M/S.High Energy Batteries vs. The Assistant Commissioner

Held

The Court held that the impugned assessment orders were liable to be set aside because they were passed in direct contravention of the interim order granted by the Hon'ble Division Bench in W.P.(MD)No.12888 of 2013. The Court noted that the respondent official was present and did not dispute the subsistence of the interim order. The interim order had specifically restrained the respondent from reversing the ITC availed by the petitioner. Therefore, the respondent authority was clearly not open to reversing the ITC while the interim order was still holding good. The Court observed that the impugned orders themselves made a specific reference to the interim order. Consequently, the Court set aside the impugned orders and allowed the writ petitions. The Court also noted that it was open to the respondent to take further action after the interim order was vacated. The ratio decidendi is that an authority cannot pass an order that is in direct contravention of a subsisting interim order of a superior court.

Facts

The petitioner, M/s. High Energy Batteries (India) Ltd., is challenging assessment orders dated June 18, 2018, passed by the Assistant Commissioner (CT)/FAC, Srirangam Assessment Circle. These orders reversed input tax credit (ITC) availed by the petitioner for the tax periods 2012-13, 2013-14, and 2014-15. The petitioner had effected interstate sales to a Central Government Department (Ministry of Defence). The dispute arises from Section 19(5)(c) of the TNVAT Act, which provided for reversal of ITC in cases of interstate sales to government departments where a C-Form could not be obtained. The petitioner's writ petitions challenging these reversals were pending, and an interim stay granted by a Division Bench in W.P.(MD)No.12888 of 2013 was still in effect.

Key Issues

1. Whether the impugned assessment orders reversing the input tax credit (ITC) are valid, considering the Supreme Court's decision in Civil Appeal Nos. 10560 to 10564 of 2018, which read down Section 19(5)(c) of the TNVAT Act? 2. Whether the respondent authority could pass the impugned assessment orders in contravention of the interim order granted by the Hon'ble Division Bench in W.P.(MD)No.12888 of 2013? Petitioner's arguments: The petitioner contended that the Supreme Court, while upholding Section 19(5)(c), read it down to allow ITC benefits without insisting on C-Forms for dealers making sales exclusively to other State Governments, deeming such States as registered dealers. The petitioner argued that the impugned orders directly contravened the subsisting interim order of the Division Bench, which had restrained the respondent from reversing ITC. Therefore, the assessment orders were liable to be set aside. Revenue's arguments: The judgment does not record any specific arguments made by the respondent revenue authority.