Tvl.Thermo Solutions (INDIA) vs. The Commissioner Of

Held

The Court held that the impugned orders passed by the second respondent are set aside. The reasoning for this decision is based on the petitioner's compliance with the interim order to pay 50% of the disputed tax difference. While the Court acknowledged the revenue's contention that proof of payment is necessary, it also recognized the petitioner's reliance on Section 19(10)(a) regarding the requirement of a tax invoice. The Court found that the second respondent is not debarred from calling upon the petitioner to furnish proof of payment, as this power is supported by Section 17(2) of the TNVAT Act, which places the burden of proof on the dealer. However, given the procedural issues and the petitioner's compliance with the interim order, the Court decided to remit the matters back to the second respondent for a fresh assessment. The ratio decidendi is that while the revenue has the right to demand proof of payment for input tax credit claims, procedural fairness and opportunity of hearing are paramount, especially when the petitioner has shown good faith by complying with court directions.

Facts

The petitioner, Thermo Solutions (India) Private Ltd., filed three writ petitions challenging orders passed by the Commercial Tax Officer-V, Dindigul. The impugned orders were passed for the assessment years 2011-12, 2012-13, and 2014-15. The petitioner did not file a reply to the pre-assessment notices issued by the second respondent, leading to the ex-parte orders. The petitioner contended that the orders were passed without following the proper procedure. At the time of admission, the petitioner was directed to pay 50% of the difference in disputed tax, which has been complied with.

Key Issues

1. Whether the impugned assessment orders passed by the second respondent are liable to be quashed for non-compliance with the usual procedure, as contended by the petitioner? Petitioner's arguments: The petitioner argued that the assessment orders were passed without conforming to the usual procedure. They relied on Section 19(10)(a) of the TNVAT Act, which states that a registered dealer can claim input tax credit only upon receiving an original tax invoice duly filled, signed, and issued by the selling dealer. The petitioner submitted that furnishing the original tax invoice is sufficient. Revenue's arguments: The second respondent, present in person, argued that the purchaser dealer must provide proof of payment to the selling dealer, either in cash or online, before the Commercial Tax Officer can undertake an enquiry with the other end dealer. The Court noted that the second respondent's power to call for proof of payment is traceable to Section 17(2) of the TNVAT Act, which places the burden of proving the claim of input tax credit on the dealer.