Madras High Court
M/S.Sri Ram Pharma vs The Commercial Tax Officer on 3 March, 2022
W.P.Nos.4791, 4796, 4797 & 4802 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 03.03.2022
CORAM
THE HONOURABLE MR.JUSTICE R.SURESH KUMAR
W.P.Nos.4791, 4796, 4797 & 4802 of 2022
and
W.M.P.Nos.4899, 4901, 4905, 4907,
4906, 4904, 4908 & 4909 of 2022
M/s.Sri Ram Pharma,
No.4, 7th main Road, New Colony,
Chennai – 44, rep.by its Partner,
AN.Selvam ... Petitioner in all W.Ps
Vs
1.The Commercial Tax Officer,
Pallavaram, Assessment Circle,
Chennai – 600 044.
2.Assistant Commissioner (ST)
Pallavaram, Assessment Circle,
Nandanam, Chennai – 600 034.
3.Tamil Nadu Mercantile Bank Ltd.,
No:33, Siva Shanmugam Street,
Tambaram West, Chennai – 600 045. ... Respondents in all W.Ps
https://www.mhc.tn.gov.in/judis
W.P.Nos.4791, 4796, 4797 & 4802 of 2022
Prayer in W.P.No.4791 of 2022: Petition filed under Article 226 of the
Constitution of India, praying for issuance of a Writ of Certiorari, calling
for the records of the 1st respondent relating the proceedings TIN
No:33840880826/ 2008-09 dated 10.12.2021 and quash the same.
Prayer in W.P.No.4796 of 2022: Petition filed under Article 226 of the
Constitution of India, praying for issuance of a Writ of Certiorari, calling
for the records of the 1st respondent relating the proceedings TIN
No:33840880826/ 2010-11 dated 10.12.2021 and quash the same.
Prayer in W.P.No.4797 of 2022: Petition filed under Article 226 of the
Constitution of India, praying for issuance of a Writ of Certiorari, calling
for the records of the 1st respondent relating the proceedings TIN
No:33840880826/ 2009-10 dated 10.12.2021 and quash the same.
Prayer in W.P.No.4802 of 2022: Petition filed under Article 226 of the
Constitution of India, praying for issuance of a Writ of Certiorari, calling
for the records of the 1st respondent relating the proceedings TIN
No:33840880826/ 2011-12 dated 10.12.2021 and quash the same.
For Petitioner : Mr.P.Senthil Dhandapani
[in all W.Ps]
For Respondents : Mr.V.Prasanth Kiran
Government Advocate
[in all W.Ps]
https://www.mhc.tn.gov.in/judis
W.P.Nos.4791, 4796, 4797 & 4802 of 2022
COMMON ORDER
Since the issue raised in these writ petitions is one and the same,
with consent of the learned counsel appearing for both sides, these writ
petitions were heard together and are being disposed of by this common
order.
2. That the relevant Assessment Years are 2008-09, 2009-10, 2010-
11 and 2011-12. Insofar as these four Assessment Years are concerned,
the petitioner/assessee had claimed Input Tax Credit [in short, 'ITC'] and
that the same was availed.
3. Subsequently, the Revenue having verified the Books of
Accounts, Vouchers etc., had come to the conclusion that, in respect of
the purchase transaction taken place in these Assessment Years from the
selling dealers, those selling dealer's registration certificate had been
cancelled by order dated 28.05.2010 with retrospective effect from
05.04.2007.
https://www.mhc.tn.gov.in/judis
W.P.Nos.4791, 4796, 4797 & 4802 of 2022
4. Therefore, on that basis, ITC claimed by the petitioner/assessee
was sought to be reversed, that is how these orders have been passed on
10.12.2021 in all these four Assessment Years, making the assessment of
reversing the ITC claimed by the petitioner/assessee for the relevant
Assessment Years and to make the tax liability to be paid by the
petitioner in this regard.
5. Challenging these orders dated 10.12.2021 in all these cases,
these writ petitions have been filed.
6. Heard Mr.P.Senthil Dhandapani, learned counsel appearing for
the petitioner, who would submit that, the petitioner is a genuine
purchasing dealer, who purchased from various selling dealers for those
years and at the time of purchasing the same as the transaction taken
place long back, the petitioner/assessee did not know registration
certificate of those selling dealers were cancelled by order dated
28.05.2010 that too retrospectively from 05.04.2007.
https://www.mhc.tn.gov.in/judis
W.P.Nos.4791, 4796, 4797 & 4802 of 2022
7. Atleast for the Assessment Years 2008-09 and 2009-10,
certainly, the registration certificates were alive during the transaction
taken place between the selling dealers and the petitioner, because the
registration was cancelled only on 28.05.2010, of-course, with
retrospective effect from 05.04.2007. Therefore, it could not be expected
that in future, the registration of the selling dealers would be cancelled
with retrospective effect.
8. He would also submit that, in so far as Assessment Years 2010-
11 and 2011-12 are also concerned, if these transactions have been taken
place genuinely and it is not the case of the Revenue that, it is only a
mere bill transaction or bill trading, the petitioner cannot be proceeded
for the reversal of ITC on the reason that the petitioner purchased and the
transaction taken place with selling dealers, whose registration
certificates have been cancelled on 28.05.2010.
9. This position since has not been made known to anyone
including the petitioner/assessee, it cannot be stated that the transaction
https://www.mhc.tn.gov.in/judis
W.P.Nos.4791, 4796, 4797 & 4802 of 2022
taken place for the Assessment Years 2010-11 and 2011-12 also to be
considered as a transaction taken place from the selling dealers, whose
registration have been cancelled and on that ground, the petitioner's
availing of ITC has to be reversed.
10. In support of his contention, the learned counsel appearing for
the petitioner has relied upon the following decisions:
(i) In the case of Jinsasan Distributors Vs. Commercial Tax
Officer (CT), reported in 2013 (1) MLJ 157;
(ii) In the case of Tvl.Indian Products Vs. Commercial Tax
Officer, made in W.P.No.40382 to 40385 of 2016 dated 17.11.2016;
(iii) In the case of Infiniti Wholesale Limited (Formerly known as
Woolworths Wholesale (India) Private Limited Vs. The Assistant
Commissioner (CT), reported in 2015 (2) C.W.C. 73;
(iv) In the case of State of Maharashtra Vs. Suresh Trading
Company, reported in 1997 (11) SCC 378.
https://www.mhc.tn.gov.in/judis
W.P.Nos.4791, 4796, 4797 & 4802 of 2022
11. On the other hand, Mr.V.Prasanth Kiran, learned Government
Advocate appearing for the respondents/Revenue would contend that,
insofar as the claim made for ITC for the transaction taken place with the
selling dealer, whose registration have been cancelled are concerned,
whether ITC claimed by the purchasing dealer could be reversed or not is
to be done in accordance with Section 19 (15) of the Tamil Nadu Value
Added Tax Act, 2006 [in short 'the Act']. He relies upon Sub-Section 15
of Section 19 of the Act, which reads thus:
“19. ....
(15) Where a registered dealer has purchased any
taxable goods from another dealer and has availed input tax
credit in respect of the said goods and if the registration
certificate of the selling dealer is cancelled by the appropriate
registering authority, such registered dealer, who has availed
by way of input tax credit, shall pay the amount availed on the
date from which the order of cancellation of the registration
certificate takes effect. Such dealer shall be liable to pay, in
addition to the amount due, interest at the rate of 1 [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.”
https://www.mhc.tn.gov.in/judis
W.P.Nos.4791, 4796, 4797 & 4802 of 2022
12. By relying this provision, learned Government Advocate would
submit that, if the registration certificate of the selling dealers is
cancelled by the appropriate registering authority, such registered dealers,
who have availed by way of ITC, shall pay the amount availed on the
date, from which, the order of cancellation of the registration certificate
takes effect.
13. Therefore, the learned Government Advocate would point out
that, if not from 05.04.2007, the date on which, retrospectively the
cancellation has been taken effect, atleast from 28.05.2010, the date on
which, the actual cancellation was made, the petitioner is liable to get the
reversal of the ITC as the petitioner has availed the input tax already, it
has to be necessarily reversed within the meaning of Section 19 (15) of
the Act. Therefore, absolutely, there is no impediment or infirmity
attached with the impugned order. Hence, the learned Government
Advocate appearing for the respondents/Revenue seeks dismissal of these
writ petitions.
https://www.mhc.tn.gov.in/judis
W.P.Nos.4791, 4796, 4797 & 4802 of 2022
14. I have considered the said submissions made by the learned
counsel appearing for the parties and have perused the materials placed
before this Court.
15. Insofar as the transaction taken place during the Assessment
Years 2008-09 and 2009-10 are concerned, the very Section 19 (15) itself
has given the benefit to the purchasing dealer, since the language used
therein is that, such registered dealer, who has availed by way of Input
Tax Credit shall pay the amount availed on the date, from which, the
order of cancellation of the registration certificate takes effect.
16. Though such a language is used, that from the date, the
registration certificate takes effect which includes the retrospective
effect, the Courts have given their interpretation with regard to the said
provision namely Section 19(15) of the Act, where, the aforesaid decision
cited by the petitioner company would certainly advance the case of the
petitioner for the period covered between 05.04.2007 and 28.05.2010. In
https://www.mhc.tn.gov.in/judis
W.P.Nos.4791, 4796, 4797 & 4802 of 2022
the judgment cited, i.e., 2013 (1) MLJ 157, the Courts have taken the
view that, whatever benefits that has accrued to the petitioners based on
valid documents in the course of sale of purchase of goods, for which, tax
has been paid, cannot be declined. The transaction that took place, when
the registration certificate of the selling dealers were in force, cannot be
denied to the petitioner/assessee on the said plea.
17. Almost, similar view had been taken in other cases also, where,
during the period, where the registration certificate was alive i.e., prior to
the date of cancellation of certificate, what are all the transaction taken
place with the selling dealer, whose registration certificate subsequently
been cancelled, the purchasing dealer like the assessee/petitioner, ifmade
those transaction or sale that means, if any ITC claimed or availed by the
purchasing dealer for transaction taken place during the period, where,
the selling dealers', registration certificate was alive, that availment of
ITC cannot be reversed.
https://www.mhc.tn.gov.in/judis
W.P.Nos.4791, 4796, 4797 & 4802 of 2022
18. When that being the position, the ITC reversal now sought to
be made through the impugned orders pertaining to Assessment Years
2008-09 and 2009-10 are concerned, this Court has no hesitation to hold
that, those orders would not stand in the legal scrutiny. Therefore, the
writ petitions in W.P.Nos.4791 of 2022 and 4797 of 2022 pertaining to
Assessment Years 2008-09 and 2009-10, are liable to be allowed.
19. However, insofar as the Assessment Years 2010-11 and 2011-
12 are concerned, those transactions had taken place only during the said
years i.e., after the cancellation order was passed on 28.05.2010.
20. In this context, it was also a point urged not only by the
petitioner counsel, but across the Bar that, Rule 22 of the Tamil Nadu
Value Added Tax Rules, 2007 [in short 'the Rules'] made clear that, there
must be publication of certain documents, which include the cancellation
of registration certificate, for which, the learned counsel rely upon Rule
22(e) of the Rules, which reads thus:-
https://www.mhc.tn.gov.in/judis
W.P.Nos.4791, 4796, 4797 & 4802 of 2022
“22. Publication of information in respect of assessees
- (1) the following informations in respect of the assesses will
be published under Section 79 namely:-
“.................
(e) Names of dealers with details, whose registration
certificates have been cancelled.”
21. Quoting this provision of the Rules, learned counsel for the
petitioner/assessee and other supporting learned counsels across the Bar
who assist the Court would contend that, since it has been mandated
under the Rule that, everything should be published, which includes the
order passed by the authority concerned, who cancels the registration
certificate and if that is not published, then the plea can be taken that the
transaction taken place without the knowledge of the cancellation, as the
same since has not been published, can be saved from the purview of
reversal of ITC within the meaning of Section 19(15) of the Act.
https://www.mhc.tn.gov.in/judis
W.P.Nos.4791, 4796, 4797 & 4802 of 2022
22. If we delve into the said plea raised by the assessee's side, we
must see Section 79 of the Act, which reads thus:
“79. Publication of information in respect of the
Assessees .--
(1) If the Government is of opinion that it is necessary
or expedient in the public interest to publish the names of
any assessees and any other particulars relating to any
proceedings under this Act in respect of such assessees, they
may, subject to such conditions as may be prescribed, cause
to be published, such names and particulars in such manner
as they think fit.
(2) No publication under this section shall be made in
relation to any penalty imposed, or any conviction for any
offence connected with any proceedings under this Act, until
the time for presenting an appeal or a revision, as the case
may be, has expired without an appeal or revision having
been presented or the appeal or revision, if presented, has
been disposed of.
Explanation-- In the case of a firm, company or other
association of persons, the names of the partners of the firm,
directors, managing agents, secretaries and treasurers, or
managers of the company, or the members of the
association, as the case may be, may also be published if, in
https://www.mhc.tn.gov.in/judis
W.P.Nos.4791, 4796, 4797 & 4802 of 2022
the opinion of the Government, the circumstances of the case
justify it.”
23. Section 79 (1) of the Act says that, if the Government is of the
opinion that it is necessary or expedient in the public interest to publish
the names of any assessees and any other particulars relating to any
proceedings under the Act in respect of such assessees, they may, subject
to such conditions as may be prescribed, cause to be published, such
names and particulars in such manner as they think fit.
24. The language used in Section 79(1) of the Act suggest that, it is
purely the discretion of the Government that, if it is in the opinion that
something to be published that it is necessary or expedient in the public
interest, the Government may publish it.
25. Only pursuant to Section 79 of the Act, Rule 22 has been made,
where, the opening line of Rule 22 states that “the following information
in respect of assessees will be published under Section 79 namely”
https://www.mhc.tn.gov.in/judis
W.P.Nos.4791, 4796, 4797 & 4802 of 2022
26. Therefore, what has been stated in Section 79 of the Act for
publication, that has been enumerated in Rule 22, which includes names
of the dealers with details, whose registration certificates have been
cancelled.
27. Therefore, the order, cancelling the registration is one of the
document may be published under Section 79 (1) of the Act, that does not
mean that, each and every such cancellation order issued by the authority
shall be published within the meaning of Section 79 (1) of the Act as it is
not mandated under Section 79(1) of the Act that, those orders shall be
published.
28. Therefore, the non-publication of such cancellation of
registration would not give raise to claim by the assessee that, merely
because the registration cancellation was not published, he can avail the
ITC and the same cannot be reversed within the meaning of Section
19(15) of the Act. Therefore, that plea raised on the side of the
https://www.mhc.tn.gov.in/judis
W.P.Nos.4791, 4796, 4797 & 4802 of 2022
petitioner/assessee, supported by some of the learned counsels across the
Bar, in my considered opinion, is liable to be rejected. Accordingly, it is
rejected.
29. Therefore, in view of the aforestated facts and circumstances
and discussions herein above made, this Court is inclined to dispose of
these writ petitions with the following orders:
(i) That in respect of the writ petitions in W.P.Nos.4791 and 4797
of 2022 the respective impugned orders in these writ petitions are set
aside. Accordingly, these writ petitions are allowed.
(ii) The impugned orders in W.P.Nos.4796 and 4802 of 2022 are
concerned, for the Assessment Years 2010-11 and 2011-12, where, the
transactions admittedly taken place after 28.05.2010, those impugned
orders are to be sustained. Accordingly, these writ petitions are
dismissed.
(iii) However, there shall be no order as to costs. Consequently,
connected miscellaneous petitions are closed.
https://www.mhc.tn.gov.in/judis
W.P.Nos.4791, 4796, 4797 & 4802 of 2022
30. After dictating the orders, learned counsel appearing for the
petitioner/assessee wants 30 days time to make payment as per the
demand made for the Assessment Years 2010-11 and 2011-12,
accordingly, this court is inclined to grant thirty (30) days time for
making such payment. While making such payment, if any amount had
already been deposited for those Assessment Years by deducting the
same, the balance payment can be made by the assessee.
03.03.2022
Index : Yes
Speaking Order : Yes
kak
To
1.The Commercial Tax Officer,
Pallavaram, Assessment Circle,
Chennai – 600 044.
2.Assistant Commissioner (ST)
Pallavaram, Assessment Circle,
Nandanam, Chennai – 600 034.
3.Tamil Nadu Mercantile Bank Ltd.,
No:33, Siva Shanmugam Street,
Tambaram West, Chennai – 600 045.
https://www.mhc.tn.gov.in/judis
W.P.Nos.4791, 4796, 4797 & 4802 of 2022
R. SURESH KUMAR, J.
kak
W.P.No.4791 of 2022
03.03.2022
https://www.mhc.tn.gov.in/judis
