Tvl. M.R. Motor Company VS Assistant Commissioner

In this Writ Petition, the petitioner has contested the impugned order dated September 12, 2013, in RC.366/2013/A1, issued by the respondent. The petitioner, a dealer of motor vehicles, sought a refund of excess Input Tax Credit (ITC) under Sections 19(17) and 19(18) of the Tamil Nadu Value Added Tax (TNVAT) Act, 2006, along with Rule 10(10)(a) & (b) and Rule 11 of the TNVAT Rules, 2007.

On November 9, 2011, the petitioner submitted a refund claim, requesting the respondent to refund Rs.46,03,026, which represented the accumulated ITC for the assessment years 2006-2007 through 2009-2010. Following this, the petitioner filed a Writ Petition (W.P.No.18839 of 2013) with this Court, seeking consideration of its representation for the refund of the accumulated credit, which had reportedly increased to Rs.1,06,72,081 by then. The Writ Petition was resolved by an order dated (order details not provided in the given text.

In this Writ Petition, the petitioner, a dealer of Motor Vehicles, has challenged the impugned order dated 12.09.2013 in RC.366/2013/A1 passed by the respondent. The petitioner had claimed a refund of excess Input Tax Credit (ITC) under Sections 19(17) & 19(18) of the Tamil Nadu Value Added Tax (TNVAT) Act, 2006, read with Rule 10(10)(a) & (b) and Rule 11 of the TNVAT Rules, 2007.

The petitioner initially filed a refund claim on 09.11.2011, requesting the respondent to refund Rs.46,03,026/-, which was the accumulated ITC for the Assessment Years from 2006-2007 to 2009-2010. Subsequently, the petitioner filed a Writ Petition (W.P.No.18839 of 2013) before the Court to consider its representation for the refund of the accumulated ITC, which had purportedly increased to Rs.1,06,72,081/-. The Court disposed of the said Writ Petition by an order dated 05.08.2013, directing the respondent to consider the petitioner’s representations and pass orders on merits in accordance with the law.

Following this, the petitioner submitted another representation on 15.08.2013, again requesting the respondent to refund the accumulated ITC. However, the respondent rejected the refund claim in the impugned order dated 12.09.2013. The respondent’s observations included that the petitioner had carried forward the closing balance of ITC as of 31.03.2012 to subsequent years according to their Form-I returns filed for the months of April 2012 and April 2013, and had adjusted the output tax dues until July 2013. As a result, the closing balance of ITC as of March 2012 had been merged with the ITC claims and adjustments for output tax dues until July 2013, and thus, the closing balance of ITC shown in March 2012 could not be refunded. After verifying all records and guidelines stipulated in the TNVAT Act, 2006, and TNVAT Rules, 2007, the respondent rejected the petition filed by Tvl.M.R.Motor Company.

In essence, the petitioner is seeking judicial review of the respondent’s decision to deny the refund of accumulated ITC, which the petitioner believes they are entitled to under the applicable laws and rules. The Court is now being asked to adjudicate on the validity of the respondent’s order and the petitioner’s entitlement to the claimed refund.

The case revolves around a writ petition where the petitioner seeks a refund of Rs. 1,06,72,081.00, citing accumulation of Input Tax Credit as of March 31, 2012. The proceedings note that the Tamil Nadu Value Added Tax Act of 2006 was replaced by the Tamil Nadu Goods and Service Tax Act of 2017 pending the petition’s resolution.

A communication from the respondent dated February 4, 2020, clarifies that as of June 30, 2017, the petitioner’s closing Input Tax Credit amounted to Rs. 1,05,30,257/-. It further confirms the petitioner’s transition of this credit under the TNGST Act through GST TRAN-I, without any set-off having been applied by the petitioner.

Additionally, it is highlighted that the petitioner maintains an active business status with a valid registration under GSTIN: 33AALFM0921B1ZW, continuing to dutifully file returns under the TNGST Act of 2017.

The central issue under consideration is whether the petitioner qualifies for the refund of Input Tax Credit as per the relevant statutory provisions.

The petitioner in this case sought a refund of Rs. 1,06,72,081.00 as accumulated Input Tax Credit by the end of March 2012, under the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act). Subsequently, with the replacement of TNVAT Act by the Tamil Nadu Goods and Service Tax Act, 2017 (TNGST Act), the legal framework changed. The respondent clarified in a communication dated 04.02.2020 that the closing Input Tax Credit for the petitioner as of June 2017 was Rs. 1,05,30,257/-. The petitioner had transitioned this credit under TNGST Act through GST TRAN-I, without utilizing it.

The petitioner maintains active business operations under valid registration with GSTIN: 33AALFM0921B1ZW, regularly filing returns under the TNGST Act. The primary issues for consideration are whether the petitioner was entitled to the refund under Sections 19(17) and 19(18) of the TNVAT Act despite ongoing business operations and regular adjustments of taxes. Another issue is whether the implementation of TNGST Act in 2017 affects this entitlement to refund.

During the proceedings, arguments from both the petitioner’s counsel and the government advocate representing the respondent were considered. Sections 19(17) and 19(18) of the TNVAT Act, 2006 were particularly discussed, which pertain to the adjustment and refund of Input Tax Credit if it exceeds the tax liability for a year, allowing it to be offset against any outstanding tax owed by the dealer.

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