partner of the petitioner. The place of business of the proprietary concern
namely M/s.Aassaan Global Trade and that of the petitioner are one and the same. Similarly, the
petitioner has also purchased goods from M/s.Arunachala Impex Private Limited during the
period in dispute i.e., during the month of July and August 2014.
2 1 9 . The petitioner claims to have effected sale to the said proprietary concern namely
M/s.Aassaan Global Trade and to M/s.Arunachala Impex Private Limited and has utilized the
IncomeTax Credit availed on the invoice raised by them on the petitioner.
220. The contention of the department is that there is no corresponding movement of goods by
the above two concern and thus, the credit was wrongly availed to discharge the tax liability on
the sale effected to these two concerns viz.,M/s.Aassaan Global Trade and to M/s.Arunachala
Impex Private Limited.
221. It is further submitted that proviso to Section 19 of the TNVAT Act, 2006, inserted only
with effect from 29.01.2016 and therefore it cannot be imposed retrospectively to deny credit
which was validly availed.
222. In support of the above plea, the petitioner has placed reliance on the decision of the
Hon'ble Supreme Court in the case of Bharat Sanchar Nigam Limited(BSNL)vs. Union of India,

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 MANU/SC/1091/2006 : (2006) 3 SCC 1, wherein it held as under:
"43. Transactions which are mutant sales are limited to the clauses of Article 366 (29-A).
All other transactions would have to qualify as sales within the meaning of the Sales of
Goods Act, 1930, for the purpose of levy of sales tax."
223. It is further stated that there is a deem sale between the petitioner and the two concerns
and therefore the petitioner was justified incorrect and utilizing the same for discharging the lax
liability on the sales effected under the provisions of the TNVAT Act, 2006.
224. In our view, the petitioner has not made out a case for interference. The petitioner has no
documents to substantiate movement of goods. Therefore, we give liberty to the petitioner to
challenge the impugned orders, if advised before the Appellate Authority within the time
stipulated in this order. The Appellate Authority shall dispose such appeal in the light of the law
declared by us.

2 2 5 . The petitioner purchased automobiles as well as other raw materials required for
manufacture of auto parts from some vendors located within the State and outside the State.
226. The petitioner availed ITC. Initially proceedings were initiated on various dates for the
respective assessment years. The Department had issued notices to deny ITC to the petitioner on
account of mismatch of ITC between Annexure I of the petitioner and Annexure II filed by the
respective selling dealers who sold the goods during the period in dispute and on account of
cancellation of the Registration.
227. The details of the demand proposed in the respective notices issued to the petitioner for
the respective assessment years and the demand confirmed in all the writ petitions are as under:
Sl. Financial Mismatch Cancellation Total Penalty Total
No Year Proposed confirm
demand
Proposed Confirm Proposed Confirm
Credit Credit
Mismatch Mismatch Input Input
with seller with seller from RCtaken
taken
tax record tax record Cancelled from RC
cancelled
in sales tax in sales tax dealers dealers
portal portal
1. 2010-11 1,07,47,4581,02,72,72513,70,60613,70,6061,21,18,0631,74,64,9972,91,08,328
2. 2011-12 1,33,70,416 46,29,725* 13,446 13,452 13,383,862 69,64,766 1,16,07,943
3. 2012-13 93,91,386 45,20,157 18,664 18,663 94,10,050 68,08,230 1,13,47,050
4. 2013-14 24,72,966 2,07,587 1,19,119 1,19,124 25,92,085 4,90,067 8,16,778
5. 2014-15 7,20,256 4,40,067 90,834 90,840 8,11,090 7,97,201 13,28,108
6. 2015-16 9,62,600 4,63,352 1,27,689 1,27,689 10,90,289 8,86,562 14,77,603
Total 3,76,65,0822,05,33,61317,40,35717,40,3743,94,05,4403,34,11,8235,56,85,810
* actually 33,16,213
228. As far as penalty is concerned the State Tax Officer has held as under:-

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 "Conclusion of the Assessing Authority:
They have requested to drop the penalty as it would not be warranted, based on the
judgments delivered by the Hon'ble High Court. They have added that the proposals are
not at all finding out any willful suppression on the part of the dealer to suffer with
penalty. The contention of the dealer was carefully examined and found that not
sustainable. The proposals are early establishing the leakage of revenue by their wanton
suppression of fact. The transaction has resulted to the determent of Government Ex-
chequer which can be considered only as a willful suppression to defraud the
Government Revenue. Hence, their contention is not sustainable and the penalty is
warranted."
2 2 9 . The reasoning in all the orders for the respective years are similar.The Department's
contention was that the petitioner had wrongly availed credit in excess and therefore issued
notices to the petitioner for the respective assessment years. Apart from the above, there are
several other issues also in the above proceedings that were initiated against the petitioner.
230. Barring the above two issues all the issues have attained finality. There is no further
challenge in so far as above two mentioned issues i.e. regarding mismatch between the credit
availed in Annexure I of the petitioner and Annexure II filed by the respective selling dealers, the
demand has been confirmed in the light of Circular dated 18.01.2019 bearing reference Circular
No. 3/2019/Q1/39643/2018, Relevant portion of the order for Assessment Year 2011-2012 as far
as Mismatch reads as under:
Conclusion of the Assessing Authority:
The above readings were carefully examined.
The total transactions are analysedwith two major categories.
1] Reported by the seller at the other end, settling the mismatching on some or
other reason.
2] Not established with reference to the reporting at other end.
As far as the reconciled turnover with reporting at the other end, it works out to the
input tax credit value of Rs. 1,00,54,203.00. The entries have been reflecting the
concern transactions and the mismatching has been crept out due to technical and
administrative differences. Otherwise the transactions are established and the concern
turnover is bonafide with documentary evidence. Hence, the proposal to the extent of Rs.
1,00,54,203.00 is hereby dropped.
As far as the turnover of Rs. 33,16,213.00, it seems to be not established with the
verification of reporting at the other end. In supporting the argument of the dealer in the
absence of reporting at the other end, the Court verdict is mainly concerned to exercise
the discretionary decision in justifying the transaction. The judgments referred above are
directing that the buyer cannot be denied for input tax credit when they have established
their genuineness. In this connection, the dealers have furnished the copy of invoices
and proof for bank payment on the transactions. Whereas, they have not furnished the
documentary evidence for the movement of goods without which the transfer of property
is not established. With the copy of invoice, the transfer of title of goods is established.
With the proof for bank payment, the realization of proceeds is established.
Whereas, in the absence of proof for transportation, the transfer of property is not
established. Only with the above three aspects, a purchase or sales can be constituted.
Hence, when they have not established their genuineness of purchase on their part, the
benefit of the judicial verdict will not go in favor of them.
Moreover, the provisions of Section 19 has been amended vide Gazette no.217 dated
14.10.2015 as detailed below:

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 In section 19 of the Principal Act:-
/1/Sub-Section/1/
/a/for the expression, "Tax paid or payable", the expression "Tax Paid" shall be
substituted;
/b/for the provision, the following provision shall be substituted, namely-
"Provided that the registered dealer, who claims input tax credit, shall
establish that the tax due on purchase of goods has actually been paid
in the manner prescribed by the registered dealer who such sold and
that the goods have actually been paid and delivered:
From the above, when the selling dealer is at default, the buying dealer
has to be establish the genuineness of physical occurrence of the
transaction, as envisaged in Section 17 of the TNVAT Act 2006 which is
not fulfilled. In the absence of compliance of statutory provisions, the
assessing authority finds no room to consider the transaction as
physically occurred and genuine. Moreover, as per the amended
provisions of the Act, the "paid" position of sufferance of tax is not at
all established when it is not found reported at the other end. In fine,
the concern transactions are not established in a genuine way to be
considered. Hence, the proposal to the extent of Rs. 33,16,213.00 is
hereby confirmed as their contention is not sustainable with the
statutory stipulation. However, the narrative result of the examination is
furnished in Annexure to the order."
2 3 1 . As far as retrospective cancellation of registration, the Assessment Order has held as
under:
"Conclusion of the Assessing Authority:
On this issue, it is clarified that the Registration Certificates of the selling dealers have
been cancelled with retrospective effect. When a proceeding is passed, the content of the
proceeding is legal stand, not mere the date of proceedings. Even though the date of
proceedings are subsequent to the dates of their purchase, the effective date of
cancellation is prior to that. Hence, the selling dealers have turned into unregistered
dealers from the date mentioned in the proceeding itself. Then the issue is whether the
buying dealers, who have made the tax payment to them in the intermittent time, are
eligible on the tax sufferance or not. In this issue, it is clarified that many High Court
verdicts have approved and upheld the decision of Government, passing an retrospective
effect orders. Hence, the cancellation of Registration on retrospective effect is has legal
approval and thereby the date of effect mentioned in the proceedings also has legal
approval. On the other hand, the cancellation of Registration is ordered not on any
incidental occasion but it is passed only the perpetual default of the concern dealers.
Only on the continuous and perpetual default, the certificates are cancelled. Hence, the
transaction effected by them from the original date itself becomes suspicion and not
physically occurred. As per the provisions of Section 17 of the Act, when a dealer avails
input tax credit on their purchases the responsibility of proving the tax sufferance at
their point lies on the shoulder of the buyer. Establishing the genuineness of the
physical occurrence of the transaction, in the case default at the selling point, becomes
inevitable legal responsibility of the buyer to be discharged, without which their claim
cannot be considered. The input tax credit becomes a credit on their part only when the
concern tax amount is remitted into the Government account, not before that.
The concern judgments referred by them were carefully examined, which are
encouraging that the buyer cannot be denied for the default of the seller. To allow the
benefit of the concern judgements, they have to establish their genuineness on their

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 physical occurrence of the transaction and prove that the default is only on the part of
the seller. When, basically, they have not discharged their responsibilities, as per the
provisions of Section 17 of the Act, the default cannot be assigned only on the part of
the seller. In such issue, as per the provisions, the buyer is responsible for establishing
the genuineness. In this line, their contention is not sustainable.
From the above, when the selling dealer is at default, the buying dealer has to be
establish the genuineness of physical occurrence of the transaction, which can be
constituted only with the following three components of a genuine transaction.
1) The valid & original purchase invoice, issued by the selling dealer to establish
the transfer of title of goods.
2) The proof for bank or cash payment of the proceed, made against the
consideration to establish the rights on transfer of title of goods.
3) proof of transportation to establish the transfer of possession of goods.
In the above contention of the dealer, they have not established the right on the transfer
of title, by way of not filing any bank payment proof and not established the transfer of
possession of goods, by way of not filing transportation proof. In the absence of
fulfillment of the legal stand, the transaction happened in between the parties has not
constituted the purchase or sale. Hence, their purchase transactions are not valid and
qualified in accordance with the law and resultant credit on their tax sufferance of tax at
the purchase point is also not legal credit on their part to claim. In view of the above
facts, their contention that the selling dealers have been alive on the date of purchase is
not sustainable and untenable.
232. In the result:-
i. T.C. Nos. 19, 20 & 21 of 2022 are dismissed.
ii. W.A. Nos. 451 of 2022 & 2714 of 2021 & 2637 to 2640 of 2021 & 119, 125, 131 &
135 of 2022 & 1194, 1195, 1197 & 1201 of 2022 & W.P. No. 9372 of 2019 &11482 to
11484, 11488 & 11489 of 2019 & 12450 of 2019 & 15046, 15049, 15050, 15052, 15053
& 15055 of 2019 & 1226, 1230 & 1239 of 2021 & 18761, 18766 & 18769 of 2021 &
11808, 11811, 11812, 11814, 11816 & 11819 of 2022, are dismissed with liberty to the
appellants/petitioners to file their respective statutory appeals before the Appellate
Authority within thirty days of this order.
iii. In W.A. No. 2607 and 2618 of 2021, the impugned orders are set aside and the cases
are remitted back to the Original Authority to pass a fresh order on merits in the light of
the observation in this order.
iv. These petitioners/appellants are at liberty to file their appeals/replies/representations
before the authority within a period of 30 days from the date of receipt of a copy of this
order.
v. The Original Authority/Appellate Authority as the case may be shall pass order orders
within three months of the receipt of this order after affording an opportunity of personal
hearing.
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