Reversal of ITC u/s 19(2)(v) TNVAT Act: Madras HC upholds Single bench’s Order Quashing Assessment, Limits Revival of Assessment Post- SC Decision [Read Order]
The court held that if the Supreme Court reverses the Everest Industries judgment, the assessing authority would be at liberty to revive the quashed assessment
ITC reversal - TNVAT Act - Section 19(2)(v) - taxscan
ITC reversal - TNVAT Act - Section 19(2)(v) - taxscan
The Madras High Court has reaffirmed its position on the contentious issue of reversal of Input Tax Credit ( ITC ) under Section 19(2)(v) of the Tamil Nadu Value Added Tax Act, 2006, by dismissing a writ appeal filed by the State and upholding the single bench’s decision to quash the assessment order and limited the revival of the assessment only after the decision of the supreme court decision pending in the diary stage.
The appeal was filed by the commercial tax department against Mudhra Fine Blanc Private Limited. However, the court made it clear that the issue is no longer res integra in view of the earlier binding precedent in The State of Tamil Nadu v. M/s. Everest Industries Limited[(2022) , where a Division Bench had held in favor of the assessee.
The case is about the reversal of ITC availed by the assessee under Section 19(2)(v) of the TNVAT Act, which permits input credit subject to conditions. The assessing authority had disallowed and reversed such credit, leading to the dispute.
Get a Handbook on TDS Including TCS as Amended up to Finance Act 2024, Click Here
The Single Judge, relying on the Everest Industries ruling, set aside the assessment order, prompting the State to file the present appeal.
The Division Bench of Justices M. Subramiam and C. Saravanan, while considering the appeal, observed that the correctness of the Everest Industries decision has already been challenged by the State before the Supreme Court, where the matter is still pending at the diary stage.
In such circumstances, the High Court found no infirmity in the writ court’s reasoning and held that the assessment was rightly quashed by following the settled law declared by the Division Bench.
The Court also clarified the scope of revival of the assessment by the tax authorities. It was held that if the Supreme Court reverses the Everest Industries judgment, the assessing authority would be at liberty to revive the quashed assessment.
However, such revival must strictly be carried out within four weeks from the date of the Supreme Court’s judgment, failing which the opportunity would lapse.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
