M/S Opal Energy Solution vs. The Commercial Tax Officer

Held

The Court held that a purchasing dealer is entitled to rely on the selling dealer's certificate of registration and act upon it. The retrospective cancellation of a selling dealer's registration cannot affect a purchasing dealer who acted on the strength of a valid registration certificate when it was current. The Court rejected the argument that it was the duty of persons dealing with registered dealers to ascertain if facts existed justifying cancellation. To accept such an argument would nullify the statutory provisions that allow persons dealing with registered dealers to act upon the strength of registration certificates. Relying on the Supreme Court's decision in State of Maharashtra vs. Suresh Trading Company, the Court set aside the impugned order of assessment. The writ petition was allowed, and the connected miscellaneous petition was closed.

Facts

The petitioner, M/s. Opal Energy Solution Private Ltd., challenged an order dated March 28, 2014, passed by the Commercial Tax Officer, Pattukkottai. The respondent proposed to reverse Input Tax Credit (ITC) under Section 19(16) of the Tamil Nadu Value Added Tax Act, 2006, for the tax period 2012-13. This proposal was based on the ground that the petitioner had purchased goods from three dealers whose registrations were subsequently cancelled. The petitioner contended that the sales were genuine, the dealers were registered and active at the time of purchase, and their websites indicated that monthly returns had been filed. The petitioner also submitted purchase invoices. The respondent, through the Special Government Pleader, produced details indicating retrospective cancellation of the dealers' registrations.

Key Issues

1. Whether the retrospective cancellation of a selling dealer's registration can negate the Input Tax Credit (ITC) claim of a purchasing dealer who acted in good faith based on the registration certificate being active at the time of purchase? (Section 19(16) of the Tamil Nadu Value Added Tax Act, 2006). The petitioner argued that the purchases were made from registered dealers whose status was 'active' at the time of the transactions. They contended that the retrospective cancellation of the selling dealers' registrations should not prejudice their claim for ITC, especially since they relied on the registration certificates and departmental website information. The petitioner cited the Supreme Court judgment in State of Maharashtra vs. Suresh Trading Company. The respondent argued that the dealers' registrations were indeed cancelled retrospectively, implying that the petitioner should not have availed ITC from them. The respondent's contentions are not explicitly detailed beyond the fact of retrospective cancellation.