M/S. Suriya Cement Agency vs. The Assistant Commissioner

Held

The Court held that the allegation of omission to report the purchase value was not sustainable. It was noted that the transactions in question were clearly reflected in the audit report in Form WW. While there might have been a minor omission in the return, the Court found that when all details were disclosed in Form WW, a mere omission in the return should not be held against the petitioner. Regarding the wrongful availment of input tax credit, the Court found considerable merit in the petitioner's stand. The Court referred to Section 19(20) of the TNVAT Act, 2006, and Rule 10(6)(b)(ii)(C) of the TNVAT Rules, 2006, which deal with the reversal of ITC when goods are sold at a price lesser than the purchase price, provided the tax component is disturbed. The Court relied on the ratio laid down in Kun Motor Company Pvt. Ltd. vs. The Assistant Commissioner (CT), Chennai, which interpreted similar provisions. The Court held that the trade discount offered by the manufacturer to the petitioner did not enhance the taxable value of the cars sold by the petitioner and could not be added to the petitioner's taxable turnover to conclude that ITC was wrongly availed. The impugned order was quashed. The Court entertained the writ petition despite the alternative remedy, considering the contentious questions of fact were not involved and the petition was filed in 2014.

Facts

The petitioner, M/s. Suriya Cement Agency, a dealer registered with the respondent, challenged an order dated 16.10.2014 passed by the Assistant Commissioner (CT), Madurai. The assessment pertained to the year 2012-13. Initially, the petitioner was assessed on a deemed assessment basis. Subsequently, a pre-revision notice was issued alleging omission to report a purchase value of Rs. 7,39,829/- and wrong availment of input tax credit (ITC). The petitioner responded, but the respondent was not satisfied, confirming the proposed tax demand of Rs. 21,02,363/- and a penalty of Rs. 4,09,874/-. The petitioner filed this writ petition challenging the order. The respondent argued that the writ petition was filed without availing the alternative remedy of appeal.

Key Issues

1. Whether the petitioner wrongly omitted to report a purchase value of Rs. 7,39,829/-, thereby constituting suppression of turnover, contrary to Section 22(2) of the TNVAT Act, 2006? 2. Whether the petitioner wrongly availed input tax credit by disturbing the tax component on the price, in contravention of Section 19(20) of the TNVAT Act, 2006 read with Rule 10(6)(b)(ii)(c) of the TNVAT Rules, 2006? Petitioner's Arguments: The petitioner contended that the alleged omitted purchase value was clearly reflected in the audit report in Form WW, and therefore, no suppression occurred. Regarding ITC, the petitioner argued that they had scrupulously complied with the statutory rules and that the respondent had not produced convincing material to show any disturbance of the tax component. The petitioner relied on the invoices provided in their typed set to demonstrate that the sale price was lower than the purchase price due to trade discounts, not a manipulation of the tax component. They cited the case of Kun Motor Company Pvt. Ltd. vs. The Assistant Commissioner (CT), Chennai. Respondent's Arguments: The respondent argued that the writ petition should be dismissed for not availing the alternative remedy of appeal. They also contended that the petitioner had failed to adhere to the parameters laid down in Section 19(20) of the TNVAT Act, 2006, and Rule 10(6)(b)(ii)(c) of the TNVAT Rules, 2006, concerning the availment of input tax credit when goods were sold at a price lower than the purchase price.