In the High Court of Judicature at Madras
Dated: 08.04.2013
Coram:
The Honourable Mr. Justice V. Dhanapalan
Writ Petition No. 7094 of 2013 &
M.P.No.1 of 2013
KSB Pumps Limited,
Represented by its
Senior Manager-Finance,
R.Sundaresan,
No.151, Mettupalayam Road,
NSN Palayam,
Coimbatore-641 031. .. Petitioner
Vs.
1. The Deputy Commissioner (CT) (FAC),
Fast Track Assessment Circle-II,
Coimbatore.
2. The Joint Commissioner (CT) Appeals,
Dr.Balasundaram Road,
Coimbatore-641 018. .. Respondents
Writ Petition filed under Article 226 of the Constitution of India, praying for issuance of a Writ of Certiorari to call for the records on the file of the first respondent in TIN/33902020737/2007-08, dated 7.10.2011 and quash the same insofar as it relates to the payment of Rs.27,41,385/-.
For petitioner : Mr.N.Sriprakash
For respondents : Mr.Manoharan Sundaram,
Govt. Advocate
.. .. ..
O R D E R
By consent of the learned counsel on either side, the writ petition itself is taken up for final disposal.
2. Heard Mr. N. Sriprakash learned counsel appearing for the petitioner and Mr.Manoharan Sundaram, learned Government Advocate appearing for the respondents.
3. A challenge has been made to an order passed by the respondents under Section 27 of the Tamil Nadu Value Added Tax Act, confirming the proposal with a partial modification and seeking to quash to the same in so far as it relates to the payment of Rs. 27,41,385/-.
4. Short facts pleaded by the petitioner are as follows:
(a) By an order dated 13.5.2011, the original assessment of the petitioner-Company for the assessment year 2007-08 was completed under Section 22 (3) of the Tamil Nadu Value Added Tax Act, 2006, hereinafter referred to as 'the TNVAT Act'. Subsequently, by notice dated 5.8.2011, the first respondent proposed to disallow the input tax credit (for short, 'the ITC') availed of by the petitioner during the months of April, May and June 2007 to an extent of Rs.27,41,385/-. The notice also contained certain other adverse proposals, which are not disputed by the petitioner in the present writ petition.
(b) To the above notice, the petitioner submitted objections, vide letter dated 24.8.2011. By an order dated 7.10.2011, the first respondent confirmed the proposal to treat the sum of Rs.27,41,385/- as ineligible credit and also issued a notice of assessment and demand in Form-O for that amount.
(c) Aggrieved by the said order dated 7.10.2011, the petitioner filed First Appeal before the second respondent, which was numbered as A.P.No. 9 of 2011 and it was taken up for final hearing on 11.12.2012. The only dispute in the appeal related to the reversal of ITC of Rs.27,41,385/- ordered by the first respondent. Before filing the appeal, the petitioner reversed the ITC amount of Rs.27,41,385/- while filing their monthly returns for the month of October 2011, filed on 19.11.2011. The said reversal was undertaken by the petitioner from out of the total ITC, which had accrued and had been accumulated under the TNVAT Act. That reversal was undertaken to comply with the requirement of the second proviso to Section 52 of the TNVAT Act. Only after taking note of the same, the appeal itself was duly numbered and taken up for final hearing on 11.12.2012.
(d) Before the appeal was numbered, the first appellate authority, vide proceedings, dated 8.12.2011 sought to ascertain the date of service of the assessment order impugned before him. Thus, only after a thorough examination of the petitioner having satisfied all the pre-conditions for filing an appeal, that the appeal itself was numbered. Accordingly, the appeal was heard on merits. The Department representative appearing before the second respondent did not question or doubt the maintainability of the appeal and they submitted that the appeal itself can be allowed, subject to the condition that the tax was in fact paid by the seller, which was to be ensured by the first respondent. The second respondent, by the impugned order, dismissed the appeal as not maintainable. The said impugned order has been challenged on the ground that the 2nd respondent had violated the principles of natural justice when it had, instead of taking up the appeal on merits, dismissed the appeal on maintainability, without hearing the petitioner at all.
5. The 2nd respondent, in his written instructions addressed to the Special Government Pleader (Taxes) has submitted that consequent to the filing of this writ petition by the petitioner against the order passed by the Joint Commissioner (CT), Appeals, Coimbatore, in A.P. No: 9 of 2011 dated 21.12.2012, remarks have been called for the passing of a non-maintainability order after admitting the appeal under Section 52 of the T.N.V.A.T. Act. The written instruction referred to above reads as under :
" In this connection, I submit that the appeal petition filed by the Appellants M/s. K.S.B. Pumps against an order passed by the Assessing Officer in the proceedings No: TIN/3390202737/2007-2008 dated 07.10.2011 has been admitted in the month of December 2011 by the erstwhile Joint Commissioner (CT) Appeals, Coimbatore. The learned Joint Commissioner (CT), Appeals has taken into account input tax credit available at the credit which is provisional under Section 19 (16) of TNVAT Act '06 with the disputed tax due to be payable by the Appellants in connection with the appeal filed.
The most possible reason for admission of the appeal petition is that this is the first case under TNVAT Act '06 in respect of this dealer Tvl. K.S.B. Pumps and
also the first case where instead of paying 20% disputed tax separately, adjusted with ITC which is also in dispute.
Because of this reason, it has been clearly mention in the appeal order in Para 5 (6th sentence) which reads as follows :
"Though the appeal petition has been admitted inadvertently, before disposing the appeal petition, it is necessary to verify whether such appeal eligible to be heard and orders passed at any point of time before passing any order."
With reference to the claim of the Appellants in the writ petition that the Appeal petition would have been returned demanding 25% of the disputed tax, it is submitted that the appellants filed the appeal petition only on the last day ( i.e. 30th day of the receipt of the assessment order) 30.11.2011. Had the appeal petition was returned as claimed by the appellants, any payment made would fall after the prescribed period of 30 days which requires condonation of delay in payment of disputed tax. The Appellants received original assessment order on 01.11.2011 and the due date for filing appeal with disputed tax is 30.11.2011. The Appellants filed the appeal petition only on the last day being 30.11.2011. Thus at the later stage, the appeal petition cannot be returned to the appellants demanding to pay 25% of the disputed tax separately as the time has already barred more than 30 days.
It is also submitted in respect of the Joint Commissioner (CT) Appeals, Coimbatore, this is the third case where the appeal has been filed in respect of the assessment made under TNVAT Act '06 for the year 2006-07. In respect of two cases pertaining to VAT period, being Tvl. L.G. Balakrishnan Brothers, the appellants filed appeal petition and admitted in AP. 14/2010 and 8/2011 not at all required payment of disputed tax as the assessment order resulted in NIL and excess of Rs.33,80,908.00 respectively.
Further, when the dispute is itself, incorrect claim of Input Tax credit, the same amount cannot be adjusted towards disputed tax payable against the appeal.
Moreover there is also no provision under TNVAT Act to adjust the disputed tax payable under the appeal provisions with that of the provisional Input Tax credit available on the hand as per the monthly returns for the month of October 2011.
The appellants also not filed a certificate of adjustment of tax towards 2% of the disputed tax obtained from the concerned assessing authority.
Further the incorrect adjustment of ITC towards disputed tax was also raised at the time of hearing the appeal for which the learned authorized representative appearing for the appellants has staed that the provision of Section 19 (16) terming ITC as Provisional is itself wrong.
In view of the above position, the appeal petition filed by the appellants TVL. K.S.B. Pumps was returned to the appellants by dismissing it as non-maintainable."
6. On the background circumstances and pleadings, I have heard the learned counsel appearing for the parties and perused the material documents made available on record.
7. It is seen that the assessing officer completed the original assessment in respect of the petitioner, for the assessment year 2007-2008, by an order dated 13.05.2011. However, by a notice dated 5.8.2011, the 1st respondent proposed to disallow the input tax credit availed by the petitioner during the months of April, May and June 2007 to an extent of Rs.27,41,385/-. Petitioner submitted its explanation on 24.08.2011. But, by his order dated 7.10.2011, the 1st respondent confirmed the proposal and issued a notice of assessment and demand for that amount. Petitioner went before the 2nd respondent in appeal A.P. No: 9 of 2011. Though the 2nd respondent heard the petitioner on merits, by its order dated 21.12.2012, declined to hear the appeal on merits and dismissed the appeal in toto as not maintainable. The reason for coming to such a conclusion, as stated by the 2nd respondent in its order dt. 21.12.2012, is that the appellants have not fulfilled the condition specified under second proviso to Section 52 of the T.N.V.A.T. Act by paying 25% of the disputed tax while filing the appeal. Challenging such an order, the petitioner is before this Court.
8. It is necessary to state here that before filing the appeal, the petitioner has reversed the ITC amount of Rs. 27,41,385/- while filing their monthly returns for the month of October 2011, filed on 19.11.2011. That reversal was undertaken by the petitioners from and out of the total ITC which had accrued and accumulated under the Act. In fact, the appellant had enclosed copies of the monthly returns for the month of October 2011 along with the appeal petition. The most unfortunate thing happened in this case is that the appellate authority, instead of insisting the petitioner to pay 25% of the disputed tax as pre-condition for filing the appeal, accepting the copies of the monthly returns as a proof of payment required for filing the appeal, had numbered the appeal. The reason for such an act on the part of the 2nd respondent, as given by him in his written instructions, is that this is the first case under TNVAT Act 2006 in respect of this dealer. Though at the first instance the 2nd respondent ought not to have numbered the appeal without payment of 25% of the disputed tax, later, while passing orders on the appeal dismissed it as not maintainable. The relevant portion of the order reads as follows :
" 5. I have carefully considered the arguments of both the sides and the connected records made available for perusal. Perusal of the appeal petition filed by the appellants revealed the fact that the appellants aggrieved against the order of the assessing officer filed an appeal before this forum on 30.11.2011 being 30th day of the receipt of the assessment order. By this way they fulfilled the basic condition required for filing the appeal as prescribed under Section 52 of the TNVA Act '06. The present appeal shall be entertained and taken for hearing only if the appellants fulfilled the conditions prescribed as per second proviso to Section 52 of TNVAT Act '06. The present appeal shall be entertained and taken for hearing only if the appellants fulfilled the conditions prescribed as per second proviso to Section 52 of TNVAT Act '06. As per Second Proviso to Section 52 of TNVAT Act '06,t he appellants are required to furnish proof of payment of tax admitted by the appellants to be due and twenty five percent of the difference of the tax assessed by the assessing authority and the tax admitted by the appellants. Though the appeal petition has been admitted inadvertently, before disposing the appeal petition, it is necessary to verify whether such appeal eligible to be heard and orders passed at any point of time before passing any order. Perusal of the appeal petition revealed the fact that the appellants, instead of paying 25% of the disputed tax separately, they have filed a copy of the monthly returns pertaining to the month of October 2011 as a proof of payment required for filing the appeal. In the copy of the returns filed, the appellants made a reversal of ITC to the extent of Rs.28,03,891.00 which included the value of Rs.27,41,385.00 being the disputed reversal of Input Tax Credit made in this appeal. The appellants made reversal of Input Tax Credit out of the ITC carry forward relating to the month of September 2011 and the ITC accrued during the month of October 2011. While doing so, the appellants have shown in the return that ITC accrued during the month of November 2011 has reduced from Rs. 26,82,675.00 to Rs. -1,21,216.00 and also arrived corresponding turnover as Rs. -1,75,05,117.00. Thus the appellants instead of paying disputed tax separately, reversed the disputed ITC and shown as proof of payment to the Department. Using the available ITC on hand, the appellants adjusted the 25% of the disputed tax payable in the appeal by reversing the entire disputed ITC. As such there is no provision under Section 52 of TNVAT Act '06 to take the available credit of ITC as a proof of payment towards 25% of the dipsuted tax by making necessary reversal as specified in Annexure III of Form 1 returns filed under TNVAT Act'06 for the month of Octobe 2011. Thus the appellants have made reversal of ITC as early as 19/11/2011 before filing the appeal petition (30/11/2011) in this forum. Moreover, the Input Tax Credit claimed by the appellants in the monthly returns filed is provisional as per Section 19 (16) of TNVAT Act '06. Section 19 (16) reads as follows :-
" 19 (16) : The input tax credit availed by any registered dealer shall be only provisional and the assessing authority is empowered to revoke the same if it appears to the assessing authority to be incorrect, incomplete or otherwise not in order.
6. Thus from the above it is very clear that the ITC claimed by the appellants in the monthly returns filed is provisiona and the assessing authority can revoke the same. Thus unless it is finalized by the assessing authority, ITC claimed provisional. In fact, in this case, the assessment has been finalized on 13/05/2011 and certain ITC were shown as eligible carry forward for the year 2007-08. But this ITC along with ITC claimed during the year 2008-09, 2009-10, 2010-11 and 2011-12 were all provisional and accordingly the ITC shown as carry forward for the month of October 2011 to the extent of Rs.70,25,732.00 is only provisional and cannot be put to use for adjustment towards any dues other than output tax due as per the monthly returns. Thus adjusting this ITC carry forward of Rs.70,25,732.00 towards actual due of Rs.6,85,346.00 being 25% of Rs.27,41,385.00 for entertaining the appeal is not correct as the ITC claimed is only provisional and not made final till date. This amounts to non-payment of 25% of the disputed tax while filing the appeal before this Forum as required under Section 52 of TNVAT Act '06. Thus it is crystal clear that the appellants have not fulfilled the conditions specified in the second proviso to Section 52 of TNVAT Act '06. Thus the eligibility of filing the appeal before this forum is not available for the appellants and hence, in view of the above facts, I decline to hear this appeal on merits and dismiss this appeal petition in Toto as non-maintainable. "
9. It would be appropriate here to look into the relevant proviso to Section 52 of the T.N.V.A.T. Act. Second Proviso to Sec. 52 reads as under :
" 52. Appeal to Appellate [Joint] Commissioner :-
.... ..... ......
.... ..... ......
Provided further that in the case of an order under Section 22, Section 24, Section 26 or sub-sections (1), (2), (3) and (4) of Section 27, Section 28, or Section 29, no appeal shall be entertained under this sub-section unless it is accompanied by satisfactory proof of the payment of the tax admitted by the appellant to be due or of such instalments thereof as might have become payable, as the case may be and twenty-five per cent of the difference of the tax assessed by the assessing authority and the tax admitted by the appellant. "
Thus, it is clear from the above proviso that, no appeal can be entertained unless it is accompanied by satisfactory proof of the payment of the tax admitted by the appellant to be due or of such instalments thereof as might have become payable, as the case may be and twenty-five per cent of the difference of the tax assessed by the assessing authority and the tax admitted by the appellant. Admittedly, such payment of 25% has not been made by the petitioner while filing the appeal. Though it is claimed by the petitioner that it had reversed the I.T.C. as early as on 19.11.2011 itself, while the appeal was filed only on 30.11.2011, it is seen from the provisions to the T.N.V.A.T Act that the Input Tax Credit claimed by the petitioner in the monthly returns is only provisional and that the assessing authority is empowered to revoke the same if it appears to him to be incorrect or otherwise not in order. Section 19 of the T.N.V.A.T. Act deals with Input Tax Credit. Sub Section (16) to Section 19 of the Act reads as follows :
" 19 (16) The input tax credit availed by any registered dealer shall be only provisional and the assessing authority is empowered to revoke the same if it appears to the assessing authority to be incorrect, incomplete or otherwise not in order. "
10. On a combined reading of the above two provisions makes it clear that no person shall be entitled to have the appeal numbered without meeting out the statutory requirement of depositing 25% of the disputed tax amount. The stand of the petitioner that it has revised the disputed amount from its I.T.C. And this may be treated as payment of the disputed amount of tax cannot be accepted by any stretch of imagination as the provisions in the T.N.V.A.T. Act categorically provides that the input tax credit availed by any registered dealer is only provisional and that the assessing authority is empowered to revoke the same if it appears to him to be incorrect or otherwise not in order. Thus, the decision rendered by the appellate authority in returning the appeal as not maintainable cannot be found fault with.
11. At this juncture, Mr. N.Sriprakash, learned counsel appearing for the petitioner, looking into the legal position, fairly submitted that the petitioner may be permitted to pay 25% of the disputed tax so that the appeal may be disposed of on merits and this Court may pass appropriate orders to that effect. In my considered opinion, the plea of the learned counsel appearing for the petitioner merits acceptance because, the mistake on the part of the petitioner in not paying the 25% of the disputed tax while filing the appeal can not only be attributed to the petitioner. The 2nd respondent is equally responsible for having allowed such a mistake to be crept in. The appellate authority ought not to have numbered the appeal when it is presented without the proof of payment of 25% of the disputed tax. Though the 2nd respondent had corrected its earlier mistake of numbering the appeal later by dismissing the appeal as not maintainable, as far as the petitioner is concerned it had lost an opportunity of putting forth its contentions on the merits of the matter.
12. Accordingly, this writ petition stands disposed of with a direction to the petitioner to re-submit the appeal papers along with payment of 25% of the disputed tax, within a period of two weeks from the date of receipt of a copy of this order. On such filing of the appeal by the petitioner, the appellate authority shall take up the matter and proceed to dispose of the same on merits and in accordance with law. Connected miscellaneous petition is closed. There shall be no orders as to the costs.
Index : Yes
Website : Yes 08..04..2013
To
1. The Deputy Commissioner (CT) (FAC),
Fast Track Assessment Circle-II,
Coimbatore.
2. The Joint Commissioner (CT) Appeals,
Dr.Balasundaram Road,
Coimbatore-641 018.
V. Dhanapalan, J.
W.P. No: 7094 of 2013
08..04..2013
