Restriction of the amount of Input Tax Credit on the ground that the seller has not paid tax to the Government, when the purchaser is able to prove that the seller has collected tax and issued invoices to the purchaser, cannot be sustained and requires re-consideration.
Section 19 of VAT Act — Restrictions on use of ITC – The petitioner challenged the restriction of the amount of ITC claimed in Form W for the months of December 2013 to May 2014. The restriction of the amount of ITC has been done predominantly on the head of (a) Prior sufferance of Taxes; (b) ITC on reversal on wastage; and (c) Ineligible claim of ITC on goods. The respondent viewed that some of the sellers from whom the petitioner had purchased the goods had not paid tax to the Government. In the judgment of Assistant Commissioner (CT), presently Thiruverkadu Assessment Circle, Kolathur, Chennai Vs. Infiniti Wholesale Ltd., it has been held that ITC cannot be disallowed on the ground that the seller has not paid tax to the Government, when the purchaser is able to prove that the seller has collected tax and issued invoices to the purchaser. This Court in the case of M/s. Shri Ranganathar Valves Private Limited Vs. Assistant Commissioner (CT), (FAC), Velandipalayam Assessment Circle, Coimbatore in 2016 has dealt similar issue.
Held that:- The Hon’ble High Court set aside the orders and remanded the matter back to the Assessing Officer for fresh consideration. The Assessing Officer shall, before taking a final decision, extend due opportunity of personal hearing to the petitioner and complete the proceedings, atleast within a period of twelve weeks.