M/S.Varuni Chemicals PVT. LTD. vs. The State Of Tamilnadu

Held

The Court held that the challenge to Section 19(5)(c) of the Tamil Nadu Value Added Tax Act, 2006, had already been rejected by the Madras High Court and subsequently confirmed by the Supreme Court in the case of TVS Motors Company Ltd. vs. State of Tamil Nadu and others. Therefore, the primary ground for the writ petitions, which was the alleged unconstitutionality of Section 19(5), was no longer tenable. Consequently, the writ petitions were liable to be dismissed. However, the Court granted liberty to the petitioners to file objections on the merits of the proposals contained in the impugned notices within three weeks from the date of the order (August 5, 2019). The Assessing Officer was directed to pass assessment orders after hearing the petitioners and in accordance with law within six weeks from the date of receipt of such objections. No costs were awarded.

Facts

The petitioners, M/s. Varuni Chemicals Pvt. Ltd. and M/s. Salfa Industries, filed writ petitions challenging proceedings issued by the Assistant Commissioner (CT), Mahal Assessment Circle, Madurai. These proceedings, dated between October 3 and October 6, 2016, called for the reversal of input tax credit. The tax periods in dispute are 2008-2009, 2009-2010, 2010-2011, 2011-2012, and 2012-2013. The challenge was primarily based on the contention that Section 19(5) of the Tamil Nadu Value Added Tax Act, 2006, was ultra vires the Constitution of India. The State of Tamil Nadu, represented by the Secretary to Government, Commercial Taxes and Registration Department, and the Assistant Commissioner (CT) were the respondents.

Key Issues

1. Whether Section 19(5) of the Tamil Nadu Value Added Tax Act, 2006, is ultra vires the Constitution of India, as contended by the petitioners. The petitioners argued that Section 19(5) of the Tamil Nadu Value Added Tax Act, 2006, was unconstitutional. They sought to quash the impugned proceedings that mandated the reversal of input tax credit based on this provision. The respondents, represented by the Special Government Pleader, did not explicitly record arguments in the judgment regarding the constitutional validity of Section 19(5). However, their stance was implicit in the issuance of the impugned notices calling for reversal of input tax credit.