Tvl.Km Best Medical Works vs. The Commissioner Of Commercial

Held

The Court held that the respondents erred in reversing the input tax credit. The Court respectfully applied the ratio laid down in the case of Bharath Traders vs. The Commissioner of Commercial Taxes and Another (W.P.Nos.15130 of 2015 etc Batch). The Court found that Section 8(1) of the CST Act provides for concessional tax rates upon production of a statutory declaration form for inter-State transactions with registered dealers, while Section 8(2) applies to transactions with unregistered dealers. Section 19(2)(v) of the TN VAT Act extended ITC to transactions under Section 8(1). The amendment in 2015 broadened this benefit to include transactions with unregistered dealers under Section 8(2). The Court reasoned that there was no logical reason to restrict this benefit only from the date of substitution (01.04.2015), as it would discriminate against prior period transactions under Section 8(2). The Court concluded that the legislature corrected an anomaly in 2015 by bringing transactions under Section 8(2) within the beneficial sweep of Section 19(2)(v), and this correction should be effective retrospectively from the inception of the Act. Consequently, the impugned order was quashed.

Facts

The petitioner, Tvl.KM Best Medical Works Private Ltd., challenged an order dated 25.04.2018 passed by the Assistant Commissioner (ST). The case pertains to the assessment year 2014-15. The petitioner's assessment was finalized on 31.10.2015. The petitioner had reported inter-State sales of Rs.4,20,149/- against Form 'C' declarations and other sales turnover of Rs.37,15,114/- without Form 'C'. Initially, the respondent treated the entire turnover as sales without Form 'C' and reversed input tax credit (ITC) via an order dated 28.02.2017. Subsequently, the petitioner received Form 'C' declarations for the sales reported under Section 8(1) of the CST Act and submitted them, seeking revision. The impugned order dated 25.04.2018, despite acknowledging the submitted Form 'C' declarations, still reversed ITC to the tune of Rs.1,64,266/-.

Key Issues

1. Whether the provisions of Section 19(2)(v) of the Tamil Nadu Value Added Tax Act, 2006, as amended by the Tamil Nadu Value Added Tax Act (Amendment Act, 2015), are retrospective and apply to earlier periods of assessment, or prospective, applying only from 01.04.2015 onwards? Petitioner's contention: The petitioner argued that the amendment to Section 19(2)(v) of the Tamil Nadu Value Added Tax Act, 2006, which extended the benefit of ITC to inter-State transactions whether covered by C-Form or not, in terms of both Section 8(1) and 8(2) of the CST Act, should be applied retrospectively. They relied on the principle that amendments correcting anomalies should be effective from the inception of the Act. Revenue's contention: The revenue contended that the order passed by the second respondent, both in original assessment and rectification proceedings, was in consonance with Section 19 of the Tamil Nadu Value Added Tax Act. They did not explicitly argue on the retrospective or prospective nature of the amendment but sought to sustain the impugned order.